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Interpersonal Effects in Consumption: Evidence from the Automobile Purchases of Neighbors

  • Mark Grinblatt
  • Matti Keloharju
  • Seppo Ikaheimo

This study analyzes the automobile purchase behavior of all residents of two Finnish provinces over several years. It finds that a consumer's purchases are strongly influenced by the purchases of his neighbors, particularly purchases in the recent past and by neighbors who are geographically most proximate. There is little evidence that emotional biases, like envy or an urge to conform, lie behind the interpersonal influence in automobile consumption. The most reasonable alternative explanation for these findings is some form of information sharing among neighbors.

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File URL: http://www.nber.org/papers/w10226.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10226.

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Date of creation: Jan 2004
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Handle: RePEc:nbr:nberwo:10226
Note: AP
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