The Allocation of Time and Goods: Three Essays on American Household Shopping Behavior

Transcription

1 Western Mchgan Unversty ScholarWorks at WMU Dssertatons Graduate College The Allocaton of Tme and Goods: Three Essays on Amercan Household Shoppng Behavor Jng Ca Western Mchgan Unversty Follow ths and addtonal works at: Part of the Behavoral Economcs Commons, and the Home Economcs Commons Recommended Ctaton Ca, Jng, "The Allocaton of Tme and Goods: Three Essays on Amercan Household Shoppng Behavor" (2010). Dssertatons Ths Dssertaton-Open Access s brought to you for free and open access by the Graduate College at ScholarWorks at WMU. It has been accepted for ncluson n Dssertatons by an authorzed admnstrator of ScholarWorks at WMU. For more nformaton, please contact mara.bundza@wmch.edu.

2 THE ALLOCATION OF TIME AND GOODS: THREE ESSAYS ON AMERICAN HOUSEHOLD SHOPPING BEHAVIOR by Jng Ca A Dssertaton Submtted to the Faculty of The Graduate College n partal fulfllment of the requrements for the Degree of Doctor of Phlosophy Department of Economcs Advsor: Jean Kmmel, Ph.D. Western Mchgan Unversty Kalamazoo, Mchgan December 2010

3 THE ALLOCATION OF TIME AND GOODS: THREE ESSAYS ON AMERICAN HOUSEHOLD SHOPPING BEHAVIOR Jng Ca, Ph.D. Western Mchgan Unversty, 2010 Consumers shoppng behavor connects market goods expendture wth the outof-market tme allocaton n ther daly tme use. Ths study s composed of three essays. In the frst essay, data are collected from the Amercan Tme Use Survey and t s found that an ndvdual s tme devoted to shoppng s postvely determned by opportunty cost of tme. Grocery shoppng and other shoppng, as two dstnct types of shoppng, react dfferently to a seres of ndvdual and household characterstcs as well as by seasons. The correspondng margnal effects also dfferentate between shoppng tme, lesure tme, and home producton tme. In regards to gender dfference, females domnate n amount of shoppng tme, and males and females respond dfferently on change of tme due to change n economc status. The second essay examnes the demand for market goods as an mportant factor n the process of household producton. The researcher analyzes food and non-food expendtures of households n the Unted States usng the 2002 and 2003 Current Populaton Survey Food Securty Supplements. The results reveal the relatonshp between earned ncome and food purchased for home consumpton, food purchased n restaurants, and non-food grocery goods purchases. It s found that expendture for food

4 to be consumed at home s related postvely to ncome, whle the share of total purchase devoted to home consumpton s negatvely related to ncome. Demographc varables and socoeconomc varables are found to play mportant roles n expendture determnaton. In the thrd essay, a jont examnaton of shoppng tme and shoppng expendtures s performed by mergng the data from the researcher s tme use study and expendture study. The results of ths paper show that shoppng tme and goods expendture are related postvely, so that the complementartes exst between grocery shoppng tme and grocery expendture for Amercan households.

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6 Copyrght by Jng Ca 2010

7 TABLE OF CONTENTS LIST OF TABLES... LIST OF FIGURES... v v CHAPTER I. HOUSEHOLD PRODUCTION OR LEISURE: A STUDY OF GROCERY AND OTHER SHOPPING... 1 Introducton... 1 Tme Use and Shoppng... 4 Conceptual Framework... 7 Emprcal Model and Methodology Data and Descrptve Statstcs Emprcal Results Concluson References Appendx II. ENGEL S LAW REVISITED: NEW EVIDENCE FROM THE FOOD SECURITY SUPPLEMENT TO THE CURRENT POPULATION SURVEY Introducton Lterature Revew Model Specfcaton and Estmaton Data and Descrptve Statstcs... 51

8 Table of Contents contnued Emprcal Results Concluson References Appendx III. TIME AND EXPENDITURE: GROCERY SHOPPING BEHAVIOR OF AMERICAN HOUSEHOLDS Introducton Lterature Summary Data and Estmaton Sample Estmaton Strategy Emprcal Results Dscusson References Appendx... 99

9 LIST OF TABLES 1.1. Average Mnutes of Shoppng, Pad Work, Home Producton and Lesure Descrptve Statstcs of the Independent Varables Estmated Wage Elastctes for Fve Uses of Tme Margnal Effects of the Determnants of Tme Spent on Shoppng, Home Producton, Lesure and Work Gender Dfference n Margnal Effects of Determnants of Two Types of Shoppng Cross-equaton Correlatons of Resduals for Each Par of Tme Use Categores Weekly per Capta Expendture by Selected Demographc Groups Descrptve Statstcs of Independent Varables Tobt Estmates of Expendture Equatons Estmates of Expendture Share on Food at Home, Food Away from Home, and Non-food Grocery Goods Usng Tobt Model Income Elastcty on Food at Home, Food Away from Home, and Nonfood Grocery Goods Sample Means of Dependent and Independent Varables Indvdual Shoppng Tme s Effect on Household Expendture by Martal Status Relatonshp between Total Shoppng Tme of Marred Sample and Grocery Expendture Smultaneous Estmaton of Shoppng Tme and Grocery Expendture v

10 LIST OF FIGURES 1.1. Shoppng patterns by days of the week Shoppng patterns by quarters of the year Predcted Shoppng Tme of Marred Sample on Each Day of a Week Compared wth Sample Means v

