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Household Finances and Social Interaction

Author

Listed:
  • Sarah Brown

    (Department of Economics, The University of Sheffield)

  • Karl Taylor

    (Department of Economics, The University of Sheffield)

Abstract

In this paper, we investigate the relationship between social interaction and household finances using data from the British Household Panel Survey. We explore how social interaction influences the probability of holding different types of unsecured debt and assets, as well as how social interaction influences the levels of unsecured debt, financial assets and net worth held. Our findings suggest that social interaction has a positive influence upon the types of financial assets held, which is particularly pronounced for the holding of stocks and shares. Social interaction is also found to influence the amount of financial assets held as well as the level of household net worth. In contrast, there appears to be no clear relationship between social interaction and the holding of unsecured debt, suggesting that social interaction has distinct effects across different parts of the household balance sheet. When we instrument the measure of social interaction, our results once again endorse the finding that social interaction impacts differently on debt and asset holding. Interestingly, in this case, our findings support an inverse association between debt and social interaction.

Suggested Citation

  • Sarah Brown & Karl Taylor, 2012. "Household Finances and Social Interaction," Working Papers 2012007, The University of Sheffield, Department of Economics.
    • Handle: RePEc:shf:wpaper:2012007
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    File URL: http://www.shef.ac.uk/economics/research/serps/articles/2012_007.html
    File Function: First version, 2012
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    assets; debt; household finances; social interaction.;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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