The political economy of regime switching and preferences for inter-temporal consumption: an application to Pakistan  

Oleh:

Akhter, Syed Toqueer ; Tanveer, Fatima

Jenis: Article from Proceeding
Dalam koleksi: SIBR-Thammasat 2014 Conference on Interdisciplinary Business & Economics Research June 5th- 7th, 2014 di Emerald Hotel Bangkok, page 1-45.
Topik: Democracy; Ordered Probit Regression; Terrorism; Time Inconsistent Preference
Fulltext: b14-107.pdf (378.61KB)

Isi artikel

Impulse buying behavior, based on the time- inconsistent preferences theory, has been subject to disastrous personal and societal consequences but still has been in vogue for many years. The paper discusses time inconsistent consumption propensities in Pakistan, primarily impulsive purchasing in relation to two competing regimes, namely democratic regime and military rule. Amnesty International Ratings reported high political imprisonment and terror during military eras in Pakistan, signifying widespread repression. This creates emptiness in people, provoking an environment of distress and anxiety, to overcome which people indulge in consumerism in order to create their own social identity. In the analysis, the interplay of political regime with the intent upon buying behavior has been conferred through the aspect of terrorism that is more rampant in democratic regimes than otherwise as they are viewed as politically unstable. The freedom of media and civil liberties lowers the cost of carrying out terrorism in democracy while creating an environment of uncertainty that induces fear and risk in decision making and discourages purchases. In the study, primary data was collected ii using unstructured questionnaires from respondents of various social classes across Pakistan. In order to validate the impact of regime, alone and in interaction with terrorism and inflation two competing models, namely Ordered Probit and Median Regression have been estimated. Both models suggest that in democratic regimes, people exhibit less impulsivity in purchases as the risk and incidences of terrorism leads to fear arousal and creates a sense of insecurity therefore a negative relationship is seen among the two. Moreover, the perception of inflation in democracy affects impulse buying negatively as the focus of democratic regimes was on money creation that increases inflation, validating the hypotheses that impulse buying decreases in the democratic regime also because price levels are high. Other factors such as gender, income, social influence, and mood states have also been identified as significant variables.

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