11 CHAPTER I HOUSEHOLD PRODUCTION OR LEISURE? A STUDY OF GROCERY AND OTHER SHOPPING Introducton Tme use studes focusng on non-market actvtes of human bengs have attracted much attenton n recent years. In ths paper, the determnants of ndvdual s tme spent purchasng market goods are systematcally examned as a dstnct tme category based on the tradtonal tme use theory. Whether shoppng s an actvty that wll be encouraged or sacrfced due to a hgh opportunty of cost of tme s the central queston of ths study. The grocery shoppng tme has been the focus of prevous tme use studes (see Kolodnsky and LaBrecque (1996), and Kan and Fu (1997)). The other shoppng tme that s studed for the frst tme s compared wth grocery shoppng tme and found to be dfferently affected by economc factors. The results of ths paper answer how ndvduals wth dfferent socal-economc background allocate ther tme between two types of shoppng and other actvtes. Both grocery and other shoppng tme are encouraged by an ncrease of market wage rate, and these effects dfferentate sgnfcantly between genders. Tme use studes, orgnatng wth the path-breakng work of Becker (1965), shed lght on the economc nature of dfferent types of actvtes n our daly lves. Human behavor relatng to ntra-household tme allocaton has been modeled theoretcally and tested emprcally. Gronau (1977) examned three tme use categores work, home producton, and lesure. Lesure and household producton are categorzed based on ther 1

12 dfferent ways of contrbutng to ndvdual well-beng. Ths brngs us to the fundamentals of economc theory what gves us utlty. Process utlty s generated drectly by lesure tme, whle outcome utlty can be the result of household producton. The dfference between process utlty and outcome utlty s reflected n an ndvdual s dfferental tme responsveness resultng from changes n the benefts and costs of tme. These dfferences also determne how to categorze tme n emprcal studes. Other economsts have acknowledged the fact that household producton tme also generates some drect utlty just lke pure lesure tme (Graham and Green, 1982; Kerkhofs and Kooreman s, 2003). In prevous studes, the grocery shoppng tme s always recognzed as an ndcator of one s tme devoted to household producton. It s nterestng to see f the lesure consumpton exsts durng the shoppng actvty. The demographc nformaton s also nterested ndcators n studyng tme allocaton. The tme allocaton on non-market actvtes dfferentate on heterogeneous ndvduals and households. Especally, the gender dfference on dsaggregated actvtes s sgnfcant such as chld care and household chores. Shoppng s a typcal actvty, on whch male and female not only devote dfferent amounts of tme, but also respond dfferently due to change on economc factors. Intutvely, shoppng s lkely to be mult-purpose because t nvolves a complex array of economcally sgnfcant behavors purchasng fnal goods, purchasng ntermedate goods, and consumng lesure. Groceres are lkely to be both ntermedate and fnal goods, and the tme devoted to ths shoppng could be categorzed as part of home producton tme accordng to the prevalng theores and emprcal studes. But the nature of non-grocery shoppng and ts dfference from grocery shoppng has been 2

13 neglected n the lterature, and the possblty that shoppng represents lesure consumpton s hardly evdent n any prevous research. For example, who to shop wth may reflect one s purpose (e.g., socalzng) and whether a person chooses to spend tme wth a spouse or frends. Another pont s that what to buy may drectly ndcate the purpose of shoppng. Shoppng enjoyment s found to be very mportant n tme percepton n some consumer behavor studes (Marmorsten, Grewal and Fsh, 1992; Hornk, 1984). The emprcal work n ths paper shed lght on the role of economc and demographc factors n shoppng tme decson wth a focus on grocery versus nongrocery shoppng. Usng the 2003 Amercan Tme Use Survey (ATUS) data set that provdes a good vew of shoppng categores, I treat grocery and other shoppng actvtes as two dstnct types of actvtes n an ndvdual s tme allocaton. I fnd that ndvdual demographcs and household demographcs are farly mportant factors n determnng the amount of tme allocated to shoppng and other actvtes. Hgher market wages encourage shoppng tme both n the case of groceres and other commodtes, even after I control for ndvdual shoppng needs. After comparng the two types of shoppng, I contrast the responsveness of these two types of shoppng to varous economc and demographc factors versus other tme choces (lesure, home producton and market work). In addton to the mportance of the value of shoppng tme (as approxmated by the ndvdual s market wage), the shoppng locaton and season could be mportant determnants of shoppng tme. I use a Tobt model to examne these tme uses due to the frequency of zero mnutes reported, partcularly for shoppng. The fve categores of actvtes are estmated and compared n a seemngly unrelated Tobt estmaton (.e., 3

14 SUR Tobt) n order to account for the unobserved across-equaton correlatons n error terms. Tme Use and Shoppng Tme use theory developed by Robbns (1930), Becker (1965) and Gronau (1977) has been used n emprcal research to examne tme allocaton to actvtes such as lesure, home producton, and market work. Also, some researchers have narrowed ther focus to more specfc actvtes. Solberg and Wong (1992) focus on work-related travel tme and how t affects tme devoted to lesure, home producton, and market work. They treat work-related tme as an exogenous tme category that affects the other contemporaneous tme use choces. Kooreman and Kapteyn (1987) analyze the ntrahousehold tme allocaton decson n a more dsaggregated level. Seven types of nonmarket actvtes are dstngushed n ther study by assumng a flexble specfcaton wthn the household utlty functon. The dsaggregaton mproved ther earler work and mpled that substantal shfts n tme components mght be masked by aggregaton. Kmmel and Connelly (2007) argue that care-gvng s a unque actvty contanng elements of both household producton and lesure. Along ths same ven, shoppng blurs the lne dvdng unpad tme nto housework and lesure. Identfyng shoppng In the exstng tme use lterature, grocery shoppng actvtes typcally are dentfed as a component of tme servng as an nput nto household producton. Recent exploraton by Aguar and Hurst (2007) fnds ncreased shoppng tme assocated wth a lower opportunty cost of tme by senors as they engage n more frequent shoppng and 4

