Social Finance

23 Pages Posted: 5 Nov 2020

See all articles by Theresa Kuchler

Theresa Kuchler

New York University (NYU)

Johannes Stroebel

New York University (NYU) - Leonard N. Stern School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

Date Written: 2020


We review an empirical literature that studies the role of social interactions in driving economic and financial decision making. We first summarize recent work that documents an important role of social interactions in explaining household decisions in housing and mortgage markets. This evidence shows, for example, that there are large peer effects in mortgage refinancing decisions and that individuals’ beliefs about the attractiveness of housing market investments are affected by the recent house price experiences of their friends. We also summarize the evidence that social interactions affect the stock market investments of both retail and professional investors as well as household financial decisions such as retirement savings, borrowing, and default. Along the way, we describe a number of easily accessible recent data sets for the study of social interactions in finance, including the “Social Connectedness Index,” which measures the frequency of Facebook friendship links across geographic regions. We conclude by outlining several promising directions for further research at the intersection of household finance and “social finance.”

Keywords: social networks, peer effects, financial decision making, social dynamics, belief contagion

Suggested Citation

Kuchler, Theresa and Stroebel, Johannes, Social Finance (2020). CESifo Working Paper No. 8658, Available at SSRN:

Theresa Kuchler (Contact Author)

New York University (NYU) ( email )

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Johannes Stroebel

New York University (NYU) - Leonard N. Stern School of Business ( email )

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National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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