Comment on “Who Faces Higher Prices? An Empirical Analysis Based on Japanese Homescan Data”

• DOI: http://doi.org/10.1111/aepr.12052
• Date: 01 January 2014
• Published date: 01 January 2014
• Author: Yukinobu Kitamura

Comment on “Who Faces Higher Prices?

An Empirical Analysis Based on Japanese

Homescan Data”

Yukinobu KITAMURA†

Hitotsubashi University

JEL codes: D12, D30

Abe and Shiotani (2014) are concerned with household-level price differences among

households. This type of research has two different roots of investigation.The first is to

construct household-level consumer price indices (CPIs) with different household char-

acteristics, namely, the age of the head of household, household income, and household

location, for example, Kitamura (2008). The second is to examine the relationship

between the household-level actual prices and life-cycle consumption and time alloca-

tion behavior, for example, Aguiar and Hurst (2007). This paper follows the second line

of research. It is quite sensible to investigate whether Aguiar and Hurst type of observa-

tions can be found in Japan.

The advantages of homescan data over the Retail Price Survey conducted by the Japa-

nese Government lie in the former’s rich information on the varieties of goods, the pur-

chase prices paid by individual households, and the frequency of shop visits. At the

moment, Abe and Shiotani construct shopping behavior-related variables, such as the

number of different stores, a Herfindahl–Hirschman index of store shares, the total

number of goods bought by a household, a bargain index, a store chain index, and a

quality index, and use these indicators as explanatory variables in the household-level

price index.

Although Abe and Shiotani’s use of this information conveys some interesting

aspects of the Japanese household behavior, there could be some alternative ways to use

the information from the homescan data. For example, Abe and Shiotani argue that

elderly people face higher prices than the young, which is contrary to the results of

Aguiar and Hurst (2007). They provide some further analyses of this interesting finding,

by finding that the elderly spend more at specialized stores (presumably mom-and-pop

retail shops) and supermarkets, and less at drug stores and home_improvement_stores

compared to the young. The regression results in Abe and Shiotani’s (2014) Table 7 show

that store choice can explain part of the price-level differentials between households.

However, Abe and Shiotani note from their Table 8 that the elderly face higher prices

than the young even within the same store type and that the mechanism behind the

higher prices among the elderly needs further investigation.

†Correspondence: Yukinobu Kitamura, Institute of Economic Research, Hitotsubashi University,

Naka 2-1, Kunitachi-shi, Tokyo 186-8603, Japan. Email: kitamura@ier.hit-u.ac.jp

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doi: 10.1111/aepr.12052 Asian Economic Policy Review (2014) 9, 118–119

© 2014 The Author

Asian Economic Policy Review © 2014 Japan Center for Economic Research

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