Purchasing Power Expansion and Food Consumption Behavior: Empirical evidence from Thai households

Abstract

This study investigates to what extent an increase in purchasing power affects low-income households’ food consumption behavior, using Thailand’s State Welfare Card program as a quasi-experimental setting. We apply a Regression Discontinuity (RD) design on the 2023 Thai Household Socio-Economic Survey to identify the impact of a regular increase in the ability to spend at the eligibility threshold. The findings demonstrate a strategic reallocation of food expenditures toward fresh and raw food categories. Beneficiaries prioritize at-home meal preparation by significantly expanding expenditures on raw ingredients, specifically meat and seafood, core carbohydrates, and fresh vegetables. In contrast, there is no significant increase in spending on prepared foods, dining out, or discretionary goods such as alcohol and sweets. These results offer critical implications for retail marketing strategies targeting low-to-middle-income segments and provide empirical feedback for policymakers regarding the food expenditure patterns of targeted social assistance. Although our empirical evidence is derived from a cash transfer setting, these behavioral insights may provide useful insights into broader contexts of purchasing power expansion such as standard salary increases or minimum wage adjustments.