Peer Effects in Financial Decision-Making

76 Pages Posted: 29 Jun 2018 Last revised: 18 Dec 2019

See all articles by Ethan M.J. Lieber

Ethan M.J. Lieber

University of Notre Dame

Bill Skimmyhorn

Mason School of Business, College of William & Mary; U.S. Army Office of Economic and Manpower Analysis

Date Written: April 27, 2018

Abstract

Peer effects might play an important role in complex financial decisions because many consumers lack experience with them and the costs of thinking through such decisions can be very high. We study peer effects in retirement savings, life insurance purchase, and two charitable giving programs in a military setting with plausibly exogenous assignment of individuals to social groups. Peers, defined broadly as social groups which may include members of different ranks, appear to play an important role in the charitable giving programs, but not in the other outcomes. We assess a number of potential reasons for the disparate findings and provide suggestive evidence that the observability of individuals' choices is key.

Keywords: Social Effects, Financial Decision-Making, Retirement Savings, Charitable Giving

JEL Classification: D14, D64, C31, G02

Suggested Citation

Lieber, Ethan and Skimmyhorn, William, Peer Effects in Financial Decision-Making (April 27, 2018). Journal of Public Economics 163: 37-59. Available at SSRN: https://ssrn.com/abstract=3195813

Ethan Lieber (Contact Author)

University of Notre Dame ( email )

3049 Jenkins Nanovic Halls
Notre Dame, IN 46556
United States

William Skimmyhorn

Mason School of Business, College of William & Mary ( email )

Williamsburg, VA
United States

HOME PAGE: http://https://mason.wm.edu/faculty/directory/full-time-faculty/skimmyhorn_w.php

U.S. Army Office of Economic and Manpower Analysis ( email )

West Point, NY
United States

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