Household’s Consumer Behaviour: Economic Recession and Quality of Institution. The case of Italy


The recent crisis saw the Italian household cutting consumption spending reshaping expenses behaviours. In this respect the role of macroeconomic fac- tors like institutions has received poor theoretical treatment and is scarcely proven. Based on the Istat Household Budgetary Survey, this paper focuses on the effects of crisis on selected consumption items (energy; healthcare; leisure; travels; eating out) controlling for micro and macro factors, such the Institutional-Quality-Index (IQI) and the regional GDP. IQI emerge as cru- cial in determining household healthcare expenses before the recession: where the local endowment of institutional quality is higher, the private expenses for medical/dental care, pharmaceuticals and diagnostic tests, significantly decrease. The higher the quality of institutional quality, and then of pub- lic health services, the lower the private expenditure. The recession resets the impact of IQI and increases the positive correlation with strictly microe- conomic variables such as income, wealth and the number of household’s earners.

DOI Code: 10.1285/i20705948v12n1p277


Acemoglu, A., Johnson, S., and Robinson, J. (1987). The colonial origin of comparative development: an empirical investigation. American Economic Review, 91:1369–1401.

Aiello, F., Pupo, V., and Ricotta, F. (2015). Explaining tfp at firm level in italy. does location matter? International Review of Applied Economics, 29(5):1–29.

Ampudia, M., Pavlickova, A., Slacalek, J., and Vogel, E. (2016). Household heterogeneity in the euro area since the onset of the great recession. Journal of Policy Modelling, 38:181–197.

Anderloni, L. and Vandone, D. (2016). Vulnerabilità e benessere delle famiglie italiane. In di Milano-Forum Ania Consumatori, U., editor, La famiglia al tempo della crisi. Tra vulnerabilit ́a economica e nuove forme di tutela. Franco Angeli.

Aron, J., Duca, J., Muellbauer, J., Murata, K., and Murphy, A. (2010). Credit, hous- ing collateral and consumption: Evidence from the uk, japan and the us. CEPR Discussion Paper.

Attanasio, O., Blow, L., Hamilton, R., and Leicester, A. (2009). Booms and busts: Consumption, house prices and expectations. Economica, 76(301):20–50.

Barbi, E., Frova, L., Gargiulo, L., Pappagallo, M., and Tomassini, C. (2015). Soprav- vivenza e salute. In De Rose, A. and Strozza, S., editors, Rapporto sulla popolazione. L’Italia nella crisi economica. Il Mulino.

Barro, R. (1974). Are government bonds net wealth? Journal of Political Economy, 82. Berg, L. (2015). Consumers vulnerability: are older people more vulnerable as consumers

than others? International Journal of Consumers Studies, 39:284–293.

Blanchard, O. (2009). Sustaining a global recovery. Finance and Development, pages


Bottazzi, R., Trucchi, S., and Wakefield, M. (2013). Wealth effect and the consumption

of italian households in the great recession. Institute for Fiscal Studies.

Bover, O. (2005). Wealth effects on consumption: Microeconometric estimates from the

spanish survey of household finances.

Bronner, F. and De Hoog, R. (2012). Economizing strategies during an economic crisis. Annals of tourism research, 39(1):1048–1069.

Buiter, W. (2012). Housing wealth isn’t wealth. Economics: The Open-Access, 4(22).

Campbell, J. and Cocco, J. (2007). How do house prices affect consumption? evidence from micro data. Journal of Monetary Economics, 54(3):591–621.

Campos-Soria, J., Inchausti-Sintes, F., and Eugenio-Martin, H. (2015). Understanding tourists’ economizing strategies during the global economic crisis. Tourism Manage- ment, 48:164–173.

Carroll, C., Otsuka, M., and Slacalek, J. (2011). How large are housing and financial wealth effects? a new approach. Journal of Money, Credit and Banking, 43(1):55–79.

Christelis, D., Georgarakos, D., and Jappelli, T. (2015). Wealth shocks, unemployment shocks and consumption in the wake of the great recession. Journal of Monetary Economics, 72:21–41.

Crossley, T., Low, H., and O’Dea, C. (2013). Household consumption through recent recessions. Fiscal Studies, 34(2):203–229.

Cutler, D., Huang, W., and Lleras-Muney, A. (2014). When does education matter? the protective effect of education for cohorts graduating in bad times.

Danzigher, S., Chavez, K., and Cumberworth, E. (2012). Poverty and the great recession. Recession trends.

Del Monte, A. and Giannola, A. (1997). Istituzioni economiche e Mezzogiorno. La Nuova Italia Scientifica.

Disney, R., Gathergood, J., and Henley, A. (2010). House price shocks, negative equity, and household consumption in the united kingdom. Journal of the European Economic Association, 8(6):1179–1207.

Djankov, S., La Porta, R., Lopez De Silanes, F., and Shleifer, A. (2002). The regulation of entry. Quarterly Journal of Economics, 117:1–37.

Easterly, W. and R, L. (2003). Tropics, germs and crops: the role of endowments in economic development. Journal of monetary economics, 50:3–39.

Erbetta, F. and Petraglia, C. (2011). Drivers of regional efficiency differentials in italy: technical inefficiency or allocative distortions?

