Affording expensive ceremonies: Evidence from quinceañeras in Mexico

Despite their limited resources, low-income households in developing countries spend considerably on festivals and ceremonies. How do they afford this, and how do such events affect their economic outcomes? I address these questions using a coming-of-age ceremony in Latin cultures called a quinceañera. To overcome the endogeneity associated with ceremony timing, I exploit a unique feature of quinceañeras that only households with a 15-year-old girl have the ceremony. With repeated cross-sectional data from Mexico, I show that households fund quinceañeras using savings, transfers from other households, and increased labor supply by mothers. However, quinceañeras decrease the probability that households engage in non-agricultural businesses, suggesting that ceremonial expenses crowd out business resources. My study provides insights into how households facing incomplete credit markets in developing countries manage large expenditures.