15 use more dscounts to obtan lower purchasng prces. In ths study, shoppng tme should be a perfect substtute for other home producton tme. They also fnd a negatve assocaton between shoppng tme and the wage rate because people wth hgh market wages have a hgh opportunty cost of tme. But people workng n the labor market do not cut back ther tme on shoppng for groceres due to a hgher hourly wage rate. In my study based on the same tme use data, a hgher wage encourages shoppng tme both n the case of groceres and other commodtes even after I control for ndvdual shoppng needs. Whle non-grocery tme s more ndependent of famly characterstcs and responds more n magntude to a hgher wage rate and other sources of ncome, ths type of shoppng s related negatvely to one s age. Early research that dd not focus on shoppng also assocated grocery shoppng wth home producton. For example, Bhat and Koppelman (1993) dentfy three broad types of actvtes: subsstence, mantenance, and dscretonary actvtes. Subsstence actvtes nclude work or work-related actvtes. Mantenance actvtes pertan to the purchase and consumpton of goods and servces, of whch grocery shoppng s an mportant component. Dscretonary actvtes nclude lesure. In ther study, grocery shoppng s ncluded wth home producton, whle other shoppng tme should be part of out-of-home dscretonary actvtes. They found age and work duraton to be mportant determnants of dscretonary actvtes. Kan and Fu (1997) use the monthly frequency of grocery shoppng to approxmate shoppng tme as an nput n the household producton process n ther analyss focused on marred women n Tawan. Grocery shoppng was consdered as an actvty representatve of home producton n ther study. They examne the effect of workng status on grocery shoppng behavors and fnd that workng status 5

16 affects women s shoppng frequency response to explanatory varables. Workng and non-workng women have dfferent estmated coeffcents n sgns and magntudes. Although the amount of tme devoted to shoppng s not mentoned n ths study, the paper stll shed lght on an ndvdual s shoppng behavor under dfferent workng states. Although the lterature has not theoretcally or emprcally separated shoppng tme by commodtes, the ATUS data permt comparatve analyss between two categores of shoppng tme. A partcularly nterestng study of shoppng behavor was conducted by Jacobsen and Kooreman (2005) who compare total shoppng tme on dfferent days of the week and among dfferent years before and after shoppng hour regulaton changes n the Netherlands. They also estmate sub-samples based on gender and martal status. They fnd that total shoppng tme s ncreased by regulaton changes that loosened the shoppng tme constrant and these results vary by gender. Shoppng tme s dfferent from other tme due to ts ntrcate relatonshp to expendture on ntermedate and fnal goods. Tme spent shoppng can lower the purchasng prce, whch makes the relaton between tme and expendture ambguous f one fals to dstngush comparson shoppng from total shoppng tme. Two early studes smultaneously estmate grocery shoppng tme allocaton and expendture. Blaylock and Smallwood (1987) focus on marred couples decsons on who becomes the prmary shopper. The determnaton of whch famly member shops reflects the advantage of productvty, and gender dfference could be mportant n tme allocaton. Kolodnsky and LaBrecque (1996) look at ndvdual s mnutes on shoppng and compare the case of the U.S. and Canada. They fnd a postve sgnfcant mpact of grocery expendture on 6

17 shoppng tme on one of the Canadan groups. Controllng for expendture, there s no statstcally sgnfcant mpact of the wage rate on shoppng tme, and n fact, there s a negatve mpact from non-labor ncome for one Canadan group. Conceptual Framework Gronau (1977) extended the neoclasscal labor/lesure model to a broader ndvdual tme allocaton model, n whch home producton actvtes are dstngushed from lesure actvtes accordng to the contractng out crtera;.e., household producton s comprsed of actvtes that could be performed by someone else. Therefore, n an ndvdual utlty (process) maxmzaton model, only the tme spent on pure lesure actvtes wll generate drect utlty, whle the tme nput on home producton generates home-produced goods (va the home producton functon), whch contrbute to outcome utlty. Addtonally, market work also contrbutes to utlty ndrectly through marketproduced goods. The key assumpton for Gronau s model s that market goods and home-produced goods are perfect substtutes for each other. 1 Ths smplfed model serves as the startng pont for my model. Snce there are mult-purpose actvtes that contrbute to home producton whle generatng utlty at the same tme, Graham and Green (1982), followed by Kerkhofs and Kooreman (2003) developed a so-called jontness functon descrbng whch part of home producton tme s counted as pure lesure. 2 In my model, ths technology s focused on shoppng rather than aggregate home producton tme. Thus, shoppng enters the utlty 1 See Gronau (1977). The ntermedate goods enterng the home producton process s gnored n hs model. 2 See Kerkhofs and Koorman (2003). Household producton tme enters the utlty functon not drectly as a perfect substtute of lesure, but through an ncreasng, twce dfferentable, and concave functon. Ths functon s frst developed by Graham and Green (1982). 7

18 functon n two separate ways, contrbutng to both process and outcome utlty. A ( jontness functon ( g s ) ) s ntroduced nto the utlty functon to ncorporate the multpurpose property of shoppng. U = U l+ g ( s ), X + X ] =1, 2 (1) [ h m The utlty functon s determned by a combnaton of total lesure tme and fnal goods and servces ( X ) purchased n the market ( X m ) or at home ( X h ). Ths s comparable to Gronau s (1997) structure except that shoppng ( s ) s separated from home producton ( h ) and lesure tme (l ), and generates utlty as a type of lesure tme through functon g. There could be types of shoppng actvtes and I dvde shoppng nto two types n ths paper. In a general case, any specfc actvty that s dsaggregated from home producton tme may generate drect utlty, and ths functonal form could accommodate the stuaton of jont utlty producton. Equaton (2) and (3) dsaggregate the goods component n the utlty functon. X = X + X (2) m h + X = F( h) G ( s ) =1, 2 (3) h See n equaton (3) that shoppng tme also contrbutes to the producton of household goods. The above two equatons are also no dfferent from Gronau s except that home produced goods are comng from two sources: shoppng tme and home producton tme. The structure of ths model s comparable to Gronau s one-person household model whle usng Kerkhofs and Kooreman s dea of jont utlty producton. Shoppng enters the home producton functon through functon ( G ), whch s dfferent from the producton functon of other home producton tme ( F (h) ), and also generates a perfect 8

