Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/251460 
Year of Publication: 
2022
Series/Report no.: 
DIW Discussion Papers No. 1996
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
A number of studies show that there is a link between social comparison and high levels of household debt. However, the exact mechanisms behind this link are not yet well understood. In this paper, we disentangle two mechanisms by performing a lab experiment designed to study the effects of social image concerns and peer information on consumption choices financed through debt taking. We find that having to announce one's consumption decision publicly makes participants less likely to take debt and more likely to leave money on the table. The more information participants receive about other participants' choices, the more they seem to conform to these choices, leading to slightly increased debt taking and leaving money on the table.
Subjects: 
Household Finance
Lab experiment
Social Comparison
Peer Effects
JEL: 
D14
G51
D91
Document Type: 
Working Paper

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