Economizing of the Poor Comprehending Economizing of the Poor Walking down the aisles of a supermarket, low-income shoppers must consider a number of factors including quantity, price, quality and nutritional differences when selecting food products. Food-purchase decisions by the poor often entail balances among taste, preference and quality factors--either real or perceived--to meet spending constraints. Within broad product categories such as cereal, cheese, meat and poultry, and fruits and vegetables, shoppers can choose among many substitutable products. Low-income shoppers can extend their food dollars in a number of ways. They may shop in discount food stores they may purchase and consume less food than higher-income shoppers they may purchase low-priced (and possibly lower quality) food products or they may rely on some combination of all three. A better understanding of how the poor economize in food spending addresses important policy questions raised by researchers, nutrition educators, and food-assistance program managers. The Correlation between the Location and Price Whether the poor face significantly different food prices due to where they shop for food remains an unresolved empirical question. Extensive research over the years has tried to answer the question--Do the poor pay less for food? The Economic Research Service (ERS) in 1997 received the results of studies comparing price differences in grocery stores across different income levels and combined these with current census data on the distribution of low-income households by urbanization type. The ERS study concluded that, in general, the poor face higher prices due to their greater representation in urban and rural areas (as opposed to suburban areas), where food prices tend to be higher. Higher Prices but Less Spending Based on results from household surveys, ERS also found that despite facing higher prices, low-income shoppers spend less than higher-income shoppers for food purchased in food stores. Due to their level of aggregation and lack of in-store sales and promotion information, such surveys shed little light on the economizing practices of households. To learn more about how low-income shoppers spend less for food despite facing higher prices, we obtained food-store purchase data that incorporate per-capita quantity and expenditure-measure equivalents (household measures adjusted for household size) across income levels. The Main Economizing Practices The resulting comparisons describe how individuals with different levels of income vary in their food-spending patterns. By using actual transaction data, detailed information about the product purchased (for example, price, product description, package size, and brand name) as well as the condition of purchase (promotion, coupon, or sale item) was obtained. From these, the average unit cost (per ounce, per pound) for each item was calculated. Low-income shoppers may use four primary economizing practices to reduce their food spending. First, they may purchase a greater proportion of discounted products. Second, they may purchase more private-label products (generic or store brand) versus brand products than higher-income shoppers buy. Third, they may take advantage of volume discounts by purchasing larger package sizes. Fourth, they may purchase a less-expensive food product within a product class. Although quality differences such as freshness, convenience and taste often contribute to prices differences, differences in nutritional quality are also evident. More Spending on Promotional Items The use of promotions is measured by comparing the percentage of expenditures and quantities of each product purchased on promotion (manufacurers' coupons, store coupons, store sales, and other promotions). For random-weight cheese, fruit, vegetables and meat in 1998, low-income households (less than $ 25,000 per ye