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Non-separable time preferences, novelty consumption and body weight: Theory and evidence from the East German transition to capitalism

Davide Dragone () and Nicolas Ziebarth ()

Journal of Health Economics, 2017, vol. 51, issue C, 41-65

Abstract: This paper develops a dynamic model to illustrate how diet and body weight change when novel food products become available to consumers. We propose a microfounded test to empirically discriminate between habit and taste formation in intertemporal preferences. Moreover, we show that ‘novelty consumption’ and endogenous preferences can explain the persistent correlation between economic development and obesity. By empirically studying the German reunification, we find that East Germans consumed more novel Western food and gained more weight than West Germans when a larger variety of food products became readily accessible after the fall of the Wall. The observed consumption patterns suggest that food consumption features habit formation.

Keywords: Endogenous preferences; Food consumption; Novel goods; Habit formation; Obesity; Economic development; German reunification (search for similar items in EconPapers)
JEL-codes: D11 D12 D91 E21 I12 I15 L66 O33 Q18 R22 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:51:y:2017:i:c:p:41-65

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Journal of Health Economics is currently edited by J. P. Newhouse, A. J. Culyer, R. Frank, K. Claxton and T. McGuire

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