Teachers Teaching Teachers: The Role of Workplace Peer Effects on Financial Decisions
58 Pages Posted: 5 Nov 2015 Last revised: 5 Aug 2018
Date Written: July 24, 2018
This paper studies the role of workplace peers in the transmission of information pertinent to an important household financial decision: the mortgage refinancing choice. Exploiting commonalities in teaching schedules of school teachers in Texas to identify peer groups, we find that refinancing activity among a teacher's peers increases her likelihood of refinancing by 20.7%. The effect of peers increases with the potential savings realized upon refinancing, and is stronger among younger teachers. Peers also affect a teacher's choice of lender. Overall, our findings suggest that peer interactions greatly reduce a household's cost of acquiring and processing financial information.
Keywords: Household Finance, Peer Effects, Mortgages, Refinancing
JEL Classification: D71, G21, H31, R20
Suggested Citation: Suggested Citation