Crowdsourcing Financial Information to Change Spending Behavior

50 Pages Posted: 8 Mar 2019

See all articles by Francesco D'Acunto

Francesco D'Acunto

Boston College

Alberto Rossi

University of Maryland - Department of Finance

Michael Weber

University of Chicago - Finance

Multiple version iconThere are 2 versions of this paper

Date Written: 2019

Abstract

We document five effects of providing individuals with crowdsourced spending information about their peers (individuals with similar characteristics) through a FinTech app. First, users who spend more than their peers reduce their spending significantly, whereas users who spend less keep constant or increase their spending. Second, users’ distance from their peers’ spend-ing affects the reaction monotonically in both directions. Third, users’ reaction is asymmetric - spending cuts are three times as large as increases. Fourth, lower-income users react more than others. Fifth, discretionary spending drives the reaction in both directions and especially cash withdrawals, which are commonly used for incidental expenses and anonymous transactions. We argue Bayesian updating, peer pressure, or the fact that bad news looms more than (equally-sized) good news cannot alone explain all these facts.

Keywords: FinTech, learning, beliefs and expectations, peer pressure, financial decision-making, saving, consumer finance

JEL Classification: D120, D140, D910, E220, G410

Suggested Citation

D'Acunto, Francesco and Rossi, Alberto and Weber, Michael, Crowdsourcing Financial Information to Change Spending Behavior (2019). CESifo Working Paper No. 7533. Available at SSRN: https://ssrn.com/abstract=3348722

Francesco D'Acunto (Contact Author)

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Alberto Rossi

University of Maryland - Department of Finance ( email )

Robert H. Smith School of Business
Van Munching Hall
College Park, MD 20742
United States

Michael Weber

University of Chicago - Finance ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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