Habitual Consumption, Individual Trade Preference, and Recessionary Periods

• In Event: Poster Session: International Political Economy I

Abstract

A large body of research analyzes the rise of protectionist policy-making during economic recessions. However, do individuals actually prefer protectionist policies during recessionary periods? This paper draws on a habit formation model to show how consumer purchasing habits sustain liberal trade preferences through recessionary periods. The model offers conditions under which consumers develop a habit for imported goods. As income is restrained, consumers must either forgo imports or act to oppose protectionism. This paper creates a broader dialogue regarding individuals beyond their roles as workers and voters but also as consumers, and the potential impact their preferences can have on policy. I demonstrate this empirically through survey data that analyzes how habit for imported goods informs preferences for liberal trade during economic recessions.

Author

• Jingwei Maggie Li, The University of Chicago