How Persistent Are Consumption Habits? Micro-Evidence from Russia

Lorenz Kueng, Evgeny Yakovlev

NBER Working Paper No. 20298
Issued in July 2014
NBER Program(s):   AG   AP   EFG   HE   PE

We use two quasi-natural experiments, the rapid expansion of many markets after the collapse of the Soviet Union and the Anti-Alcohol Campaign in 1986, and a migrants research design to identify highly persistent habits in food and alcohol consumption. Large shocks to product availability and persistent habits produce large cohort differences in consumption. Placebo tests and descriptive statistics show that habits are formed when individuals start consuming a good regularly and remain largely unaffected afterward. We estimate that Russian male mortality will decrease by 23% within twenty years even without further interventions due to changes in alcohol consumption preferences.

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This paper was revised on May 29, 2015

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Document Object Identifier (DOI): 10.3386/w20298

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