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Non-separable time preferences, novelty consumption and body weight: Theory and evidence from the East German transition to capitalism

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  • Dragone, Davide
  • Ziebarth, Nicolas R.

Abstract

This paper develops a dynamic model to illustrate how diet and body weight change when novel food products become available to consumers. We propose a microfounded test to empirically discriminate between habit and taste formation in intertemporal preferences. Moreover, we show that ‘novelty consumption’ and endogenous preferences can explain the persistent correlation between economic development and obesity. By empirically studying the German reunification, we find that East Germans consumed more novel Western food and gained more weight than West Germans when a larger variety of food products became readily accessible after the fall of the Wall. The observed consumption patterns suggest that food consumption features habit formation.

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  • Dragone, Davide & Ziebarth, Nicolas R., 2017. "Non-separable time preferences, novelty consumption and body weight: Theory and evidence from the East German transition to capitalism," Journal of Health Economics, Elsevier, vol. 51(C), pages 41-65.
  • Handle: RePEc:eee:jhecon:v:51:y:2017:i:c:p:41-65
    DOI: 10.1016/j.jhealeco.2016.11.002
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    Cited by:

    1. Strulik, Holger, 2018. "I shouldn't eat this donut: Self-control, body weight, and health in a life cycle model," Center for European, Governance and Economic Development Research Discussion Papers 360, University of Goettingen, Department of Economics.

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    Keywords

    Endogenous preferences; Food consumption; Novel goods; Habit formation; Obesity; Economic development; German reunification;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • R22 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Other Demand

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