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Impulsive Consumption and Financial Wellbeing: Evidence from an Increase in the Availability of Alcohol

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  • Itzhak Ben-David
  • Marieke Bos

Abstract

Increased availability of temptation goods might harm individuals if they have time-inconsistent preferences and consume more in the present than planned before. We study this idea by examining the credit behavior of low-income households around the expansion of the opening hours of retail liquor stores during a nationwide experiment in Sweden. Consistent with store closures serving as commitment devices, expanded operating hours led to higher alcohol consumption (Nordström and Skog 2003) and greater consumer credit uptake and default. Thus, our results show that limiting the availability of temptation goods can improve the financial wellbeing of individuals with inconsistent time preferences.

Suggested Citation

  • Itzhak Ben-David & Marieke Bos, 2017. "Impulsive Consumption and Financial Wellbeing: Evidence from an Increase in the Availability of Alcohol," NBER Working Papers 23211, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23211
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    References listed on IDEAS

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    Cited by:

    1. Byun, Hyungsuk & Scholnick, Barry & Byun, Hyungsuk, 2017. "Spatial Commitment Devices and Addictive Goods: Evidence from the Removal of Slot Machines from Bars," Working Papers 17-34, Federal Reserve Bank of Philadelphia.

    More about this item

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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