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

Posted: 18 Oct 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

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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, Social Influence and Consumption: Evidence from the Automobile Purchases of Neighbors. Review of Economics and Statistics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1021960

Mark Grinblatt

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

Los Angeles, CA 90095-1481
United States
310-825-1098 (Phone)
310-206-5455 (Fax)

Yale University - International Center for Finance

Box 208200
New Haven, CT 06520-8200
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Matti Keloharju (Contact Author)

Aalto University - School of Business ( email )

P.O. Box 21210
AALTO, FI-00076
Finland
+358 40 353 8043 (Phone)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Seppo Ikaheimo

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101
Finland

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