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A Mixed Bag: The Hidden Time Costs of Regulating Consumer Behavior

Rebecca Taylor ()

Journal of the Association of Environmental and Resource Economists, 2020, vol. 7, issue 2, 345 - 378

Abstract: The nonmonetary costs consumers experience from regulations are challenging to quantify and, thus, easily overlooked. Using quasi-experimental policy variation and high-frequency supermarket data, this paper identifies previously hidden time costs from policies that ban or tax the use of disposable carryout bags. Bag policies disrupt checkout procedures, causing a 3% increase in supermarket checkout duration. Given the capacity-constrained queueing system of supermarket checkout, the slowdown of individual customers compounds into congestion larger than the individual slowdown during peak shopping hours. These hassle costs do not disappear over time and, instead, persist at least 2 years after policy implementation. Customers are also sensitive to these costs—with a 1-minute increase in average checkout duration leading to a 1.2% drop in the likelihood customers return to the store in subsequent weeks. The results show that ignoring time costs, as well as institutional constraints, overstates the welfare gains from policy-induced behavioral change.

Date: 2020
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Handle: RePEc:ucp:jaerec:doi:10.1086/707039