Crowdsourcing Peer Information to Change Spending Behavior
72 Pages Posted: 22 Feb 2019 Last revised: 27 Feb 2023
There are 2 versions of this paper
Crowdsourcing Financial Information to Change Spending Behavior
Date Written: January 18, 2023
We isolate the information channel of peer effects in consumption in a setting that excludes a role for common shocks or social pressure—a spending panel paired with crowdsourced information about anonymous “peers” elicited at different times. Consumers converge to peers’ spending and more so when peer signals are more informative. Convergence is asymmetric: within 12 months of information provision, overspenders close 37% and underspenders 9% of their gap relative to peers. We exploit the quasi-random assignment to peer groups in an instrumental-variable strategy and implement an experiment for external validity. Our results are consistent with information-based theories of overconsumption.
Keywords: Social Finance, Visibility Bias, Conspicuous Consumption, Robo-advising, FinTech, Information Economics, Household Finance.
JEL Classification: D12, D14, D91, E22, G41
Suggested Citation: Suggested Citation