A Decade of U.S. Natural Disasters and Household Food-at-Home Expenditures and Quality: A Quasi-Experimental Study

Abstract

This study exploits spatial and temporal variation in natural disasters in the United States via a generalized differences-in-differences approach to identify the impact of natural disasters on households’ food-at-home (FAH) spending and quality from 2005 to 2016. We use two datasets: (i) the Storm Events Database to identify U.S. counties that experience severe economic losses as a result of droughts, floods, hurricanes, and tornadoes, and (ii) the Nielsen Consumer Panel Data for grocery data. We find that only floods and hurricanes affect FAH spending. Floods (Hurricanes) have a persistent (immediate) effect on FAH spending. On average, highly damaging floods (hurricanes) decrease 15-day FAH spending by about $2 ($7) in 90 days (30 days) after the events. The FAH quality effect of the four natural disasters is either inconsequential or nonexistent. We provide indirect evidence that the FAH spending effect of natural disasters works through both income and price channels. We also find that hurricanes have an anticipation effect on total grocery spending which starts 15 days before the disaster date. Our results are robust to an alternative specification that controls for county-specific linear trends. We add to the growing body of literature on the effects of natural disasters on household finances and financial decisions. Our findings could be of particular interest to post-disaster relief organizations and their programs.