19 substtute to lesure tme (.e., process utlty) through a specfc functon ( g ). The lesure generatng functon and producton functon of shoppng tme are modfcatons to prevous models. I assume dfferent functonal forms for shoppng tme n both the consumpton and producton processes, whch ndcates that shoppng not only generates ndrect utlty but also generates drect utlty. The dfferent shoppng categores are used to dstngush types of shoppng that may be dentfed dfferently n optmzaton, (e.g., ntermedate goods and fnal goods consumpton; grocery and other commodty consumpton). The regular home producton functon and utlty functon are assumed to be concave as was assumed n other smlar tme allocaton models. The ndvdual maxmzes utlty subject to a budget constrant (Equaton 4) as well as a tme constrant (equaton 5). X m mw+ v (4) + T = m+ l+ h s (5) The frst component n total tme s market work denoted by m. w s a person s market wage rate that represents hs/her market productvty and v denotes non-labor ncome. The two constrants can be wrtten as one full ncome constrant (equaton 6), and the frst order condtons of ths constraned utlty maxmzaton problem are shown n equatons (7) to (10). + wt + v X + w l+ h s ) (6) m ( U λ w= 0 (7) l 9

20 U l U g ( ) s + G ( s ) λ w= 0 X (8) U X F ( h) λ w= 0 (9) U X λ = 0 (10) From the optmal condtons of tme allocaton and market good consumpton, I am able to derve the relevant comparatve statc whch I can test emprcally. Substtutng (7) and (10) nto (8) yelds equaton (11) the relaton of tme allocated to shoppng (category ) wth market wage rate n optmal status. Ths ndcates that the rato of margnal productvty of shoppng tme wth respect to the substtuton rato of shoppng tme to pure lesure equals the market wage. U l (11) U / X G ( s ) = 1 g ( s ) = w Gven (11), I can derve ndvdual tme demand equatons. Accordng to the assumpton that the functonal form of shoppng producton and substtuton rato of shoppng tme to pure lesure tme vares due to ndvdual and famly characterstcs, the shoppng tme demand equatons can be wrtten n a compact form as equaton (12) * s = Z( w, d, y, q) =1,2 (12) The regressors nclude the wage, demographc characters (d), ncome level (y), and other shfters (q) that affect the optmal tme allocaton decsons. These factors wll be 10

21 dscussed n detal n the followng secton. Other optmal tme equatons, ncludng market work, home producton, and lesure are obtaned from frst order condtons n the same way and they are dsplayed n equatons (13) to (15). * m = M ( w, d, y, q) (13) * h = H ( w, d, y, q) (14) * l = L( w, d, y, q) (15) The possble sgn of the wage s effect on shoppng tme, whch s of greatest nterest here s dscussed based on the dervaton from equaton (11). The general comparatve statc can be wrtten as shown n (16). * ds dw * 2 [1 g ( s )] = =1,2 (16) * * * * G ( s )[1 g ( s )] + G ( s ) g ( s ) The tme elastcty of shoppng wth respect to the prce of market work s determned by the functonal form of shoppng producton and lesure generaton by shoppng. It s possble to sgn the rght hand sde of equaton (16) based on the assumptons mposed for these two functons. Accordng to Graham and Green (1984) and Kerkhofs and Kooreman (2003), the jont lesure producton by each unt of home producton tme can generate up to one unt of lesure. Therefore, shoppng wll not generate more utlty than other pure lesure actvtes. Thus 0 g ( s ) < 1 s a reasonable assumpton. On the other < hand, the home producton functon of shoppng (G) s assumed concave just as home producton va other household tme. The frst term of the denomnator s a negatve product of a negatve term and a postve term. Thus, the sgn of the second order dervatve of the jont lesure producton functon g determnes the sgn of equaton (16). The model n our lterature assumes the concavty of g n home producton tme. 11

22 However, there s no exstng evdence supportng the sgn of the second order dervatve of g n shoppng tme, n the case where shoppng tme s dfferent from other home producton tme (as s assumed n my model). ds * <0 f g ( s ) <0, and shoppng tme dw wll respond n the same drecton to wage changes as does other home producton tme. 3 On the contrary, f g s ) s postve (.e., g s ) ncreases as shoppng tme ncreases, ( ( * ds although less than 1 n magntude), the sgn of dw s ambguous, dependng on the relatve contrbuton of shoppng tme n mprovng utlty and home goods producton. Thus, there s no clear predcton from theory regardng the lkely change n shoppng expected from an ncrease n the wage. Emprcal Model and Methodology The emprcal hypothess I want to test s whether relevant economc, demographc, and other factors have dfferent margnal effects on tme spent on grocery shoppng and other shoppng actvtes. As stated prevously, the basc equatons for estmaton are s = Z ( w, d, y, q) m = M ( w, d, y, q) h = H ( w, d, y, q) l = L( w, d, y, q) (17) where =1 for grocery shoppng and =2 for non-grocery shoppng. 3 From (10) and (11), the optmal home producton tme satsfes the condton F ( h * ) w, the * correspondng comparatve statc s dh * = 1/ F ( h ). Ths term s negatve accordng to the general dw assumpton of a concave home producton functon. 12

