The role of subjective assessments of well-being in changing the consumption structure of Russian households in 2022—2023

The present study analyses the impact of the 2022—2023 external shock on the consumption structure of Russian households, with a focus on the role of subjective assessments of well-being. The consumption structure of Russian households consists of five categories of expenditure: food at home, out-of-home food, alcohol, non-food goods, and services. Data from the 27th—32nd waves of the Russian Longitudinal Monitoring Survey — HSE University were used as the empirical basis. Based on changes in self-assessments of their financial situation, households are divided into three groups: those whose financial situation has improved, those whose financial situation has remained unchanged, and those whose financial situation has deteriorated. For econometric modelling, a modification of the Engel curve is applied, utilizing models with both fixed and random effects, in addition to the Tobit model. The results show that under the impact of the 2022—2023 external shock, all household groups reduced their spending on non-food goods, which we attribute to a decline in imports and the departure of foreign companies. We found an increase in spending on services, especially among households whose situation has deteriorated, which is attributed to the indexation of tariffs for essential services. With regard to the role of subjective assessments of well-being, all household groups differ in their responses to shocks and their adaptation strategies.