To have or not to have Internet at home: Implications for online shopping

This paper analyzes the individual decision of online shopping, in terms of socioeconomic characteristics, internet related variables and location factors. Since online shopping is only observed for internet users, we use the two-step Heckman’s model to correct sample selection. We argue that one of the relevant variables to explain online shopping, the existence of a home internet connection, can be endogenous. To account for this potential endogeneity, we jointly estimate the probability of online shopping and the probability of having internet at home. The dataset used in this paper comes from the Household Survey of ICT Equipment and Usage, conducted by the Spanish Statistical O¢ ce on an annual basis. Our analysis covers the period 2004-2009. Our results show that not accounting for the endogeneity of having internet at home, yields to overestimate its e¤ect on the probability of buying online. This …nding can be important in the design of public policies aimed at enhancing e-commerce through providing households with internet connection at home. We also show that, compared to other variables that are also relevant for online shopping, the e¤ect of internet at home is quite small. JEL Classi…cation: D12, C35, C25