23 The total tme devoted to shoppng wthn a typcal day responds to several sets of varables. Economc factors that are expected to be mportant n affectng shoppng tme choces, as well as other tme choces, nclude the ndvdual wage and famly ncome. A change n the hourly wage rates, s expected to nfluence tme allocaton va both substtuton and ncome effects. For a person workng for pay, the wage rate wll affect the tme dstrbuton on shoppng or other actvtes based on the margnal rate of substtuton of productvty n dfferent actvtes. Meanwhle, a person s tme allocaton wll also be affected by famly ncome, especally for those who are the man source of ncome n a famly. The father s shoppng behavor wll be affected by hs own nonlabor ncome and earnngs from other famly members. The total famly ncome used here s a category varable ndcatng f total household annual ncome s above or below 50,000 dollars. 4 The expected sgn of the margnal effect from ncome s ambguous. The ncome that determnes household expendture wll affect tme spent on purchasng market goods. Ths effect s dstnct from the way that ncome may affect other household chores or lesure tme. Shoppng tme could ncrease due to an ncrease n ncome and shoppng needs. It could also ncrease due to a decrease n ncome and an ncrease n comparson shoppng tme. Shoppng for dfferent commodtes may also mply dfferent responses to an ncome shock. The ndvdual demographcs (d) nclude age, age squared, and gender. 5 Gender s lkely to be mportant due to dfferences n shoppng sklls and personal preferences towards shoppng. Women are expected to do more shoppng generally for cultural reasons, gven famly and economc backgrounds. Important famly demographcs 4 An alternatve measure of non-labor ncome could be spouse s earnng f the person s marred, whch s otherwse zero. 5 In a second set of regressons, I stratfy the sample by gender and estmate separate regressons. 13

24 nclude the presence of a spouse, the presence of chldren n several age categores, as well as the presence of other adults wthn the household. The presence of chldren s expected to be assocated postvely wth tme devoted to essental food or grocery shoppng. Marrage and a large famly may ncrease shoppng tme as part of chores, but the other adults n the household may contrbute ther tme to shoppng as well. The presence of another adult n the famly s lkely to facltate the sharng of routne housework and grocery shoppng. Therefore, I expect dfferent effects from dfferent types of famly members. But when t comes to shoppng for other commodtes whch do not satsfy people s basc requrements or cannot be shared wth other famly members, these connectons between famly sze and shoppng tme may not exst. The fnal set of varables thought to affect tme choces are spatal varables ncludng regon and tmng of shoppng. Whle many other studes separate the weekday and weekends samples, 6 I focus on specfc hgh shoppng days. I run ths pooled estmaton wth the day dummy varables of Frday, Saturday, and Sunday. Snce the data are sampled randomly on dfferent weekdays, I am able to fnd parametrc dfference of Frday f dfferent from other weekdays and weekends. The addtonal varables n ths group are the seasons of the year. Shoppng behavor may vary greatly due to changes n shoppng needs, especally when the fall holday season comes. It s reasonable to expect shoppng fluctuaton n the last quarter of a year, when many famles celebrate Halloween, Thanksgvng, and Chrstmas. Estmaton s based on fve tme equatons wth two beng the key equatons of shoppng tme. The crteron of separatng two types of shoppng s the type of goods purchased. No lterature has ever examned tme choces n non-grocery shoppng other 6 See Bhat and Koppelman (1993), and Kmmel and Connelly (2007). 14

25 than grocery shoppng separately. In descrptve results, I wll provde evdence to support the examnaton of the two dstnct shoppng categores separately. In order to compare the drectons and magntudes of the margnal effects from the varous explanatory factors, the shoppng tme equatons are jontly estmated wth work tme, lesure tme, and home producton tme estmatons. 7 Snce tme allocaton on dfferent types of actvtes are determned by all of a gven ndvdual s assumed exogenous characterstcs, ntutvely each partal tme decson s not ndependent gven the total tme constrant. Some actvtes may be compettve n tme, and others mght be less correlated. I use a multvarate lmted dependent model wth fve equatons. The fve dependent varables that sum to twenty-four hours are endogenous. The error terms of each equaton have zero means and varance-covarance matrx, where they are assumed correlated wth each other. 8 Tobt estmaton s appled for each equaton, because there are zeroes reported n each dependent varable. 9 Lesure tme s the only varable not censored at zero snce no ndvduals report zero lesure mnutes. 7 Kalenkosk, Rbar, and Stratton (2005) estmate three correlated equatons on prmary chldcare, secondary chldcare, and market work tme. Kmmel and Connelly (2007) estmate four equatons on lesure, home producton, employment and chldcare. In my study, chldcare s grouped wth home producton, and shoppng s separated from home producton or lesure. 8 The 5*1 error term vector has multvarate normal dstrbuton wth mean 0 and 5*5 varance-covarance matrx. Ths multvarate lmted dependent model wth fve equatons s estmated usng Monte Carlo ntegraton. See Genz (1992); Hajvasslou and McFadden D. (1998). Ths jont estmaton method s appled only to gan effcency because regressors are the same across all tme use equatons. 9 The Tobt model proposed by James Tobn (1958), descrbes the relatonshp between a non-negatve dependent varable y and an ndependent varable (or vector) x. A latent varable lnearly depends on x, but cannot always be observed whle the ndependent varable s observable. The observable varable y s defned to be equal to the latent varable whenever the latent varable s above zero and zero otherwse. In my model, the observed mnutes of shoppng s censored to zero when the unobserved probablty of conductng shoppng s below zero. 15

