Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/203263 
Year of Publication: 
2013
Series/Report no.: 
SAFE Working Paper No. 1
Version Description: 
December 6, 2013
Publisher: 
Goethe University Frankfurt, SAFE - Sustainable Architecture for Finance in Europe, Frankfurt a. M.
Abstract: 
Can concern with relative standing, which has been shown to influence consumption and labor supply, also increase borrowing and the likelihood of financial distress? We find that perceived peer income contributes to debt and the likelihood of financial distress among those who consider themselves poorer than their peers. We use unique responses describing perceived peer characteristics from a Dutch population-wide survey to handle major challenges of uncovering social interaction effects on borrowing: (i) debts, unlike conspicuous consumption, are often hidden from peers, and (ii) location is missing in anonymized data. We employ several approaches to uncover exogenous, rather than correlated, effects.
Subjects: 
Household finance
household debt
social interactions
mortgages
consumercredit
informal loans
JEL: 
G11
E21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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