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Social Influence in the Housing Market

Published online by Cambridge University Press:  26 October 2015

Carrie H. Pan  and
Christo A. Pirinsky
Carrie H. Pan*
Affiliation:
chpan@scu.edu, Santa Clara University, Leavey School of Business, Santa Clara, CA 95053
Christo A. Pirinsky
Affiliation:
cpirinsky@cornerstone.com, Cornerstone Research, Washington, DC 20006.
*
*Corresponding author: chpan@scu.edu
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Abstract

We utilize the decennial U.S. Census to study social effects in housing consumption across 4 million households from 126 ethnic groups and 2,071 geographic locations in the United States. We find that the homeownership decisions within ethnic groups are locally correlated, after controlling for the homeownership rates within the group and the region. Social influence is stronger for younger, less educated, and lower-income individuals; immigrants; and Americans with ancestors from more unequal, uncertainty-avoiding, and collectivistic cultures. Our results suggest that both status and information considerations play an important role in the social comparison process in capital markets.

Type
Research Articles
Information
Journal of Financial and Quantitative Analysis , Volume 50 , Issue 4 , August 2015 , pp. 757 - 779
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2015 

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