SOCIAL INFLUENCE AND THE CONSUMER BANKRUPTCY DECISION
Contemporary Economic Policy, 2020, vol. 38, issue 3, 474-482
I examine the influence of neighbors on the consumer bankruptcy decision using administrative bankruptcy records linked to the 2000 Decennial Census. Two empirical strategies remove unobserved common factors that affect identification. The first strategy uses small geographical areas to isolate neighborhood effects, and the second strategy identifies the effect using past bankruptcy filers who moved states. The findings from both strategies reinforce each other and confirm the role of social influence on the bankruptcy decision. Having a past bankruptcy filer move into the block from a different state increases the likelihood of filing by 10%. (JEL D12, K35)
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Working Paper: Social Influence and the Consumer Bankruptcy Decision (2017)
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