26 Data and Descrptve Statstcs ATUS data The Amercan Tme Use Survey (ATUS) s a new natonally representatve survey that provdes nformaton on how, where, and wth whom ndvduals n the Unted States spend ther tme. It reports ts ntervewee s 24-hour tme dares based on tme use on the day before the ntervew. Each detaled actvty wthn a typcal day s recorded precsely wth start and stop tmes as well as wth whom the actvty s performed. Each ndvdual s selected to be ntervewed on a randomly desgnated day. The survey sample s half weekdays and half weekends. Informaton concernng respondents famly and economc backgrounds s also collected. All partcpants n the ATUS survey are selected from households n the Current Populaton Survey (CPS) whch was conducted two to fve months pror to the ATUS ntervew. The ATUS sample s a subsample of the outgong rotaton group of the CPS sample. There s one adult selected to be the ATUS respondent from each household. The CPS survey data provde much more nformaton regardng the ATUS survey respondents as well as ther famles. In my study, all varables used are collected from ATUS data or the accompanyng CPS fle. The number of total complete ntervews avalable n the 2003 ATUS s 20,720, among whch more than 5000 respondents report postve mnutes on food, gas, or grocery shoppng. The number of respondents reportng postve mnutes on other commodty shoppng s also above I use the sample aged between 18 and 65 from the orgnal data set, whch yelds 16,530 observatons. Ths age restrcton ncorporates people who are most lkely to be choosng actvely among workng, shoppng, home 16

27 producton, or lesure actvtes. 10 The estmated sample ncludes respondents workng for pay and out of the labor market. Non-workng ndvduals are lkely to report very dfferent tme allocatons, so the estmaton wll be repeated usng a sub-sample of labor force partcpants. There s less than one percent of the sample reportng a holday on the survey day and I drop ths tny part of the sample from the estmaton. I get a usable sample sze of 13,442 after excludng nvald values for all varables used n estmaton. I categorze my fve tme uses based on the ATUS Actvty Code Lexcon. All actvtes n the ATUS survey are recorded by sx-dgt classfcaton codes. I construct grocery shoppng tme as the sum of Grocery shoppng (070101), Purchasng gas (070102), Purchasng food (070103), and Travelng to/from the grocery store (170701). Other shoppng tme s constructed as the sum of Shoppng, except groceres, food, and gas (070104) and Travelng to/from other store (170702). 11 Lesure, home producton, and market work are categorzed based on the assgnments n prevous research. 12 Varables unavalable from the ATUS survey data such as educaton, annual famly ncome, and number of chldren by age groups are obtaned from the Current Populaton Survey (CPS) survey data n the same year from the correspondng households. All these values are unlkely to change n a few months, so that the correct measures could be matched wth ATUS respondents. Famly ncome n CPS s a 10 The sample aged ncorporate people who are most lkely to be choosng actvely between shoppng, workng and lesure as opposed to beng retred or not yet n the labor force. See Jacobsen and Kooreman (2004), pg The shoppng tme categores nclude shoppng n store, through telephone, and from nternet. The classfcaton codes are provded n Appendx B. 12 I follow Kmmel and Connelly (2007) (Appendx Table A1) n actvty assgnment. I group chldcare wth home producton. 17

28 category varable that gves a range for annual ncome. I create the dummy of hgh famly ncome, to reflect famly ncome exceedng $50,000. Descrptve statstcs I present several tables and fgures to shed lght on general features of shoppng actvtes whle comparng between the two shoppng categores and wth lesure and home producton. Table 1.1 reports the average mnutes on the dary day spent on two types of shoppng as well as the mnutes on pad work, home producton, and lesure actvtes. The mnutes are reported for the whole sample and then by stratfed gender. For both shoppng and home producton, females report 15 mnutes more on average than males regardless of whether the zeroes are excluded or ncluded. Not only s the proporton of the female sample reportng postve mnutes greater, the mean tme of only those reportng non-zeroes s also greater n the female sample. The average lesure tme of men and women are relatvely close to each other although men report slghtly more lesure mnutes on average. The fact that females devote more tme to shoppng than males could be due to ther relatve productvty advantage and may also represent ther relatve preference for utlty-generatng shoppng. It s clear that grocery shoppng tme and other shoppng tme not only have dfferent means n all three columns, but ther standard devatons are also qute dfferent. 18

29 Table 1.1: Average Mnutes of Shoppng, Pad Work, Home Producton and Lesure All Male Female Mnutes of shoppng (ncludng zeroes) (74.77) (68.11) (79.17) Mnutes of shoppng (excludng zeroes) (83.90) (81.54) (80.91) [6199] [2513] [3686] Mnutes of grocery shoppng (ncludng zeroes) (30.03) (25.62) (32.98) Mnutes of grocery shoppng (excludng zeroes) (41.80) (39.01) (42.99) [4068] [1635] [2433] Mnutes of other shoppng (ncludng zeroes) (66.70) (61.05) (70.71) Mnutes of other shoppng (excludng zeroes) (85.38) (82.50) (86.94) [4945] [2064] [2881] Mnutes of Market Work (ncludng zeroes) (259.70) (277.88) (236.36) Mnutes of Market Work (excludng zeroes) (200.46) (207.02) (189.31) [6328] [3339] [2989] Mnutes of HH producton (ncludng zeroes) (183.22) (164.65) (188.51) Mnutes of HH producton (excludng zeroes) (180.50) (166.99) (184.49) [11604] [4760] [6844] Mnutes of lesure (254.62) (271.44) (239.97) Total Number of Observatons Note: Number of observatons s ncluded for each sample that excludes zero tme values. Total number of observatons represents the sze of all samples n the column that nclude zeroes. Fgure 1.1 exhbts the mean values of tme spent on the two types of shoppng for dfferent days of the week. The mean values of fve tme uses are dsplayed n Appendx Table A1. The weekly pcture of tme use patterns shows that the assumpton that Frdays are dstnct from other weekdays s generally supported. Non-grocery shoppng tme s approxmately 6 mnutes more on Frdays than on other week days. Not only the 19

