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Abstract

I estimate habit formation to dietary fat in two categories of common food products: ground meat and fluid milk. Products in each category display salient fat content information on the packaging and are identical in nearly all aspects other than fat content. This allows habit formation to be based on levels of fat content and eliminates bias arising from unobservable product attributes. I construct a dynamic AIDS model using scanner-generated household purchases of five ground meat products and four fluid milk products during the period 2004 to 2014. Results show strong habit formation to all products in the two categories. In addition, there is modest evidence of a positive association between habit formation and dietary fat for products in both categories. With the exception of fat-free milk, all high fat products exhibit stronger habit formation than low fat products in the ground meat and fluid milk category.

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