How does household spending respond to an epidemic? consumption during the 2020 COVID-19 pandemic

Scott R. Baker*, Robert A. Farrokhnia, Steffen Meyer, Michaela Pagel, Constantine Yannelis

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

72 Scopus citations

Abstract

Utilizing transaction-level financial data, we explore how household consumption responded to the onset of the COVID-19 pandemic. As case numbers grew and cities and states enacted shelter-in-place orders, Americans began to radically alter their typical spending across a number of major categories. In the first half of March 2020, individuals increased total spending by over 40% across a wide range of categories. This was followed by a decrease in overall spending of 25%-30% during the second half of March coinciding with the disease spreading, with only food delivery and grocery spending as major exceptions to the decline. Spending responded most strongly in states with active shelter-in-place orders, though individuals in all states had sizable responses. We find few differences across individuals with differing political beliefs, but households with children or low levels of liquidity saw the largest declines in spending during the latter part of March.

Original languageEnglish (US)
Pages (from-to)834-862
Number of pages29
JournalReview of Asset Pricing Studies
Volume10
Issue number4
DOIs
StatePublished - Dec 1 2020
Externally publishedYes

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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