Working Papers, Federal Reserve Bank of Boston 13-6
We exploit scanner data to track payment choice for grocery purchases for a large panel of households over three years. We show that households focus most of their expenditures on one or at most two of these instruments in choosing between using cash, a check, or a card, and they very rarely switch. We focus particularly on the role of expenditure size in determining payment choice. While the use of a long panel for these purposes is novel, the introduction of controls for household heterogeneity has little effect on our estimates. Thus, we find that transaction size is an important determinant of payment choice, not only across households but within households.