Food Choices, the Novelty Effect and Health: Evidence from the East German Transition to Capitalism

"Even though the GDR […] was for the most part self-sufficient concerning production of food and consumer goods, the choice of items available to the average consumer was limited. It is a well-known fact that some of the first items East Germans bought during their excursions to West Berlin in November 1989 were bananas and other exotic fruits, which had not been available to them in the GDR. (p.81)" In: Ganter, Theresa M. (2008): Searching for a New German Identity, East German Studies/DDR Studien 16, Peter Lang (Bern).

Economic development goes along with an increase in food products and choices which arguably increases individual welfare. At the same time, economic development often goes along with increases in BMI and obesity. When consumers enjoy consuming new goods, changes in consumption may produce persistent weight and health consequences.

In the first part of the paper we develop a model of food choice that helps explain these phenomena. The model builds on the concept of a “novelty effect”, which implies that marginal utility of consumption is higher, the lower the past consumption of a good. This induces an initially high consumption that subsequently decreases over time as consumers get used to the good. When the availability of new food products increases, utility is expected to increase, but the change in the optimal basket of demanded goods can produce relevant and persistent changes in weight and health. In particular, the larger consumption of previously unknown or unavailable products may increase BMI and lead to persistent obesity.

In the second part of the paper, we exploit the natural experiment of the German reunification to empirically test the model predictions. It is a well-known fact that the unexpected fall of the Berlin Wall in 1989 dramatically increased food choices in East Germany over night. We make use of three representative cross-sectional datasets: (i) the German National Health Survey East-West 1991, (ii) the German National Health Interview and Examination Survey 1998” and (iii) the German Microcensus 2005. The first two surveys include a battery of current and retrospective information on nutrition, health, and body weight. The Microcensus 2005 allows us to test whether differences in body weight persist 16 years after the reunification.

The empirical evidence shows that, shortly after the fall of communism, East Germans changed their eating habits, gained weight, became more obese and less healthy. The change in eating habits and weight is still detectable a decade after capitalism increased food choices and welfare.