REFERENCE GROUPS AND HOUSEHOLD CONSUMPTION: EVIDENCE FROM TURKEY

Ünay TAMGAÇ TEZCAN

Article Details

REFERENCE GROUPS AND HOUSEHOLD CONSUMPTION: EVIDENCE FROM TURKEY

Authors:

Ünay TAMGAÇ TEZCAN

Publisher:

Türkiye Ekonomi Kurumu Vakfı

Main Topics:

Economics and Finance

Journal:

Ekonomi-tek 2016 Vol.5 Issue 1, pp.71-107

Document Type:

Article

Publication Date:

12/2015

Document Language:

English

Document ID (Org No.):

2000406263

eISSN:

2791-7991

pISSN:

2146-6173

Abstract:

 

It is well-known that relative concern influences many economic choices, including consumption decisions. Recently, several studies have linked the gradually falling savings rate in the United States since the 1980s with both relative concern and increased inequality. In this paper, we test for the presence of relative concern (i.e., peer effects) in consumption decisions for Turkey. In particular, we test whether households are affected by the purchases of other households who constitute their reference group. This is one of the few studies that investigate relative concern in a developing-country setting. Drawing on nationally representative data from the Turkish Household Budget Survey for the years 2003-2012, we examine different reference groups comprised of members having the same education level, urban-rural residence status, or age range. We find that the hypothesis is validated and that non-rich households are affected by perceiving the consumption of more prosperous individuals of the same educational background. However, we do not observe any group effects for upper-income households.

 

It is well-known that relative concern influences many economic choices, including consumption decisions. Recently, several studies have linked the gradually falling savings rate in the United States since the 1980s with both relative concern and increased inequality. In this paper, we test for the presence of relative concern (i.e., peer effects) in consumption decisions for Turkey. In particular, we test whether households are affected by the purchases of other households who constitute their reference group. This is one of the few studies that investigate relative concern in a developing-country setting. Drawing on nationally representative data from the Turkish Household Budget Survey for the years 2003-2012, we examine different reference groups comprised of members having the same education level, urban-rural residence status, or age range. We find that the hypothesis is validated and that non-rich households are affected by perceiving the consumption of more prosperous individuals of the same educational background. However, we do not observe any group effects for upper-income households.

Article Details

REFERENCE GROUPS AND HOUSEHOLD CONSUMPTION: EVIDENCE FROM TURKEY

Authors: Ünay TAMGAÇ TEZCAN

Publisher: Türkiye Ekonomi Kurumu Vakfı

Main Topics: Economics and Finance

Journal: Ekonomi-tek 2016 Vol.5 Issue 1, pp.71-107

Document Type: Article

Publication Date: 12/2015

Document Language: English

Document ID (Org No.): 2000406263

eISSN: 2791-7991

pISSN: 2146-6173

Issues

Authors:

Ünay TAMGAÇ TEZCAN

Publisher:

Türkiye Ekonomi Kurumu Vakfı

Main Topics:

Economics and Finance

Journal:

Ekonomi-tek 2016 Vol.5 Issue 1, pp.71-107

Document Type:

Article

Publication Date:

12/2015

Document Language:

English

Document ID (Org No.):

2000406263

eISSN:

2791-7991

pISSN:

2146-6173