Do Big Box Grocers Improve Food Security?

This paper aims to identify the causal effects of Walmart Supercenters and warehouse clubs (Costcos, Sam’s Clubs, and BJ’s Wholesale Clubs) on a battery of survey questions related to food insecurity. We hypothesize that Walmart Supercenters and warehouse clubs, which lower food prices and expand food availability, reduce food insecurity, especially for low income households in areas with few grocery options.

            Our food insecurity-related outcomes come from the 2001-2010 waves of the December Current Population Study (CPS), which contains a food security supplement. We match these data to hand-collected county-level Walmart Supercenter and warehouse club densities. We first compare sample means of the food security variables in counties with and without Walmart Supercenters and warehouse clubs. Next we estimate multiple regressions to identify the associations between these stores and the food insecurity outcomes, conditional on individual- and county-level controls and year fixed effects. We then estimate instrumental variables (IV) models that aim to identify causal effects. Our IV strategy exploits the predictable geographic expansion patterns of big box grocers outward from corporate headquarters, which are plausibly uncorrelated with unobservable determinants of food security. We conduct diagnostic tests, robustness checks, and falsification tests to examine the validity of our IV design. Finally, we conduct subsample analyses to see if the effects differ for different subgroups within the population (e.g. those living in rural counties or counties with few grocery stores, those with low incomes, racial minorities).     

Local and state governments pursue very different strategies with respect to possible entry from big box stores. Some encourage stores like Walmart or Costco with generous tax incentives. Others use zoning restrictions, taxes, and mandates to actively fight the entry of big box chains, particularly Walmart. A complete understanding of the positives and negatives that a proposed Walmart Supercenter or warehouse club would bring to a community is important to help local and state policymakers make appropriate decisions. However, most of the research on Walmart has focused on its impact on prices and employment, while almost no research exists at all on warehouse clubs. Quantifying the impacts of these stores on food security adds a potentially important component to the calculation. If they reduce hunger and improve nutrition, then on the margin this could push some communities to be more receptive to the big box grocery model.