Crowdsourcing Peer Information to Change Spending Behavior

Chicago Booth Research Paper No. 19-09

Fama-Miller Working Paper Forthcoming

72 Pages Posted: 22 Feb 2019 Last revised: 19 Jan 2023

See all articles by Francesco D'Acunto

Francesco D'Acunto

Georgetown University

Alberto G. Rossi

Georgetown University

Michael Weber

University of Chicago - Finance; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: January 18, 2023

Abstract

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

D'Acunto, Francesco and Rossi, Alberto G. and Weber, Michael, Crowdsourcing Peer Information to Change Spending Behavior (January 18, 2023). Chicago Booth Research Paper No. 19-09, Fama-Miller Working Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=3339335 or http://dx.doi.org/10.2139/ssrn.3339335

Francesco D'Acunto

Georgetown University ( email )

Washington, DC 20057
United States

Alberto G. Rossi

Georgetown University ( email )

McDonough School of Business
Georgetown University
Washington, DC 20057
United States

Michael Weber (Contact Author)

University of Chicago - Finance ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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