Consumption and prices

Soda taxes aim to reduce excessive sugar consumption.

Household borrowing and spending rise with house prices, particularly for leveraged households, but household spending is not consumption.

This paper investigates how different income shocks shape consumption dynamics over the business cycle. First, we break new ground by creating a unique, panel dataset of transitory and permanent income shocks, using subjective income expectations from the Dutch Household Survey.

From its inception, demand estimation has faced the problem of “many prices.”

The classical problem of the monopolist faced with an unknown demand curve is considered in a simple stochastic setting.

We specify an equilibrium model of car ownership with private information where individuals sell and purchase new and second-hand cars over their life-cycle.

This paper documents significantly steeper declines in nondurable expenditures at older ages in the United Kingdom compared to the United States, in spite of income paths being similar. Several possible causes are explored, including different employment paths, housing ownership and expenses, levels and paths of health status, number of household members, and out-of-pocket medical expenditures.

Soft drink taxes have been implemented in 50 jurisdictions (as of August 2019). We review the evidence on their effects, summarising 27 studies of taxes in 11 jurisdictions.

I characterize how house price shocks affect consumption inequality using a life-cycle model of housing and non-housing consumption with incomplete markets.

We propose a demand model where consumers simultaneously choose a few different goods from a large menu of available goods, and choose how much to consume of each good.

The vast majority of household wealth in the U.S. is held in illiquid assets, primarily housing, making households vulnerable to unexpected income shocks. To rationalize this preference for illiquidity, we build a life-cycle model where households are tempted to consume their liquid wealth but can use illiquid housing as a savings commitment device.

This research explored the prevalence of gifting in the general population and how it varied between different groups, based on a new quantitative survey was conducted with a representative sample of adults in Great Britain. The survey also explored the nature of gifting – including the number and value of gifts given, who they were given to, and the motivations for doing so – as well as awareness of inheritance tax rules and exemptions.

Alcohol consumption is associated with costs to society from anti-social behaviour, crime and public costs of policing and health care. These externalities are non-linear in alcohol consumption, with a small number of heavy drinkers creating the majority of the costs. Governments attempt to reduce problematic alcohol consumption through restricting availability and with policies that aim to increase prices. In this paper we study the design of alcohol taxes.

We analyse a simple Hotelling model in which retailers and manufacturers endogenously advertise their respective brands; we account for the impact of advertising on retailer–manufacturer bargaining and downstream competition. The model predicts that retailers advertise their store brands less when advertising is more rivalrous.

This paper studies regulatory policy interventions aimed at protecting vulnerable consumers who are disengaged and thus exposed to exploitation. We model heterogeneous consumer switching costs alongside asymmetric market shares.

With the aim of determining the welfare implications of price change in consumption data, we introduce a revealed preference relation over prices. We show that an absence of cycles in this preference relation characterizes a model of demand where consumers trade-off the utility of consumption against the disutility of expenditure.

In our laboratory experiment, subjects, in sequence, have to predict the value of a good. We elicit the second subject’s belief twice: first (“first belief”), after he observes his predecessor’s action; second (“posterior belief”), after he observes his private signal. Our main result is that the second subjects weigh the private signal as a Bayesian agent would do when the signal confirms their first belief; they overweight the signal when it contradicts their first belief.