Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/264933 
Year of Publication: 
2021
Series/Report no.: 
Working Paper No. 10/2021
Publisher: 
Norges Bank, Oslo
Abstract: 
I estimate the effect of lottery winnings on peers' debt accumulation using administrative data from Norway. I identify neighbors of lottery winners, and estimate an average debt response of 2.1 percent of the lottery prize among households that live up to ten houses from the winner. Analyzing heterogeneity, I find that neighborhood characteristics and shared characteristics with the winner matter for the debt response: there is a tendency for greater effects for those (1) residing closest to the winner, (2) residing in single-household dwellings, (3) with a longer tenure, and (4) with a household structure similar to that of the winner. Finally, estimates of the (imputed) expenditure response among neighbors indicate that they accumulate debt to finance increased spending, consistent with a "keeping-up-with-the Joneses" type explanation, where neighbors react to each others expenditure.
Subjects: 
peer effects
debt accumulation
income shocks
network homophily
household finance
JEL: 
D14
D31
D91
E21
G51
Persistent Identifier of the first edition: 
ISBN: 
978-82-8379-205-8
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper
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