Fungibility and Consumer Choice: Evidence from Commodity Price Shocks
Hastings first author. Design: the authors test the fungibility of money using parallel shifts in the prices of different quality grades of a commodity, embedding the test in a discrete-choice model of product quality choice and estimating it on panel microdata on gasoline purchases. Finding: when gasoline prices rise, consumers trade down to lower octane gasoline by more than income effects can explain, and across a wide range of specifications the authors reject the idea that households treat gas money as fungible with other income. Model comparison: a simple model of category budgeting fits the data well.
Hastings first author. Design: the authors test the fungibility of money using parallel shifts in the prices of different quality grades of a commodity, embedding the test in a discrete-choice model of product quality choice and estimating it on panel microdata on gasoline purchases. Finding: when gasoline prices rise, consumers trade down to lower octane gasoline by more than income effects can explain, and across a wide range of specifications the authors reject the idea that households treat gas money as fungible with other income. Model comparison: a simple model of category budgeting fits the data well.
Written from the abstract read 2026-10-18.
What our sources record
Recorded when this source was checked, figures included, with page references and quotation marks removed.
Hastings, J. S., & Shapiro, J. M. (2013). Fungibility and Consumer Choice: Evidence from Commodity Price Shocks. The Quarterly Journal of Economics, 128(4), 1449-1498. doi:10.1093/qje/qjt018.