TY - JOUR
T1 - Thy Neighbor’s Misfortune
T2 - Peer Effect on Consumption
AU - Agarwal, Sumit
AU - Qian, Wenlan
AU - Zou, Xin
N1 - Publisher Copyright:
© 2021, American Economic Journal: Economic Policy. All Rights Reserved
PY - 2021/5
Y1 - 2021/5
N2 - 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.
AB - 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.
UR - http://www.scopus.com/inward/record.url?scp=85125058319&partnerID=8YFLogxK
U2 - 10.1257/pol.20170634
DO - 10.1257/pol.20170634
M3 - Journal article
AN - SCOPUS:85125058319
SN - 1945-7731
VL - 13
SP - 1
EP - 25
JO - American Economic Journal: Economic Policy
JF - American Economic Journal: Economic Policy
IS - 2
ER -