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Preference Heterogeneity and Habit Persistence: the Case of Breakfast Cereal Consumption

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  • Thunström, Linda

    (Department of Economics)

Abstract

This paper estimates the strength and heterogeneity across households in state dependence associated with breakfast cereal consumption, where positive state dependence implies habit persistence and negative state dependence implies variety-seeking in consumption. The analysis relies on a discrete choice model and finds that breakfast cereal consumption is generally highly habitual, but the degree of habit persistence exhibits heterogeneity across households. In addition, some households can be characterized as variety-seeking. The strength of habit persistence is similar across income and educational groups. The strength of habit persistence seems to be weaker for households with several adults and children compared to one-adult-households.

Suggested Citation

  • Thunström, Linda, 2008. "Preference Heterogeneity and Habit Persistence: the Case of Breakfast Cereal Consumption," HUI Working Papers 19, HUI Research.
    • Handle: RePEc:hhs:huiwps:0019
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    Keywords

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    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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