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Household Finances and Social Interaction: B ayesian Analysis of Household Panel Data
Author(s) -
Brown Sarah,
Ghosh Pulak,
Taylor Karl
Publication year - 2016
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/roiw.12174
Subject(s) - debt , balance sheet , social relation , panel data , economics , perspective (graphical) , household debt , interaction , public economics , finance , econometrics , artificial intelligence , computer science , psychology , social psychology , agronomy , biology
We investigate the relationship between social interaction and household finances using the B ritish Household Panel Survey. We explore the relationship between a wide range of aspects of household finances and social interaction, rather than focusing on one particular facet of household finances, such as the holding of stocks and shares. We develop a B ayesian statistical framework to simultaneously explore both sides of the household balance sheet—liabilities and assets. Additionally, we allow the influence of social interaction on household finances to be time dependent, enabling us to model the effects of social interaction from a dynamic perspective. We also develop a two‐part model to jointly investigate the influence of social interaction on the amount of different types of debt and financial assets held conditional on holding the different types of debt and assets. Our analysis suggests that social interaction is associated with households holding larger amounts of debt and assets.