Self-perceptions and perceptions of peers: their role in understanding expenditure behaviours

Abstract

In the last decades, the analysis of individual consumption behaviours has been enriched by considering several non-rational features of (i) self-perceptions and (ii) perceptions of peers that can affect people’s spending decisions, such as subjective well-being and feelings about different aspects of life, as well as measures of social comparison. However, at our knowledge, no studies have yet considered the two sources of emotionality simultaneously. This study aims to investigate the simultaneous role of these two emotional facets in affecting expenditure behaviours of Italian individuals for the year 2016, considering two measures of own satisfaction, relative quantities of SWB and expenditure, and inequality measures. Our results, controlling for potential sources of endogeneity, reveal a significant role of both aspects in influencing individuals’ spending habits.