Economic Policy Uncertainty and Self-Control: Evidence from Unhealthy Choices
52 Pages Posted: 1 Jan 2020
Date Written: December 4, 2019
We hypothesize that greater economic policy uncertainty (EPU) leads to increases in unhealthy behaviors by lowering individuals’ impulse control. Based on 6.1 million interviews over 22 years, our analysis reveals a positive relation between EPU and the propensity to make poor lifestyle choices including higher rates of alcohol consumption, a larger number of drinks consumed, and greater binge drinking. EPU has long-lasting effects on drinking behavior, consistent with habit formation. Moreover the relation is stronger for younger individuals whose habits are more malleable. We find similar results when using smoking rates to measure unhealthy choices.
Keywords: economic policy uncertainty, unhealthy choices, impulse control, temporal discounting
JEL Classification: G40, G41
Suggested Citation: Suggested Citation