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 behaviors. In this respect, the role of macroeconomic factors like institutions received poor theoretical and empirical attention and is little investigated. Based on the ISTAT Household Budgetary Survey, this paper focuses on the effects of crisis on selected consumption items (energy; healthcare; leisure; travels; out-of-home food) controlling for micro and macro factors, such the Institutional-Quality-Index (Nifo and Vecchione, 2014, 2015) and the regional GDP. IQI emerges as crucial 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 public health services, the lower the private expenditure. The recession resets the impact of IQI and increases the positive correlation with strictly microeconomic variables such as income, wealth and the number of households' earners.