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

Baker, Scott R. and Farrokhnia, R.A. and Meyer, Steffen and Pagel, Michaela and Yannelis, Constantine, How Does Household Spending Respond to an Epidemic? Consumption During the 2020 COVID-19 Pandemic (March 31, 2020). SSRN: http://dx.doi.org/10.2139/ssrn.3565521

Abstract: We explore how household consumption responds to epidemics, utilizing transaction-level household financial data to investigate the impact of the COVID-19 virus. As the number of cases grew, households began to radically alter their typical spending across a number of major categories. Initially spending increased sharply, particularly in retail, credit card spending and food items. This was followed by a sharp decrease in overall spending. Households responded most strongly in states with shelter-in-place orders in place by March 29th. We explore heterogeneity across partisan affiliation, demographics and income. Greater levels of social distancing are associated with drops in spending, particularly in restaurants and retail.

Keywords: Consumption, Coronavirus, COVID-19, Household Finance, Transaction Data
JEL Classification: D14, E21, G51

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Women and conservatives were more prone to stockpiling in the early phase of the COVID-19 outbreak in the US