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

72 Pages Posted: 22 Mar 2017

See all articles by Itzhak Ben-David

Itzhak Ben-David

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER)

Marieke Bos

Swedish House of Finance - Stockholm School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 2017

Abstract

Increased availability of alcohol may harm individuals if they have present-focused preferences and consume more than initially planned. Using a nationwide experiment in Sweden, we study the credit behavior of low-income households around the expansion of liquor stores' operating hours on Saturdays. Consistent with store closures serving as commitment devices, the policy led to higher credit demand, more default, increased dependence on welfare, and higher crime on Saturdays. The effects are concentrated among the young population due to higher alcohol consumption combined with tight liquidity constraints. The policy's impact on indebtedness is estimated at 4.5 times the expenditure on alcohol.

Suggested Citation

Ben-David, Itzhak and Bos, Marieke, Impulsive Consumption and Financial Wellbeing: Evidence from an Increase in the Availability of Alcohol (March 2017). NBER Working Paper No. w23211, Available at SSRN: https://ssrn.com/abstract=2938755

Itzhak Ben-David (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

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National Bureau of Economic Research (NBER) ( email )

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HOME PAGE: http://fisher.osu.edu/fin/faculty/Ben-David/

Marieke Bos

Swedish House of Finance - Stockholm School of Economics ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

HOME PAGE: http://www.mariekebos.org

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