Coupon Redeemers: Are They Better Shoppers?

Abstract

Previous studies report that coupon redeemers have both greater income and more education than nonredeemers. One explanation for this association is the efficiency hypothesis. This hypothesis holds that higher income/education households are better shoppers, and thus better able to take advantage of the discounts coupons offer. An alternative explanation is the preference/opportunities hypothesis. This hypothesis holds that higher income/education households are more apt to purchase the higher priced brands that offer coupons, and are likely, therefore, to redeem more coupons. Panel data on household purchases of paper towels are used to evaluate these two hypotheses. Evidence in support of both is found.