Measuring Income and Wealth Effects on Private-Label Demand with Matched Administrative Data

Industry sentiment links income and wealth to private-label demand. The intuition is that decreasing income and wealth increases the demand for (cheaper) private labels. Whereas plausible causality is harder to establish in aggregate time series analyses, such analyses suggest large effect sizes. An individual-level perspective greatly facilitates plausibly causal estimates but poses measurement challenges. We overcome these challenges by linking household scanner data to administrative data. We analyze individual-level private-label shares measured in household scanner data as a function of income and wealth, both from a linked administrative database in the Netherlands in the period from 2011 to 2018 and aggregated over all household members (rather than only from the main earner). We find that relying on within-household variation in surveyed income data significantly attenuates income effects relative to using that from administrative data. Yet, we still find an economically small effect. In addition, changes in wealth have at most an economically small effect on private-label shares.