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Household finances and social interaction

Brown, S. and Taylor, K. (2012) Household finances and social interaction. Working Paper. Department of Economics, University of Sheffield ISSN 1749-8368

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Abstract

In this paper, we investigate the relationship between social interaction and household finances using data from the British Household Panel Survey. We explore how social interaction influences the probability of holding different types of unsecured debt and assets, as well as how social interaction influences the levels of unsecured debt, financial assets and net worth held. Our findings suggest that social interaction has a positive influence upon the types of financial assets held, which is particularly pronounced for the holding of stocks and shares. Social interaction is also found to influence the amount of financial assets held as well as the level of household net worth. In contrast, there appears to be no clear relationship between social interaction and the holding of unsecured debt, suggesting that social interaction has distinct effects across different parts of the household balance sheet. When we instrument the measure of social interaction, our results once again endorse the finding that social interaction impacts differently on debt and asset holding. Interestingly, in this case, our findings support an inverse association between debt and social interaction.

Item Type: Monograph (Working Paper)
Copyright, Publisher and Additional Information: The Sheffield Economics Research Paper (SERP) series offers a forum for the research output of the academic staff and research students of the Department of Economics, University of Sheffield. Papers are reviewed for quality and presentation by a departmental editor. However, the contents and opinions expressed remain the responsibility of the authors. All papers may be downloaded free on the understanding that the contents are preliminary and therefore permission from the author(s) should be sought before they are referenced.
Institution: The University of Sheffield
Academic Units: The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) > Sheffield Economics Research Papers Series
Depositing User: Miss Anthea Tucker
Date Deposited: 16 Mar 2012 10:38
Last Modified: 07 Jun 2014 04:51
Published Version: http://www.shef.ac.uk/economics/research/serps/yea...
Status: Published
Publisher: Department of Economics, University of Sheffield
Identification Number: 2012007
URI: http://eprints.whiterose.ac.uk/id/eprint/43769

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