30 amount of mnutes, but also the proporton of the sample that report grocery shoppng dramatcally ncrease on weekends. However, Saturday s obvously a super shoppng day for non-grocery commodtes. Non-grocery shoppng tme s 111 mnutes on average for those who shopped on Saturday and 93 mnutes on Sunday. Frday s comparable to other weekdays for grocery shoppng, but other shoppng s much more frequently (0.39 of the sample) observed on Frday, even more than Sunday (0.34). The most sgnfcant fluctuaton n other tme use occurs n household producton, snce t declnes only on Frday. Ths s consstent wth an ncrease n lesure tme on Frday when people relax after a whole week s work nstead of performng daly chores as on other weekdays. Perhaps a porton of ths decreased home producton tme on Frday s devoted to shoppng. 50 Fgure 1.1: Shoppng patterns by days of the week 1a: Grocery shoppng Amount of tme (n mnutes) Proporton of shoppers 0 Mon Tue Wed Thu Fr Sat Sun 0 Amount of tme Proporton of shoppers 20

31 120 1b: Non-grocery shoppng Amount of tme (n mnutes) Proporton of shoppers 0 Mon Tue Wed Thu Fr Sat Sun 0 Amount of tme Proporton of shoppers Fgure 1.2 reveals the seasonal nature of shoppng. Grocery shoppng tme s dstrbuted evenly across quarters wth a margnal ncrease n the frst quarter. Sgnfcantly fewer people report grocery shoppng n the last quarter of the year. Perhaps dnng out n restaurants ncreases durng ths perod. On the contrary, other shoppng s much more ntense durng the last three months of the year. Non-grocery shoppng tme rses from 85 mnutes to 97 mnutes on average n the perod of October to December. Ths provdes further evdence of the mportance of separatng the shoppng actvtes for ths study. 21

32 48 Fgure 1.2: Shoppng patterns by quarters of the year 2a: Grocery Shoppng Amount of tme (n mnutes) Proporton of shopper Jan-Mar Apr-Jun Jul-Sep Oct-Dec 0.26 Amount of tme Proporton of shoppers 100 2b: Non-grocery shoppng Amount of tme (n mnutes) Proporton of shoppers Jan-Mar Apr-Jun Jul-Sep Oct-Dec Amount of tme Proporton of shoppers 0.32 Table 1.2 presents the descrptve statstcs for the ndependent varables n the estmaton equatons. The age of the sample s 42 years old on average. Around 45 percent of the sample s male, and 12 percent s Hspanc. The household characterstcs show that 64 percent of the households have a spouse present and around 1/5 of the households have chldren present n the famly. The proporton of household havng chldren aged 6 to 13 s as hgh as 28 percent. All varables but the wage rates are calculated from the nformaton drectly avalable from the survey. The wage rates are calculated by dvdng respondents earnngs by ther workng hours, and then logged and 22

33 estmated n a two-step Heckman procedure. 13 From ths procedure, the potental wage rate s predcted for both workng and non-workng ndvduals and presented n logged value n the table. The varable of famly ncome s the dummy varable that ndcates half of the households n the regresson sample have annual ncome above $50,000. More than 80 percent of the sample s located n metropoltan areas. The sample s dstrbuted evenly across months and weekdays, and half of the samples are drawn from weekends. Table 1.2: Descrptve Statstcs of the Independent Varables Varable Mean Std. Dev. Indvdaul Characterstcs Age (n years) Male Non-whte Hspanc Household Characterstcs Presence of spouse Presence of chldren 0 to Presence of chldren 3 to Presence of chldren 6 to Presence of chldren 14 to Presence of other adults Economc Characterstcs Wage rate (logged) Hgh famly ncome Other Varables Metropoltan Area Apr-Jun Jul-Sep Oct-Dec Frday Saturday Sunday See Heckman (1976). A probt estmaton of labor force status s conducted n the frst step. The second step s a wage regresson augmented wth the nonselecton hazard obtaned from the frst step. Ths makes the wage regresson unbased, and predcted wages are constructed for each ndvdual. 23

34 Emprcal Results Table 1.3 reports the estmated wage elastctes for the fve tme use categores. Accordng to the mplcaton from the theoretcal model, the wage effect s hard to predct snce the tme allocaton between market work and home producton s not only bound by the substtuton of productvtes but also affected by the process of lesure producton. Indvduals are expected to substtute more tme toward pad work f ther expected earnngs are ncreased. Meanwhle, the ncome effect s reflected by an ncrease n lesure tme or other actvtes that generate process utlty. The hourly market wage has postve and sgnfcant effects on both types of shoppng. Indvduals wth hgher market wage rates do not cut back ther tme on shoppng but actually devote more tme to shoppng. The substtuton effect of the wage, whch reduces shoppng tme, s domnated by the ncome effect that ncreases shoppng tme. The elastcty s around 0.6 for grocery and 0.9 for other shoppng. Ths fndng contradcts that of two related studes mentoned earler. The man argument of Aguar and Hurst (2007) was that grocery shoppng tme s negatvely assocated wth market wages and t s also negatvely assocated wth ther lfe-cycle prce of tme approxmated by ther age. Kan and Fu s (1997) regressons wth monthly grocery shoppng frequency as the dependent varable also have negatvely coeffcent of wage, whle they clamed that the postve ncome effect only offsets part of the negatve substtuton effect. And the nterestng results observed from gender sub-sample estmates show that women are much less elastc on grocery shoppng tme than men. Contrarly, the male s tme devoted to grocery shoppng s sgnfcantly postvely related to the wage rate, wth the elastcty estmated 1.1. In the case of other shoppng, females are more elastc n ther 24

