Who faces higher prices? An empirical analysis based on Japanese homescan data
On the basis of household-level scanner data (homescan) for Japan, we construct a household-level price index and investigate the causes of price differences between households. We observe large price differentials between households, as did Aguiar and Hurst (2007). However, the differences between age and income groups are small. In addition, we find that elderly people face higher prices than the younger ones, which is contrary to the results of Aguiar and Hurst (2007). The most important determinant of the price level is reliance on bargain sales; an increase in the purchase of goods at bargain sales by one standard deviation decreases the price level by more than 0.9%, while shopping frequency has only limited effects on the price level.
Owing to recent technological developments in data creation, numerous commodity price researchers have begun to use not only traditional aggregates, such as the consumer price index, but also micro-level information on commodity prices. To date, commodity-level price information is used in various economic fields, such as macroeconomics (Nakamura and Steinsson, 2007), international economics (Haskel and Wolf, 2001), and industrial economics (Bay et al., 2004, Goldberg and Frank 2005). Recently, on the basis of commodity-level homescan data,5 Aguiar and Hurst (2007) (hereafter AH) found a violation of the law of one price between different age groups.