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 factors 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 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 household's earners.