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Can money buy friends? Evidence from a natural experiment

Cuong Nguyen ()

European Economic Review, 2021, vol. 136, issue C

Abstract: This study examines the causal effect of positive income shocks on friendships in Vietnam. We measure income shock by respondents’ lottery prizes, controlling for spending on the lottery. We find a positive effect from lottery winnings on the number of friends. People tend to increase the number of their non-colleague and long-term friends, rather than the number of friends among colleagues or new friends. The elasticity of the number of friends with respect to lottery winnings is estimated at 0.05%. Our estimate implies that the income shock needed to purchase one additional friend is nearly 5,000 USD.

Keywords: Friendship; Social connection; Income shocks; Lottery prizes (search for similar items in EconPapers)
JEL-codes: D1 I31 O15 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:136:y:2021:i:c:s0014292121001008

DOI: 10.1016/j.euroecorev.2021.103747

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European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

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