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Neighbourhood Effects in Consumption: Evidence from Disaggregated Consumption Data

  • Teodora Boneva
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    This paper identifies neighbourhood effects in consumption using the randomized nature of the Progresa programme. Recent studies establish that the programme affects the consumption of both eligible and neighbouring ineligible households but the underlying mechanism of the spillovers is not fully understood. I use disaggregated consumption data to distinguish between changes in consumption which result from changes in neighbourhood consumption and changes in consumption which are a result of income transfers between households. Using a flexible demand model that accounts for total expenditure, prices and household characteristics, I find that neighbourhood consumption has a substantial effect on household consumption choices

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    File URL: http://www.econ.cam.ac.uk/research/repec/cam/pdf/cwpe1328.pdf
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    Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 1328.

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    Date of creation: 15 Aug 2013
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    Handle: RePEc:cam:camdae:1328
    Contact details of provider: Web page: http://www.econ.cam.ac.uk/index.htm

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    1. Lalive, Rafael & Cattaneo, Maria Alejandra, 2006. "Social Interactions and Schooling Decisions," IZA Discussion Papers 2250, Institute for the Study of Labor (IZA).
    2. Karen E. Dynan, 2000. "Habit Formation in Consumer Preferences: Evidence from Panel Data," American Economic Review, American Economic Association, vol. 90(3), pages 391-406, June.
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    4. Atkinson, A B & Gomulka, J & Stern, N H, 1990. "Spending on Alcohol: Evidence from the Family Expenditure Survey 1970-1983," Economic Journal, Royal Economic Society, vol. 100(402), pages 808-27, September.
    5. Kapteyn, A.J. & van der Geer, S. & van de Stadt, H. & Wansbeek, T.J., 1989. "Interdependent preferences : An econometric analysis," Discussion Paper 1989-54, Tilburg University, Center for Economic Research.
    6. Alessie, Rob & Kapteyn, Arie, 1991. "Habit Formation, Interdependent References and Demographic Effects in the Almost Ideal Demand System," Economic Journal, Royal Economic Society, vol. 101(406), pages 404-19, May.
    7. repec:cup:cbooks:9780521296762 is not listed on IDEAS
    8. Gustavo J. Bobonis & Frederico Finan, 2009. "Neighborhood Peer Effects in Secondary School Enrollment Decisions," The Review of Economics and Statistics, MIT Press, vol. 91(4), pages 695-716, November.
    9. Skoufias, Emmanuel & Davis, Benjamin & de la Vega, Sergio, 2001. "Targeting the Poor in Mexico: An Evaluation of the Selection of Households into PROGRESA," World Development, Elsevier, vol. 29(10), pages 1769-1784, October.
    10. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    11. Blundell, Richard & Pashardes, Panos & Weber, Guglielmo, 1993. "What Do We Learn About Consumer Demand Patterns from Micro Data?," American Economic Review, American Economic Association, vol. 83(3), pages 570-97, June.
    12. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
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