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16:30 | Applied Micro Research Seminar
Marit Hinnosaar (JOB TALK): “Time Inconsistency and Alcohol Sales Restrictions”
Northwestern University, Evanston, Illinois, USA
Abstract: Restrictions on alcohol sales hours or days are commonly used tools in order to reduce alcohol consumption. However, a forward looking consumer can buy in advance, thereby mostly undo the impact of the restriction. I study whether time inconsistent consumer preferences can provide a justification for restrictions on alcohol sales time. I estimate a demand model which allows a fraction of consumers to be time inconsistent, using scanner data of beer purchases and other shopping behavior. According to the estimation results, 20% of consumers are time inconsistent and they account for 64% of beer consumption. I find that Sunday sales restriction decreases weekend consumption by the same amount as a sales tax increase by 21 percentage points. In terms of consumer welfare, the sales restriction is preferable to the tax increase.
Full Text: “Time Inconsistency and Alcohol Sales Restrictions”
