Keeping up with the joneses: the role of interdependent preferences for private mobile phone consumption decision in Dire Dawa City, Ethiopia

In the context of modern, symbolically and materially driven global settings, particularly within collectivist and socially interconnected countries like Ethiopia, it is essential to critically examine the validity of interdependent preferences in shaping consumption decisions. Accordingly, this study aimed at addressing the role of interdependent preference for private mobile phone consumption decision among 925 workers of Commercial banks in Dire Dawa city, Ethiopia. In doing so, based on a primary data collected through structured questionnaire, the study employed spatial autoregressive binary probit model to capture the presence of interdependent preference among the workers. In this regard, relying on the demographic weight matrix formed using the number of mobile phones each worker own, a positive interdependence was found among the workers private mobile phone consumption decision. Additionally, the findings revealed that while age has a significant negative effect; sex, position at work, and marital status have a significant but positive effect on the workers' consumption of private phones differing in their country of production. To this end, the study result has important policy implications. First, in collectivist and poor country like Ethiopia, where positive interpersonal preferences are prevalent, polices aimed at boosting aggregate demand through increased consumption via income growth or tax cut may escalate wasteful competitions. Hence, policy makers should design income-consumption related policies in careful manner. Second, knowing the presence of positive interdependence may help brand personally good producers to anticipate consumer expenditure behaviors. Hence, they can increase their revenue through promoting product differentiation policies.