Keeping up with the Jansens: Causal Peer Effects on Household Spending, Beliefs and Happiness

Bernardo Candia, Olivier Coibion, Dimitris Georgarakos, Yuriy Gorodnichenko and Maarten van Rooij

No 26-29, Working Papers from Federal Reserve Bank of Cleveland

Abstract: CORRECT ORDER OF AUTHORS: van Rooij, Coibion, Georgarakos, Candia, Gorodnichenko. How does perceived relative income affect household behavior and well-being? We use a randomized information experiment in a representative panel of Dutch households to generate exogenous variation in beliefs about peers' income. Lower perceived relative standing shifts expenditure toward durable goods but we find little evidence of an increase in total spending. Higher perceived relative income increases socializing and substantially raises happiness, while lower relative income increases subsequent employment. Relative standing also shapes views about inequality and redistribution. A complementary vignette experiment provides supporting evidence on mechanisms. Overall, peer comparisons matter for behavior and well-being even when total spending responses are small.

Keywords: peer effects; randomized controlled trial; surveys (search for similar items in EconPapers)
JEL-codes: D1 D3 D6 E21 (search for similar items in EconPapers)
Pages: 115 pages
Date: 2026-10-09
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Related works:
Working Paper: Keeping Up With The Jansens: Causal Peer Effects On Household Spending, Beliefs And Happiness (2024)
Working Paper: Keeping up with the Jansens: causal peer effect on household spending, beliefs and happiness (2024)
Working Paper: Keeping Up with the Jansens: Causal Peer Effects on Household Spending, Beliefs and Happiness (2024)
Working Paper: Keeping Up with the Jansens: Causal Peer Effects on Household Spending, Beliefs and Happiness (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwq:103918

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DOI: 10.26509/frbc-wp-202629

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