Eugenio-Martin, J. and Campos-Soria, J. (2014). Economic crisis and tourism expendi- ture cutback decision. Annals of Tourism Research, 44:53–73.

Fenz, G. and Fessler, P. (2008). Wealth effects on consumption in austria. Monetary Policy & the Economy, 4:68–84.

Fry, S. and Ritchie, F. (2011). Impact of the recession on household expenditure. Family spending, 1:84–124.

Fukuyama, F. (1995). Trust: Social Virtues and the Creation of Prosperity. Free Press.

Gittins, P. and Luke, S. (2012). Impact of recession on household spending.

Glaeser, E., La Porta, L., Lopez-De-Silanes, F., and Shleifer, A. (2004). Do institutions cause growth?

Greenlaw, D., Hatzius, J., Kashyap, A., and Shin, H. (2008). Leveraged losses: Lessons from the mortgage market meltdown.

Guiso, L., Paiella, M., and Visco, I. (2005). Do capital gains affect consumption? esti-

mates of wealth effects from italian households’ behavior.

Hall, R. and Jones, C. (1999). Why do some countries produce so much more output

per worker? Quarterly Journal of Economics, 114:83–116.

Hurd, M. and Rohwedder, S. (2010). The effects of the economic crisis on the older


Jappelli, T. and L, P. (2000). Using subjective income expectations to test for excess sensitivity of consumption to predicted income growth. European Economic Review, 44(2):337–358.

Kamakura, W. and Du, R. (2012). How economic contractions and expansions affect expenditure patterns. Journal of consumer research, 39(2):229–247.

Kaytaz, M. and Gul, M. (2014). Consumer response to economic crisis and lessons for marketers: The turkish experience. Journal of Business Research, 67:2701–2706.

Keynes, J. (1939). Keynes on the distribution of income and the propensity to consume: A reply. Review of Economics and Statistics, 21(3):129.

Kwok, C. and Tadesse, S. (2006). National culture and financial systems. Journal of International Business Studies, 37:227–247.

La Porta, R., Lopez-De-Silanes, F., Shleifer, A., and Vishny, R. (1998). The quality of government.

Lasagni, A., Nifo, A., and Vecchione, G. (2015). Firm productivity and institutional quality. evidence from italian industry. Journal of Regional Science, 55(5):774–800.

Lee, J., Rabanal, P., and Sandri, D. (2010). U.s. consumption after the 2008 crisis.

Lindstrom, M. and Giordano, G. (2016). The 2008 financial crisis: Changes in social capital and its association with psychological wellbeing in the united kingdom. a panel study. Social Science and Medicine, 153:71–80.

Mansoor, D. and Jalal, A. (2011). The global business crisis and consumer behavior: Kingdom of bahrain as a case study. International Journal of Business and Manage- ment, 6(1):104–114.

Modigliani, F. (1971). Monetary policy and consumption: Linkagesvia interest rate and wealth effects in the fmp model. Consumer Spending and Monetary Policy: The Linkages.

Modigliani, F. and Brumber, R. (1954). Utility analysis and the consumption func- tion: an interpretation of cross-section data. In Kenneth, K., editor, Post Keynesian Economics, pages 388–436. Rutgers University Press, , New Brunswick.

Muellbauer, J. (2010). Household decisions, credit markets and the macroeconomy: Implications for the design of central bank models.

Muellbauer, J. and Lattimore, R. (1994). The consumption function: A theoretical and empirical overview. Handbook of Applied Econometrics.

Nifo, A. (2011). L’industria del mezzogiorno: un’analisi empirica sui divari di produttività. Economia e politica industriale, 38(3):105–126.

Nifo, A. and Vecchione, G. (2014). Do institutions play a role in skilled migration? the case of italy. Regional Studies, 48(10):1628–1649.

Nifo, A. and Vecchione, G. (2015). Measuring institutional quality index. Rivista di Economia del Mezzogiorno, 1–2:157–182.

Nistorescu, T. and Puiu, S. (2009). Marketing strategies used in the crisis - case study. Paiella, M. (2007). Does wealth affect consumption? evidence for italy. Journal of

Macroeconomics, 29(1):189–205.

Petev, I. and Pistaferri, L. (2012). Consumption in the great recession.

Pistaferri, L. (2001). Superior information, income shocks, and the permanent income hypothesis. Review of Economics and Statistics, 83(3):465–476.

Poterba, J. (2000). Stock market wealth and consumption. Journal of Economic Per- spectives, 14(2):99–118.

Putnams, R. (1993). Making Democracy Work: Civic Traditions in Modern Italy. Prince- ton University Press.

Rodrik, D., Subramanian, A., and Trebbi, F. (2004). Institutions rule: the primacy of institutions over geography and integration in economic development. Journal of Economic Growth, 9:131–165.

Sandri, D. (2009). The impact of uncertainty shocks on consumption: The 2008 u.s. crisis.

Scalera, D. and Zazzaro, A. (2010). L’economia del mezzogiorno. nuova politica regionale, crisi globale e federalismo fiscale. La finanza pubblica italiana.

Zurawicki, L. and Braidot, N. (2005). Consumers during crisis: responses from the middle class in argentina. Journal of Business Research, 58:1100–1109.

Full Text: pdf

Creative Commons License
This work is licensed under a Creative Commons Attribuzione - Non commerciale - Non opere derivate 3.0 Italia License.