Abstract

http://ssrn.com/abstract=1690612
 
 

References (35)



 
 

Citations (1)



 


 



Expenditure Cascades


Adam Seth Levine


Vanderbilt University

Robert H. Frank


Cornell University - Department of Economics

Oege Dijk


Center for Finance

September 13, 2010


Abstract:     
Prevailing economic models of consumer behavior completely ignore the well-documented link between context and evaluation. We propose and test a theory that explicitly incorporates this link. Changes in one group’s spending shift the frame of reference that defines consumption standards for others just below them on the income scale, giving rise to expenditure cascades. Our model, a descendant of James Duesenberry’s relative income hypothesis, predicts the observed ways in which individual savings rates respond to changes in both own and others’ permanent income, as well as numerous other stylized fact patterns that are difficult to reconcile with prevailing models.

Number of Pages in PDF File: 34

JEL Classification: D11, D12

working papers series





Download This Paper

Date posted: October 12, 2010  

Suggested Citation

Levine, Adam Seth and Frank, Robert H. and Dijk, Oege, Expenditure Cascades (September 13, 2010). Available at SSRN: http://ssrn.com/abstract=1690612 or http://dx.doi.org/10.2139/ssrn.1690612

Contact Information

Adam Seth Levine
Vanderbilt University ( email )
Nashville, TN 37240
United States
Robert Frank (Contact Author)
Cornell University - Department of Economics ( email )
414 Uris Hall
Ithaca, NY 14853-7601
United States
607-255-8501 (Phone)
607-254-4590 (Fax)
Oege Dijk
Center for Finance ( email )
Box 640
Gothenburg, 403 50
Sweden
Feedback to SSRN


Paper statistics
Abstract Views: 31,571
Downloads: 8,353
Download Rank: 279
References:  35
Citations:  1

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.344 seconds