35 responsveness to wage changes. Ths may be explaned by a relatvely greater apprecaton on the part of females for shoppng for apparels and home solutons. Table 1.3: Estmated Wage Elastctes for Fve Uses of Tme Grocery Nongrocery HHP Lesure Work Whole Sample 0.609** 0.911*** * *** 0.393*** p-value < <.0001 <.0001 Male Sample 1.138** 0.805** *** 0.215*** p-value < Female Sample *** *** *** 0.547*** p-value < <.001 <.0001 * sgnfcant at 10%; ** sgnfcant at 5%; *** sgnfcant at 1% In my results, the wage elastcty assocated wth market work s also postve whle the wage effect s negatve for home producton and lesure tme. Ths mples that the substtuton effect on pad work tme (whch ncreases work tme) s larger than the ncome effect (whch decreases work tme). Home producton and lesure tme are both sacrfced to balance wth more tme on pad work, and more shoppng tme. Ths helps to explan why hgher hourly pay s assocated wth ncreased workng hours. Agan, the comparson between gender groups mples that males do not sacrfce home producton tme for market work, and females are much more elastc n adjustng work hours based on changes n the wage rate. Table 1.4 presents the margnal effect of all control varables on the fve tme uses. The margnal effect from havng above average famly ncome s not sgnfcant for grocery shoppng tme. Ths s consstent wth what Kan and Fu (1997) fnd n ther study. However, the coeffcent assocated wth hgh ncome s postve and sgnfcant n the non-grocery shoppng equaton and n the work equaton. It s large and negatve n 25

36 the lesure equaton, whch s consstent wth Aguar and Hurst (2007). Respondents from famles wth hgher total ncome spend 11 mnutes more on non-grocery shoppng, ceters parbus. The noton of a reducton of comparson shoppng due to hgher ncome cannot be supported, or mnmally, t s domnated by the opposte mpact from an ncreasng demand for market goods. An alternatve explanaton s that hgher ncome ndvduals are lkely to have fewer but longer ndvdual shoppng trps, whle lower ncome people are more lkely to shop n convenence stores, whch are qucker shoppng trps. It s nterestng to see that a hgher own wage results n tme allocaton away from lesure and home producton, whle hgher non-labor ncome does not reduce one s responsblty n unpad housework. Ths may reflect the barganng between workng couples to some extent, although a sngle person model s utlzed here. However, whatever the source of ncome, hgher ncome facltates tme substtuton towards other shoppng. Ths sheds lght on the unque feature of non-grocery shoppng behavor, whch lnks expendture on market goods wth tme nputs. Non-grocery shoppng s more ncome-senstve and s always encouraged by ncome. The ndvdual demographc varables show very nterestng results. Age s negatvely assocated wth non-grocery shoppng and lesure, whle postvely assocated wth work and home producton. Controllng other relevant factors, men have sgnfcantly lower tme devoted to shoppng and home producton, but work more and enjoy more lesure tme as well. The coeffcents n the home producton and work equatons are almost equal n magntude by gender. It s lkely that men substtute tme from house work to market work, and prefer other lesure tme rather than shoppng. Contrarly, women devote sgnfcantly more tme to both types of shoppng, even when 26

37 all other famly characterstcs are controlled. It s hard to reject the hypothess that females gan more drect utlty from shoppng than do men. The gender dfference wll be dscussed more n sub-sample estmaton results. The other notable result s that nonwhtes devote more tme to lesure but less to every other category. Table 1.4: Margnal Effects of the Determnants of Tme Spent on Shoppng, Home Producton, Lesure and Work Grocery Nongrocery HHP Lesure Work Wage rate 7.75** 29.21*** * -7.21*** 81.66*** Indvdual characterstcs Age *** 9.11*** -7.21*** 11.95*** Age square *** -8.41*** 10.60*** *** Male *** *** *** 16.86*** 98.35** Non-whte *** *** 47.29*** *** Hspanc 8.77*** -7.74* *** Household characterstcs Presence of spouse *** *** Chldren *** *** *** Chldren * 68.05*** *** *** Chldren ** 52.51*** *** *** Chldren * *** *** Other adults -4.85** -5.77* *** Famly ncome level *** *** 36.23*** Other control varables Metropoltan Area 4.52** *** *** Apr-Jun ** 12.85*** ** 8.79 Jul-Sep -4.07* 10.90*** Oct-Dec -8.01*** 16.29*** 15.20*** *** Frday 8.51*** 27.31*** *** 13.84** 5.71 Saturday 16.76*** 62.46*** 35.92*** *** *** Sunday 8.80*** 18.32*** 31.51*** *** *** * sgnfcant at 10%; ** sgnfcant at 5%; *** sgnfcant at 1% The coeffcents assocated wth famly demographc varables do not provde much nformaton concernng the nature of shoppng behavor, but do seem to explan the 27

38 other three tme uses. The presence of a spouse leads to more tme on home producton tme but less tme on market work. Beng marred or wth a spouse equvalent changes the structure of a famly and creates more work at home. The other actvtes are not sgnfcantly affected by martal status. The presence of young chldren n the famly rases the tme devoted to household producton, partally due to caregvng responsbltes. Much of ths tme devoton comes from sacrfcng lesure tme and pad work tme. The presence of other adults n the household s lkely to ncrease grocery needs on the one hand and allevate tme pressures of respondents on the other hand. The negatve sgnfcant coeffcents of the presence of other adults are observed n both types of shoppng. The respondents have other adults n the famly to share ther non-market work, whch s most strongly mpled n the case of shoppng. The quarter of the year dummy varables show that the seasonal fluctuaton for non-grocery shoppng comes to a peak at the end of the year wth contnuous growth throughout the year. It s opposte to the case of grocery shoppng. Average tme on home producton s especally long durng the last quarter of the year, whle grocery shoppng and pad work s reduced at that tme. The fve tme categores dsplay dfferent trends over days of the week. Some tme s transferred from market work to shoppng and lesure on Frday, although Frday s also a pad work day. However, home producton, comprsed of many fungble actvtes, largely s left to weekends. Both types of shoppng occur somewhat more often on Saturdays than any other day of the week. Fnally, resdence n a metropoltan area s assocated wth more tme devoton to grocery shoppng. Addtonally, people n metropoltan areas enjoy more lesure actvtes and work less for pay. 28