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

Ivalina Kalcheva, Ping McLemore, and Richard Sias

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 analyses reveal 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 more 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.