How Does Household Spending Respond to an Epidemic? Consumption during the 2020 COVID-19 Pandemic

By Scott R. Baker, R. Farrokhnia, Steffen Meyer, Michaela Pagel, Constantine Yannelis. Review of Asset Pricing Studies, 2020

1,004 citations recorded by the source corpus.

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.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/53d8dca1a53d3862519134f9c14fe35c0306290a

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Citations in the corpus

Grocery Shopping Preferences during the COVID-19 Pandemic (2020, background): “According to data on household consumption in the United States, expenses on air travel, grocery delivery, public transit, and other categories changed substantially from week to week during the early stage of the COVID-19 pandemic [1].”
Pandemic, Shutdown and Consumer Spending: Lessons from Scandinavian Policy Responses to COVID-19 (2020, background): “…is fundamentally different from recent papers estimating the total change in consumer spending through the COVID-19 pandemic in the United States (Baker et al., 2020), China (Chen et al., 2020), Spain (Carvalho et al., 2020), France (Bounie et al., 2020), the United Kingdom (Hoke et al., 2020)…”
The short-term economic effects of COVID-19 on low-income households in rural Kenya: An analysis using weekly financial household data (2021, background): “Our findings on income effects provide depth to the emerging results from one-time phone surveys across the African continent 9 Baker et al. (2020) and Carvalho et al. (2020) show high-detail pre- and postCOVID-19 transaction data from the US and Spain, respectively. and other low-and middle-income…”
Shadow Banking in a Crisis: Evidence from Fintech During COVID-19 (2021, neutral): “Baker, Farrokhnia, Meyer, Pagel, and Yannelis (2020) empirically estimate the impact of the COVID-19 on consumption using the transaction-level financial data in the United States.”
Do Stay-at-Home Orders Cause People to Stay at Home? Effects of Stay-at-Home Orders on Consumer Behavior (2020, background): “…in consumer behavior, these effects explain only part of the dramatic changes in household spending toward the end of March 2020 (see, for example, Cox et al., 2020; Baker et al., 2020; Bartik et al., 2020; Carvalho et al., 2021; Goolsbee & Syverson, 2021; and Lewis, Mertens, & Stock, 2020).”
Supply and demand shocks in the COVID-19 pandemic: an industry and occupation perspective (2020, background): “In the early days of the outbreak, stockpiling behaviour also drives a direct demand increase in the retail sector (Baker et al. 2020).”
Aggregate and Firm-Level Stock Returns During Pandemics, in Real Time (2020, neutral): “…(Figure A.5), this trend is consistent with the idea that the labor-intensive sectors favored by the market shed relatively more workers (vis a vis firms in capital-intensive sectors) in an effort to cut costs as consumption contracts across the board (Baker et al., 2020), and revenues decline.”
Pandemic, Mobile Payment, and Household Consumption: Micro-Evidence from China (2020, background): “…consumption (see Barro and Ursúa 2008; Barro, Ursúa, and Weng 2020; Chen, Qian, and Wen 2020; Correia, Luck, and Verner 2020), different category changes in consumption (see Jung et al. 2016), and dynamic changes in consumption (see Baker et al. 2020), most studies employ macro- or microlevel data.”
Risk Perception Through the Lens of Politics in the Time of the COVID-19 Pandemic (2020, neutral): “(2020), Barro et al. (2020) and Jones et al. (2020) present macroeconomic frameworks for studying epidemics.”
A literature review of the economics of COVID‐19 (2020, neutral): “Consumption pattern responses and debt responses from pandemic shocks had not been analyzed prior to COVID-19 (Baker et al., 2020).”
Consumer Spending Responses to the COVID-19 Pandemic: An Assessment of Great Britain (2020, methodology): “Baker et al (2020c) note that news coverage of 12 Similarly, for the US, Alon et al (2020) suggest that employment losses arising from social distancing interventions has a larger impact on sectors with higher female employment shares.”
Inflation with Covid Consumption Baskets (2020, neutral): “The difference narrowed in the following months, but by December the US Covid index still had an annual rate of 1.80%, compared to 1.38% in the fixed-basket CPI.”