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Keeping up with the Jansens: Causal Peer Effects on Household Spending, Beliefs and Happiness

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Abstract

CORRECT ORDER OF AUTHORS: van Rooij, Coibion, Georgarakos, Candia, Gorodnichenko. How does perceived relative income affect household behavior and well-being? We use a randomized information experiment in a representative panel of Dutch households to generate exogenous variation in beliefs about peers' income. Lower perceived relative standing shifts expenditure toward durable goods but we find little evidence of an increase in total spending. Higher perceived relative income increases socializing and substantially raises happiness, while lower relative income increases subsequent employment. Relative standing also shapes views about inequality and redistribution. A complementary vignette experiment provides supporting evidence on mechanisms. Overall, peer comparisons matter for behavior and well-being even when total spending responses are small.

Suggested Citation

  • Bernardo Candia & Olivier Coibion & Dimitris Georgarakos & Yuriy Gorodnichenko & Maarten van Rooij, 2026. "Keeping up with the Jansens: Causal Peer Effects on Household Spending, Beliefs and Happiness," Working Papers 26-29, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwq:103918
    DOI: 10.26509/frbc-wp-202629
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    2. Aruni Mitra & Ronit Mukherji, 2026. "Class, caste and conspicuous consumption in India," Economica, London School of Economics and Political Science, vol. 93(370), pages 439-467, April.
    3. Makridis, Christos A. & Wang, Tao, 2024. "Learning from Friends in a Pandemic: Social networks and the macroeconomic response of consumption," European Economic Review, Elsevier, vol. 169(C).
    4. Huang, Shiwei & Chen, Yu & Hu, Jie & Zhang, Weiping, 2026. "Dynamic panel data quantile regression with network-linked fixed effects," Journal of Econometrics, Elsevier, vol. 253(C).
    5. Valenzuela-Rivera, Luis & Pastén, Roberto, 2025. "Max-Neef's 'Threshold Hypothesis' - 30 years later," MPRA Paper 128419, University Library of Munich, Germany, revised 2026.
    6. Steffen Altmann & Robert Mahlstedt & Malte Jacob Rattenborg & Alexander Sebald & Sonja Settele & Johannes Wohlfart, 2026. "Wage Expectations and Job Search," CEBI working paper series 26-02, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).

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    Keywords

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    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D3 - Microeconomics - - Distribution
    • D6 - Microeconomics - - Welfare Economics
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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