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Social Influence and Consumption: Evidence from the Automobile Purchases of Neighbors

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Listed:
  • Mark Grinblatt

    (The Anderson School at UCLA and NBER)

  • Matti Keloharju

    (Helsinki School of Economics and CEPR)

  • Seppo Ikäheimo

    (Helsinki School of Economics)

Abstract

This study analyzes the automobile purchase behavior of all residents of two Finnish provinces over several years. Using a comprehensive data set with location coordinates at the individual consumer level, it finds that the purchases of neighbors, particularly in the recent past and by those who are geographically most proximate, influence a consumer's purchases of automobiles. There is little evidence that emotional biases, like envy, account for the observed social influence on consumption. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Mark Grinblatt & Matti Keloharju & Seppo Ikäheimo, 2008. "Social Influence and Consumption: Evidence from the Automobile Purchases of Neighbors," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 735-753, November.
  • Handle: RePEc:tpr:restat:v:90:y:2008:i:4:p:735-753
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