Consumption Smoothing: Financial Stress and Food Insecurity

54 Pages Posted: 8 Mar 2020 Last revised: 20 May 2022

See all articles by Alexander W. Butler

Alexander W. Butler

Rice University - Jesse H. Jones Graduate School of Business

Irem Demirci

Nova School of Business and Economics

Umit G. Gurun

University of Texas at Dallas

Yessenia Tellez

Virginia Tech

Date Written: May 12, 2022

Abstract

We link consumer credit bureau data to data on household demographics and consumption choices. We show that financial stress not only changes how and where consumers shop, but 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 stress, which we interpret as a manifestation of food insecurity. Households 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

Suggested Citation

Butler, Alexander W. and Demirci, Irem and Gurun, Umit G. and Tellez, Yessenia, Consumption Smoothing: Financial Stress and Food Insecurity (May 12, 2022). Available at SSRN: https://ssrn.com/abstract=3530165 or http://dx.doi.org/10.2139/ssrn.3530165

Alexander W. Butler

Rice University - Jesse H. Jones Graduate School of Business ( email )

MS 531
Houston, TX 77005
United States
713-348-6341 (Phone)

HOME PAGE: http://www.owlnet.rice.edu/~awbutler/

Irem Demirci

Nova School of Business and Economics ( email )

Campus de Carcavelos
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal

Umit G. Gurun (Contact Author)

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States

HOME PAGE: http://www.umitgurun.com

Yessenia Tellez

Virginia Tech ( email )

1016 Pamplin Hall
Blacksburg, VA 24061
United States
540-231-4131 (Phone)

HOME PAGE: http://https://finance.pamplin.vt.edu/about-us/directory/tellez-parrales.html

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