Working Papers

Non-Separable Time Preferences and Novelty Consumption: Theory and Evidence from the East German Transition to Capitalism

Davide Dragone, Nicolas R. Ziebarth

Non-separable intertemporal preferences and novelty consumption can explain the persistent correlation between economic development and obesity. Employing the German reunification as a fast motion natural experiment of economic development, we study how the sudden availability of novel food products impacts individual consumption patterns and body weight. Immediately after the reunification, East Germans consumed more novel western food and gained more weight than West Germans. The subsequent long-run persistence in food consumption and body weight among Eastern Germans cannot be explained by taste for variety; it provides evidence for habit formation in intertemporal consumption preferences.

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Paper Keywords

economic development, food consumption, German reunification, habit formation, learning, novel goods, obesity