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The effect of social pressure on expenditures in Malawi

Jessica Goldberg

Journal of Economic Behavior & Organization, 2017, vol. 143, issue C, 173-185

Abstract: I vary the observability of windfall payments to 291 members of agricultural clubs in rural Malawi in order to study the effect of redistributive pressure on the timing of expenditures. While other studies have documented that social pressure affects the quantity of income and consumption, I focus on timing because spending money quickly may be a strategy for reducing obligatory transfers. Respondents who receive money in the presence of their agricultural club anticipate spending an extra 14 percent (0.28 standard deviations) in the week immediately following the payment than those who receive equivalent transfers in private settings. There are limited changes in the composition of spending, but some evidence that social pressure to share windfall income has a larger effect on poorer households.

Keywords: Redistributive pressure; Income sharing; Asymmetric information; Expenditure timing; Malawi; Field experiment (search for similar items in EconPapers)
Date: 2017
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