Consumption Smoothing via Product Markets

63 Pages Posted: 8 Mar 2020 Last revised: 16 Mar 2024

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: March 12, 2024

Abstract

We investigate how households adjust their shopping behavior in response to financial shocks. Our results show that households exhibit heightened price consciousness in financial downturns. They patronize discount stores more, purchase more products they perceive as deals, use coupons more frequently, and consume less nutritious food. Discount stores experience an upswing in sales, while high-end establishments witness declining sales during financially stressful times. These observations underscore the pivotal role of product markets in facilitating consumers’ consumption smoothing, particularly in scenarios where borrowing is not a viable recourse.

Keywords: Consumption, Financial Stress, Personal Finance, Retail Markets

JEL Classification: D1, I31, L81, P36

Suggested Citation

Butler, Alexander W. and Demirci, Irem and Gurun, Umit G. and Tellez, Yessenia, Consumption Smoothing via Product Markets (March 12, 2024). 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

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
543
Abstract Views
2,925
Rank
96,277
PlumX Metrics