Keeping up with the Joneses – Evidence from Local Spending Patterns
Authors: Johannes Moenius, Xin Zhao
We investigate the existence of neighborhood effects in purchasing patterns, commonly labeled as the 'keeping up with the Jones' effect. The Jones effect can be interpreted in two ways: 1) lower income earners spend as much on highly visible goods as their higher income neighbors and 2) similar income neighbors try to outspend each other on those goods. We argue which purchasing patterns are consistent with 'Jones'-effect. We test them with a geographically diverse data-set US consumers.