Essays in Applied Economics
- Author(s): Rider, Jessica Kristin
- Advisor(s): Villas-Boas, Sofia
- et al.
In this dissertation, I investigate the relationship between unemployment and grocery purchasing patterns with a particular focus on the health impacts of recession. The first chapter, I analyze food items and in the second chapter, I turn the focus on beer and cigarettes. Both of these chapters investigate possible mechanisms behind the documented phenomenon of decreased morbidity and mortality during recessions.
To conduct the analysis presented in Chapter 1, I supplement five years of multi-market, multi-chain grocery scanner data with additional information on the positive health attributes of food products to create a unique dataset. First, I find no evidence that products with positive health attributes are systematically more expensive or promoted systematically less. They are, however, purchased on promotion less. Second, I match the scanner data with unemployment rate by market in order to conduct a reduced form analysis of changes in pricing, promotion and quantities sold given a macroeconomic shock. For overall grocery categories, prices go down, promotions weakly increase and overall quantities sold decline; results vary for products with health attributes. While shares for healthy products within category are unaffected by recession in some categories, in other categories I see a marked shift toward higher fat options within category.
In Chapter 2, I again use retail scanner data to track price and quantity changes for beer and cigarettes subject to changes in unemployment rate. First, I find prices paid do not change significantly as a function of unemployment rate. Next, I find that the percentage of beer and cigarettes purchased on promotion is not significantly related to unemployment rate per se; that said, there is evidence of a period of experimentation with in-store cigarette promotions following the Tobacco Master Agreement that coincided with the 2001 recession and led to more cigarettes being purchased on promotion overall during that period. However, this period of strong in-store promotions gave way to fewer overall purchases made on promotion as states strengthened tobacco regulations in the early 2000's. The quantity of beer sold in supermarkets, which accounts for about 40 percent of total beer sales, and drug stores seems mostly unchanged by recessionary conditions; however, cigarette quantity sold has a modest negative relationship with unemployment.
Taken as a whole, this work suggests that average grocery purchasing patterns do not change greatly due to increases in average unemployment rate. While not entirely inconsistent with the hypothesis that decreased morbidity and mortality during recessions may be due to decreased smoking rates or better eating habits, the small magnitude of the overall effect suggests other mechanisms or heterogeneous effects might be at play.