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Working Paper
Keeping up with the Jansens: Causal Peer Effects on Household Spending, Beliefs and Happiness
CORRECT ORDER OF AUTHORS: van Rooij, Coibion, Georgarakos, Candia, Gorodnichenko. How does perceived relative income affect household behavior and well-being? We use a randomized information experiment in a representative panel of Dutch households to generate exogenous variation in beliefs about peers' income. Lower perceived relative standing shifts expenditure toward durable goods but we find little evidence of an increase in total spending. Higher perceived relative income increases socializing and substantially raises happiness, while lower relative income increases subsequent employment. ...
Working Paper
Cross-Sectional Patterns of Mortgage Debt during the Housing Boom: Evidence and Implications
In this paper, we use two comprehensive micro datasets to study the evolution of the distribution of mortgage debt during the 2000s housing boom. We show that the allocation of mortgage debt remained stable, as did the distribution of real estate assets. We propose that any theory of the boom must replicate this fact. Using a general equilibrium model, we show that this requires two elements: (1) an exogenous shock to the economy that increases expected house price growth or, alternatively, reduces interest rates and (2) financial markets that endogenously relax constraints in response to the ...
Working Paper
How Much Does Health Insurance Cost? Comparison of Premiums in Administrative and Survey Data
Using newly available administrative data from the Internal Revenue Service, this paper studies the distribution of employer-sponsored health insurance premiums. Previous estimates, in contrast, were almost exclusively from household surveys. After correcting for coverage limitations of the IRS data, we find that average premiums for employer-sponsored plans are roughly $1000 higher in IRS records than in the Current Population Survey. The downward bias in the CPS is largely driven by underestimating of premiums among married workers and topcoding of high premiums.
Working Paper
Updates to the Sampling of Wealthy Families in the Survey of Consumer Finances
Participation in household surveys has fallen over time, making it harder to produce a household survey-like the Survey of Consumer Finances (SCF)-in a timely manner. To address these challenges, the reference year of the sampling frame data for the 2016 SCF wealthy oversample was shifted back one year, allowing the oversample to be selected earlier than the past. In implementing this change, though, we risk identifying an outdated set of families and introducing variability in the sampling process. However, we show that the set of families selected in the new frame are observationally ...
Journal Article
Toward Healthy Balance Sheets: Are Savings Accounts a Gateway to Young Adults’ Asset Diversification and Accumulation?
Understanding the balance sheets of today?s young adults?particularly the factors that set them on a path to financial security through asset diversification and accumulation?lends some insight into the balance sheets they will have when they are older. This study uses panel data from the Census Bureau?s 1996 Survey of Income and Program Participation to investigate the acquisition of a savings account as a gateway to asset diversification and accumulation for young adults. Two avenues were considered: The first emphasized ownership of a diverse portfolio of financial products, and the second ...
Discussion Paper
Explaining the K‑Shaped Economy: What’s Behind the Divide?
In our companion post, we used a new module of our Economic Heterogeneity Indicators (EHIs) to shed light on how recent retail spending growth has been driven by high-income households. This fact is consistent with the popular press’s idea of a “K-shaped economy” in which higher-income households experience faster growth in spending than lower-income households. In this post, we dive deeper into the reasons behind this divergence by analyzing for which goods this trend holds true and ask whether it can be explained by changes in wages, inflation, or wealth. We find that, since 2023, ...