Welfare Costs of Traditional Shopping

Using data on the number of visitors (identified according to the census block that they reside in) at the store level, this paper investigates the welfare costs of traditional shopping for the U.S. census blocks. The investigation is based on an economic model, where individuals living in census blocks decide on which store to shop from based on the corresponding shopping costs and idiosyncratic benefits. The implications of the model suggest that the welfare gains from removing bilateral shopping costs in percentage terms can be measured for each census block as the weighted average of log current bilateral distance measures between shopping stores and census blocks, where weights are the bilateral probabilities of individuals (living in certain census blocks) shopping at certain stores. The corresponding results show that the welfare gains from removing bilateral shopping costs is about 4% for the average census block, with a range between 0.021% and 18% across census blocks that is further connected to their demographic or socioeconomic characteristics