Where are we going? To the changing cost of time.
The Cost of Food Shopping
During October 2009, unemployment peaked at 10 percent. With households experiencing cutbacks at work, troubled stock markets and a declining GDP, they changed how they bought their food. Rather than organics and premium brands, they searched for coupons, purchased sale items, bought in bulk, and visited multiple stores.
Based on slightly more than 4.2 million transactions for food with a barcode from 112,837 households over 32 consecutive months, researchers from Northwestern University concluded that while the dollar cost of food shopping declined, its time cost increased. People had to look through newspapers and online for coupons. They needed to identify sale items and stores with cheaper merchandize. Speaking economically, we could say the economy was experiencing “intratemporal reallocation.” More simply, we switched how we used our time.
The reason? The recession made time less valuable. Whereas pre-recession we used more money and less time for food shopping, during the recession, the tradeoff changed. The marginal value of the dollar went up while the marginal value of time went down. As a result, especially for the jobless, time spending ascended.
You can see below how our shopping behavior changed from 2008 onward. And, even before the Great Recession (12/2007-6/2009), the over-65 cohort (yellow line) engaged in time-consuming shopping.
Our Bottom Line: The Cost of Time
Economists have actually calculated that the cost of time declines by 27 percent by the time we are elderly. In Venezuela, Hugo Chavez catered to individuals with more time when his price controls created long lines. Smart businesses make coupons somewhat difficult to access so those of us who have more money and less time pay full price.