Frontiers: Estimating the Long-Term Impact of Major Events on Consumption Patterns: Evidence from COVID-19

• Published in: Marketing science (Providence, R.I.) R.I.), 2023-09, Vol.42 (5), p.839-852
• Main Authors: Oblander, Shin, McCarthy, Daniel Minh
• Format: Article
• Language: English
• Subjects: age-period-cohort model; causal inference; Consumer behavior; Consumption; Consumption patterns; COVID-19; customer relationship management; Durable goods; Electronic commerce; forecasting; Marketing; Pandemics; persistence; Prediction models
• ISSN: 0732-2399; 1526-548X
• DOI: 10.1287/mksc.2023.1443

This study proposes a novel causal inference method and uses it estimate the long-term impact of the COVID-19 pandemic on purchasing behavior in 12 consumption categories. We propose a general and flexible methodology for inferring the time-varying effects of a discrete event on consumer behavior. Our method enables analysis of events that span the target population being analyzed, where there is no contemporaneous “control group” and/or it is not possible to measure treatment status, by comparing the purchasing behavior of cohorts acquired at different times. Our method applies nonparametric age-period-cohort models, commonly used in sociology but with limited adoption in marketing, in conjunction with a predictive model of the counterfactual no-event baseline (i.e., an event study model). We use this method to infer how the COVID-19 pandemic affected 12 online and offline consumption categories. Our results suggest that the pandemic initially drove significant spending lifts at e-commerce businesses at the expense of brick-and-mortar alternatives. After two years, however, these changes have largely reverted. We observe significant heterogeneity across categories, with more persistent changes in subscription-based categories and more transient changes in categories based on discretionary purchases, especially those of durable goods. History: K. Sudhir served as the senior editor. This paper was accepted through the Marketing Science : Frontiers review process. Funding: This work was supported by research grants from the Goizueta Business School, Emory University and the Marketing Science Institute. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mksc.2023.1443 .