IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/32186.html
   My bibliography  Save this paper

Friends with Benefits: Social Capital and Household Financial Behavior

Author

Listed:
  • Brad Cannon
  • David Hirshleifer
  • Joshua Thornton

Abstract

Using friendship data from Facebook, we find that among three aspects of social capital, Economic Connectedness — the fraction of one’s social network with high income, has the strongest and most robust relationship with stock market and saving participation. One standard-deviation greater Economic Connectedness is associated with 10.6% greater stock market participation and 9.2% greater saving participation. Evidence from non-local friendships supports a causal link between household financial behavior and the income of one’s friends. Our results indicate that the effect of Economic Connectedness on participation derives from opportunities to interact with high-SES individuals rather than from class-based friending propensities.

Suggested Citation

  • Brad Cannon & David Hirshleifer & Joshua Thornton, 2024. "Friends with Benefits: Social Capital and Household Financial Behavior," NBER Working Papers 32186, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32186
    Note: AP DEV
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w32186.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nyakurukwa, Kingstone & Seetharam, Yudhvir & Chipeta, Chimwemwe, 2025. "The role of acquaintances' characteristics in shaping digital payment technology," Finance Research Letters, Elsevier, vol. 76(C).

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • G4 - Financial Economics - - Behavioral Finance
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G5 - Financial Economics - - Household Finance
    • G50 - Financial Economics - - Household Finance - - - General
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:32186. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.