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The effect of social pressure on expenditures in Malawi

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  • Goldberg, Jessica

Abstract

I vary the observability of windfall payments to 291 members of agricultural clubs in rural Malawi in order to study the effect of redistributive pressure on the timing of expenditures. While other studies have documented that social pressure affects the quantity of income and consumption, I focus on timing because spending money quickly may be a strategy for reducing obligatory transfers. Respondents who receive money in the presence of their agricultural club anticipate spending an extra 14 percent (0.28 standard deviations) in the week immediately following the payment than those who receive equivalent transfers in private settings. There are limited changes in the composition of spending, but some evidence that social pressure to share windfall income has a larger effect on poorer households.

Suggested Citation

  • Goldberg, Jessica, 2017. "The effect of social pressure on expenditures in Malawi," Journal of Economic Behavior & Organization, Elsevier, vol. 143(C), pages 173-185.
  • Handle: RePEc:eee:jeborg:v:143:y:2017:i:c:p:173-185
    DOI: 10.1016/j.jebo.2017.09.005
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    References listed on IDEAS

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