Hand to Mouth: Financial Stress and Food Insecurity

Abstract

We link consumer credit bureau data to data on household demographics and consumption choices. We show that financial stress changes consumers’ consumption patterns. Not only does financial stress change how and where consumers shop, but it also affects the types and quality of food they buy. Consumers exhibit a dramatic shift toward purchasing cheap, high-calorie foods during times of high financial distress, which we interpret as a manifestation of food insecurity. Families with children are especially sensitive and respond more sharply to financial stress. Our results offer policy implications for targeted interventions.

Keywords: Financial Stress, Consumption, Personal Finance, Food Insecurity

JEL Classification: D1, L81, I1, I31