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He _________ in wearing the old fashioned coat in spite of his wife's disapproval.

What is the general difference in usage between "persists" and "insists"? Which fits into this sentence, and why?

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Persists is the correct word here.

In this sentence, persists in is grammatically correct. If you wanted to use insists, you would use insists on: "insist on" vs "insist"

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He persists in wearing: He continues to wear his old coat.

He insists on wearing: He continues demanding to wear his old coat.

The question is purely grammatical, “on” can only be preceded by persists. Usually you would start with the facts and find the correct word or words. “Persists” means he is actually doing it, “insists” is just the demand. He insisted on wearing his old coat, but he couldn’t because his wife had thrown it away.

(He persisted in wearing his old coat, but he couldn’t because his wife had thrown it away: Grammatically correct, but cannot be factually true.)

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