Impulsive Consumption and Financial Well-Being: Evidence from an Increase in the Availability of Alcohol

Identification of causal effects using instrumental variables

Itzhak Ben-David and Marieke Bos

The Review of Financial Studies, 2021, vol. 34, issue 5, 2608-2647

Abstract: The increased availability of alcohol may harm individuals who 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 on 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.

JEL-codes: D12 D91 I18 L51 L66 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Working Paper: Impulsive Consumption and Financial Wellbeing: Evidence from an Increase in the Availability of Alcohol (2017)
Working Paper: Impulsive Consumption and Financial Wellbeing: Evidence from an Increase in the Availability of Alcohol (2017)
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