Paying more for less: why don't households in Tanzania take advantage of bulk discounts?

Brian Dillon (), Joachim De Weerdt and Ted O'Donoghue

No 584133, Working Papers of LICOS - Centre for Institutions and Economic Performance from KU Leuven, Faculty of Economics and Business (FEB), LICOS - Centre for Institutions and Economic Performance

Abstract: Despite average per-capita consumption of roughly $1 per day, many Tanzanian households do not take advantage of bulk discounts for staple goods. Using transaction diaries covering nearly 57,000 purchases by 1,499 households over two weeks, we find that through bulk purchasing the average household could spend 8.9% less on observed quantities (or consume 15.6% more at observed expenditure). We investigate several explanations for the observed purchasing patterns, and find evidence consistent with inattention, worries about over-consumption, avoidance of social taxation, and coordination problems. Contrary to prior work, we find little evidence that liquidity constraints prevent poor households from bulk purchasing.

Keywords: bulk discounts; liquidity constraints; inattention; social taxes; coordination costs; self-control problems; consumer behavior (search for similar items in EconPapers)
Date: 2017-05
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Published in LICOS - Discussion paper series 396/2017 , pages 1-71

Downloads: (external link)
https://lirias.kuleuven.be/retrieve/455648 (application/pdf)

Related works:
Journal Article: Paying More for Less: Why Don’t Households in Tanzania Take Advantage of Bulk Discounts? (2021)
Working Paper: Paying More for Less: Why Don't Households in Tanzania Take Advantage of Bulk Discounts ? (2020)
Working Paper: Paying more for less: why don't households in Tanzania take advantage of bulk discounts? (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:licosp:584133

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