Sustainable Consumption and Behavioural Finance
| Reference number | |
| Coordinator | Swedish House Of Finance |
| Funding from Vinnova | SEK 1 502 822 |
| Project duration | February 2017 - January 2022 |
| Status | Completed |
Important results from the project
Consumers have a central role in driving sustainable production and development. Since the production of ´tradable´ goods accounts for a significant proportion of emissions, it is essential to understand the mechanisms that give rise to consumption decisions in order to be able to formulate effective measures that can counteract overconsumption. Over-consumption leads to over-indebtedness, a behavior that can potentially risk a sustainable level of welfare for future generations. For this purpose we have analyzed the effect of peer effects and access to ´temptation goods´;
Expected long term effects
Our empirical findings contribute to the understanding of the mechanisms behind over-consumption that jeopardize a sustainable financial market. We published two papers: 1. Bos, Marieke, Mats Levander, and Erik von Schedvin. "Relative Income, Indebtedness and Defaults: An Empirical Characterization." Indebtedness and Defaults: An Empirical Characterization (2021). 2. Ben-David, Itzhak, and Marieke Bos. "Impulsive Consumption and Financial Well-Being: Evidence from an Increase in the Availability of Alcohol." The Review of Financial Studies 34, no. 5 (2021): 2608-2647.
Approach and implementation
Together with Co-authors from the Riksbank we gathered panel data on individual borrowing characteristics and neighborhood income, to assess the impact of relative income changes on indebtedness, and payment delinquencies. Furthermore, in a second analysis, we exploit, (together with a coauthor from Ohio State University) a nationwide experiment in Sweden, to study the credit behavior of low-income households around the expansion of liquor stores’ operating hours on Saturdays. The effects are concentrated on the young population with tight liquidity constraints.