Economists think you'll just swap steak for chicken when prices go up, but our shopping habits are actually way more stubborn than that.
April 3, 2026
Original Paper
Saving by Shopping? The Limits of Substitution in Household Production
SSRN · 6510730
The Takeaway
When prices go up, families struggle to adapt far more than economists previously believed. This means inflation and economic shocks cause much more pain than our current models predict because we cannot just 'switch' our way out of high costs.
From the abstract
To what extent can households buffer cost-of-living shocks by shopping more efficiently? Using novel retailer scanner data linked to individual shoppers, we isolate the savings generated by the intensive margin of shopping. We develop a structural model of endogenous shopping frequency and estimate the elasticity of substitution between time and market goods to be approximately 0.3, which is significantly lower than the values exceeding unity typically assumed in macroeconomics. This implies tha