Thy Neighbor's Misfortune: Peer Effect on Consumption

• 成果类型: Article
• 署名作者: Agarwal, Sumit; Qian, Wenlan; Zou, Xin
• 署名单位: National University of Singapore; National University of Singapore; Hong Kong Baptist University
• 刊物名称: AMERICAN ECONOMIC JOURNAL-ECONOMIC POLICY
• ISSN/ISSBN: 1945-7731
• DOI: 10.1257/pol.20170634
• 发表日期: 2021
• 页码: 1-25
• 关键词: anticipated income changes; liquidity constraints; household consumption; consumer response; predictable changes; debt response; savings; portfolio; BEHAVIOR; matter

摘要

Using a large, representative sample of credit and debit card transactions in Singapore, this paper studies the consumption response of individuals whose same-building neighbors experienced personal bankruptcy. The unique bankruptcy rules in Singapore suggest liquidity shocks drive personal bankruptcy decisions, leading to a substantial drop in consumption for the bankrupt. Peers' monthly card consumption decreases by 3.4 percent over the 1-year postbankruptcy period. There exists no consumption decrease among individuals in immediately adjacent buildings nor for consumers with diminished postevent social ties with the bankrupt. The findings imply a significant social multiplier effect of 2.8 times the original consumption shock.