Social Influence and Consumption: Evidence from the Automobile Purchases of Neighbors

53 Pages Posted: 22 Jun 2007

See all articles by Mark Grinblatt

Mark Grinblatt

University of California, Los Angeles (UCLA) - Finance Area; Yale University - International Center for Finance; National Bureau of Economic Research (NBER)

Matti Keloharju

Aalto University - School of Business; Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR)

Seppo Ikaheimo

Aalto University - Department of Accounting and Finance; Aalto University

Multiple version iconThere are 2 versions of this paper

Date Written: June 2007

Abstract

This study analyzes the automobile purchase behavior of all residents of two Finnish provinces over several years. Using a comprehensive dataset with location coordinates at the individual consumer level, it finds that the purchases of neighbors, particularly in the recent past and by those who are geographically most proximate, influence a consumer's purchases of automobiles. There is little evidence that emotional biases, like envy, account for the observed social influence on consumption.

Keywords: Social influennce, consumption, network effects, automobiles

JEL Classification: A10, D10, D12

Suggested Citation

Grinblatt, Mark and Keloharju, Matti and Ikaheimo, Seppo and Ikaheimo, Seppo, Social Influence and Consumption: Evidence from the Automobile Purchases of Neighbors (June 2007). Available at SSRN: https://ssrn.com/abstract=995855 or http://dx.doi.org/10.2139/ssrn.995855

Mark Grinblatt

University of California, Los Angeles (UCLA) - Finance Area ( email )

Los Angeles, CA 90095-1481
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Yale University - International Center for Finance

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National Bureau of Economic Research (NBER)

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Matti Keloharju (Contact Author)

Aalto University - School of Business ( email )

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Research Institute of Industrial Economics (IFN) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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Seppo Ikaheimo

Aalto University ( email )

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Finland

Aalto University - Department of Accounting and Finance ( email )

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