Economic Policy Uncertainty and Self-Control: Evidence from Unhealthy Choices

Ivalina Kalcheva, Ping McLemore, Richard Sias

Research output: Contribution to journalArticlepeer-review

Abstract

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.

Original languageEnglish (US)
JournalJournal of Financial and Quantitative Analysis
DOIs
StateAccepted/In press - 2020

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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