The Effects of Cryptocurrency Wealth on Household Consumption and Investment

66 Pages Posted: 12 Jun 2023 Last revised: 10 Feb 2024

See all articles by Darren Aiello

Darren Aiello

Brigham Young University

Scott R. Baker

Northwestern University

Tetyana Balyuk

Emory University - Goizueta Business School

Marco Di Maggio

Harvard Business School; National Bureau of Economic Research (NBER)

Mark J. Johnson

Brigham Young University - Department of Finance

Jason D. Kotter

Brigham Young University - Department of Finance

Date Written: February 9, 2024

Abstract

This paper uses transaction-level bank and credit card data to identify cryptocurrency investors and assess the impact of crypto wealth fluctuations on household consumption, as well as on investments in other assets. We find an $0.09 MPC from crypto gains, exceeding most previous estimates from unrealized equity gains. However, crypto investors are mostly also active equity investors, with many similar consumption patterns across gains from both asset classes. Households sell cryptocurrencies to increase discretionary and housing expenditures, with the latter causing local house price appreciation.

Keywords: cryptocurrency, Bitcoin, Ethereum, consumption, transaction data, household balance sheet, real estate

JEL Classification: G51, R21, R31, G23, G11.

Suggested Citation

Aiello, Darren and R. Baker, Scott and Balyuk, Tetyana and Di Maggio, Marco and Johnson, Mark J. and Kotter, Jason D., The Effects of Cryptocurrency Wealth on Household Consumption and Investment (February 9, 2024). Available at SSRN: https://ssrn.com/abstract=4455756 or http://dx.doi.org/10.2139/ssrn.4455756

Darren Aiello (Contact Author)

Brigham Young University ( email )

United States

HOME PAGE: http://darrenaiello.com

Scott R. Baker

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Tetyana Balyuk

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

Marco Di Maggio

Harvard Business School ( email )

Soldiers Field
Baker Library 265
Boston, MA 02163
United States

HOME PAGE: http://https://www.hbs.edu/faculty/Pages/profile.aspx?facId=697248

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Mark J. Johnson

Brigham Young University - Department of Finance ( email )

Provo, UT 84602
United States

HOME PAGE: http://sites.google.com/view/markjohnson/home

Jason D. Kotter

Brigham Young University - Department of Finance ( email )

United States

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