Household Finances and Social Interaction: Bayesian Analysis of Household Panel Data

22 Pages Posted: 16 Aug 2016

See all articles by Sarah Brown

Sarah Brown

University of Sheffield

Pulak Ghosh

Indian Institute of Management (IIMB), Bangalore

Karl Taylor

University of Sheffield - Department of Economics

Date Written: September 2016

Abstract

We investigate the relationship between social interaction and household finances using the British Household Panel Survey. We explore the relationship between a wide range of aspects of household finances and social interaction, rather than focusing on one particular facet of household finances, such as the holding of stocks and shares. We develop a Bayesian statistical framework to simultaneously explore both sides of the household balance sheet - liabilities and assets. Additionally, we allow the influence of social interaction on household finances to be time dependent, enabling us to model the effects of social interaction from a dynamic perspective. We also develop a two‐part model to jointly investigate the influence of social interaction on the amount of different types of debt and financial assets held conditional on holding the different types of debt and assets. Our analysis suggests that social interaction is associated with households holding larger amounts of debt and assets.

Keywords: assets, debt, household finances, social interaction

JEL Classification: C11, D12, D14

Suggested Citation

Brown, Sarah and Ghosh, Pulak and Taylor, Karl B., Household Finances and Social Interaction: Bayesian Analysis of Household Panel Data (September 2016). Review of Income and Wealth, Vol. 62, Issue 3, pp. 467-488, 2016. Available at SSRN: https://ssrn.com/abstract=2824049 or http://dx.doi.org/10.1111/roiw.12174

Sarah Brown (Contact Author)

University of Sheffield ( email )

17 Mappin Street
Sheffield, Sheffield S1 4DT
United Kingdom

Pulak Ghosh

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

Karl B. Taylor

University of Sheffield - Department of Economics ( email )

9 Mappin Street
Sheffield, S1 4DT
United Kingdom

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