Frugality Is Hard to Afford
Kilts Center for Marketing at Chicago Booth – Nielsen Dataset Paper Series 2-031
45 Pages Posted: 7 Mar 2016 Last revised: 19 Jul 2017
Date Written: March 20, 2016
Households commonly utilize strategies that provide long-term savings on everyday purchases in exchange for an increase in their short-term expenditures. They buy larger packages of non-perishable goods to take advantage of bulk discounts, and accelerate their purchases to take advantage of temporary discounts. Even though low-income households are more incentivized to save, they are less likely to take advantage of these money-saving strategies. We provide causal evidence that liquidity constraints inhibit low-income households' ability to do so.
Keywords: intertemporal substitution, poverty, liquidity constraints, bulk discounts, purchase acceleration
Suggested Citation: Suggested Citation