EconPapers    
Economics at your fingertips  
 

Deep habits in consumption: a spatial panel analysis using scanner data

Benjamin Verhelst () and Dirk Van den Poel ()

Empirical Economics, 2014, vol. 47, issue 3, 959-976

Abstract: Using scanner data from a large European retailer, this paper empirically assesses deep habit formation in consumption. Deep habit formation constitutes a possible source of price stickiness and helps to mimic procyclical labour and real wage dynamics that are present in macrodata. To gauge the existence and the extent of deep habits in consumption, we estimate a dynamic time–space simultaneous model for consumption expenditure at different levels of product aggregation. This spatial panel model enables us to test for both internal and external deep habit formation at the same time. The former captures inertia or persistence in consumption and is included in the empirical specification as a time lag. The latter captures preference interdependence across households and is captured by a spatial lag. Our results show mixed evidence with respect to internal habit formation, whereas the external habit effect is almost always positive and significant. Copyright Springer-Verlag Berlin Heidelberg 2014

Keywords: Deep habits; Preference interdependence; Spatial panel; C33; C38; D12; L14 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1007/s00181-013-0776-4 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Deep Habits in Consumption: A Spatial Panel Analysis Using Scanner Data (2012) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:empeco:v:47:y:2014:i:3:p:959-976

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-013-0776-4

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2022-10-19
Handle: RePEc:spr:empeco:v:47:y:2014:i:3:p:959-976