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Economic Policy Uncertainty and Self-Control: Evidence from Unhealthy Choices

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  • Kalcheva, Ivalina
  • McLemore, Ping
  • Sias, Richard

Abstract

We hypothesize that greater economic policy uncertainty (EPU) leads to increases in unhealthy behaviors by lowering individuals’ impulse control. Based on 6.1 million interviews over 22 years, our analysis reveals a positive relation between EPU and the propensity to make poor lifestyle choices, including higher rates of alcohol consumption, a larger number of drinks consumed, and greater binge drinking. EPU has long-lasting effects on drinking behavior, consistent with habit formation. Moreover, the relation is stronger for younger individuals whose habits are more malleable. We find similar results when using smoking rates to measure unhealthy choices.

Suggested Citation

  • Kalcheva, Ivalina & McLemore, Ping & Sias, Richard, 2021. "Economic Policy Uncertainty and Self-Control: Evidence from Unhealthy Choices," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 56(4), pages 1446-1475, June.
    • Handle: RePEc:cup:jfinqa:v:56:y:2021:i:4:p:1446-1475_11
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    Cited by:

    1. Huang, Ho-Chuan & Wang, Xiuhua & Xiong, Xin, 2022. "When macro time series meets micro panel data: A clear and present danger," Energy Economics, Elsevier, vol. 114(C).
    2. Can Xu & Andreas Steiner & Jakob de Haan, 2023. "Does Economic Policy Uncertainty Encourage Gambling? Evidence from the Chinese Welfare Lottery Market," CESifo Working Paper Series 10241, CESifo.
    3. Chen, Zisen & James, Jonathan, 2022. "Put your FTSE down: Wealth shocks and road traffic collisions," Social Science & Medicine, Elsevier, vol. 314(C).

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