Determinants of Food Expenditure Patterns: Evidence from U.S. Consumers in the Context of the COVID-19 Price Shocks

Abstract

This study examined the factors that determine U.S. household expenditure patterns for food products in the context of exceptional price shocks due to the COVID-19 pandemic. This research relied on the Consumer Expenditure Diary Survey (CEX) for the year 2020, where households or consumer units represent units of observation. With a sample size of 10,453 observations, the empirical estimation of the Heckman two-step model yields interesting results. Consistent with the inelastic nature of food products, we found conditional expenditure elasticities of income were less than one for all kinds of food, including food away from home (FAFH). The results showed both food and FAFH to be highly price elastic in this special period of higher food prices. For instance, a 1% increase in own price implied a 7.78% decrease in the probability to spend on food and a 20.93% decrease in propensity to purchase FAFH. This study provides business managers and marketing experts with insights on the consumer profile and food product price strategy.

Association between total available nutritional quality and food expenditure in Peruvian households, 2019-2020

“…The decision to use the total food expenditure was due to limitations of dietary cost, such as overestimation due to possible errors in the reporting of price 26 , 41 . Thus, studies using the total food expenditure can capture the variability of purchasing choices in the population 13 , obtaining an inverse relationship with indicators of diet quality 22 . In this study, the inverse relationship obtained between total food expenditure and available nutritional quality shows that Peruvian households prioritizing lower-cost foods can obtain greater diversity, but the amount of total food expenditure invested in food is not sufficient to cover 90% to 110% of calorie adequacy.…”

“…The decision to use the total food expenditure was due to limitations of dietary cost, such as overestimation due to possible errors in the reporting of price 26,41 . Thus, studies using the total food expenditure can capture the variability of purchasing choices in the population 13 , obtaining an inverse relationship with indicators of diet quality 22 . In this study, the inverse relationship obtained between total food Cad.…”

“…Usually, food prices have been used to calculate the dietary cost 9 , 10 , but this could be affected by complex and dynamic mechanisms (i.e., trends, volatility, and spikes) 11 . In contrast, total food expenditure, which determines selection patterns and purchasing strategies and can be independent of price elasticity 12 , 13 , may be a good option. In fact, the causal directionality changes, making food expenditure a consequence of nutritional quality 14 .…”