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Neighbourhood Effects in Consumption: Evidence from Disaggregated Consumption Data

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  • Teodora Boneva
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    Abstract

    This paper identifies neighbourhood effects in consumption using the randomized nature of the Progresa programme. Recent studies establish that the programme affects the consumption of both eligible and neighbouring ineligible households but the underlying mechanism of the spillovers is not fully understood. I use disaggregated consumption data to distinguish between changes in consumption which result from changes in neighbourhood consumption and changes in consumption which are a result of income transfers between households. Using a flexible demand model that accounts for total expenditure, prices and household characteristics, I find that neighbourhood consumption has a substantial effect on household consumption choices

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    File URL: http://www.econ.cam.ac.uk/research/repec/cam/pdf/cwpe1328.pdf
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    Bibliographic Info

    Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 1328.

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    Date of creation: 15 Aug 2013
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    Handle: RePEc:cam:camdae:1328

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    Web page: http://www.econ.cam.ac.uk/index.htm

    Related research

    Keywords: Social interactions; consumption; field experiments; Progresa;

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    1. Atkinson, A B & Gomulka, J & Stern, N H, 1990. "Spending on Alcohol: Evidence from the Family Expenditure Survey 1970-1983," Economic Journal, Royal Economic Society, vol. 100(402), pages 808-27, September.
    2. Rafael Lalive & Alejandra Cattaneo, 2006. "Social Interactions and Schooling Decisions," IEW - Working Papers 298, Institute for Empirical Research in Economics - University of Zurich.
    3. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    4. Skoufias, Emmanuel & Davis, Benjamin & de la Vega, Sergio, 2001. "Targeting the Poor in Mexico: An Evaluation of the Selection of Households into PROGRESA," World Development, Elsevier, vol. 29(10), pages 1769-1784, October.
    5. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
    6. Gustavo J. Bobonis & Frederico Finan, 2009. "Neighborhood Peer Effects in Secondary School Enrollment Decisions," The Review of Economics and Statistics, MIT Press, vol. 91(4), pages 695-716, November.
    7. Karen E. Dynan, 2000. "Habit Formation in Consumer Preferences: Evidence from Panel Data," American Economic Review, American Economic Association, vol. 90(3), pages 391-406, June.
    8. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, October.
    9. Blundell, Richard & Pashardes, Panos & Weber, Guglielmo, 1993. "What Do We Learn About Consumer Demand Patterns from Micro Data?," American Economic Review, American Economic Association, vol. 83(3), pages 570-97, June.
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