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Emulation and state-by-state variations in bankruptcy rates

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  • Adkisson, Richard V.
  • Saucedo, Eduardo

Abstract

This paper explores differences in personal bankruptcy rates across the American states. Particular emphasis is given to the Veblenian idea of emulative consumption where a desire to “keep up with the Jones”’ results in over-borrowing leading eventually to bankruptcy. The paper posits an empirical model that incorporates a set of standard variables mentioned in the literature and variables specifically related to emulation, income level, income distribution and urbanization. Using state level pooled data for the period 2000–2009 the paper finds that the more unequal the distribution of income in a state and the more urban the state, the greater the bankruptcy rate in the state. These basic findings point to emulative consumption behavior as an important factor in explaining differences in personal bankruptcies across the states.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

Volume (Year): 41 (2012)
Issue (Month): 4 ()
Pages: 400-407

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Handle: RePEc:eee:soceco:v:41:y:2012:i:4:p:400-407

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Web page: http://www.elsevier.com/locate/inca/620175

Related research

Keywords: Bankruptcy; Emulation; Conspicuous consumption; Income distribution;

References

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  15. Jon D. Wisman, 2008. "Household Saving, Class Identitiy, and Conspicuous Consumption," Working Papers 2008-19, American University, Department of Economics.
  16. Markus Christen & Ruskin Morgan, 2005. "Keeping Up With the Joneses: Analyzing the Effect of Income Inequality on Consumer Borrowing," Quantitative Marketing and Economics, Springer, vol. 3(2), pages 145-173, June.
  17. Heather Boushey & Christian Weller, 2008. "Has Growing Inequality Contributed to Rising Household Economic Distress?," Review of Political Economy, Taylor & Francis Journals, vol. 20(1), pages 1-22.
  18. John M. Barron & Michael E. Staten & Stephanie M. Wilshusen, 2002. "The Impact Of Casino Gambling On Personal Bankruptcy Filing Rates," Contemporary Economic Policy, Western Economic Association International, vol. 20(4), pages 440-455, October.
  19. Kathleen W. Johnson, 2005. "Recent developments in the credit card market and the financial obligations ratio," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Aut, pages 473-486.
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  21. Ning Zhu, 2011. "Household Consumption and Personal Bankruptcy," The Journal of Legal Studies, University of Chicago Press, vol. 40(1), pages 1 - 37.
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