Research Teams

DT 13/16 - El consumo de bienes visibles y el rol del grupo de referencia. Un análisis para cuatro países de América Latina

ISSNISSN/ISBN: 1688-5090
Nº of PagesNº of Pages: 68
The aim of this paper is to analyze the empirical determinants of visible goods consumption, with focus on the role on reference groups and emulation. Based on expenditure surveys microdata, we study the cases of Argentina, Brazil, Mexico and Uruguay, as the four countries present significant differences in terms of ethnicity, inequality and spatial distribution of the population.

Visible consumption patterns have strong implications in term of short and medium run inequality in a wide set of achievements. Recent research points out that in many cases the more deprived households are more exposed to allocate a higher fraction of their budget in this kind of goods, compromising consumption in other goods (Charles et al, 2009; Kaus and Chai, 2013), and highlights the role of peer groups as a key determinant of this behavior.

To identify visible goods, we follow Heffetz (2011) and consider the following items: personal care, garments, jewelry and watches and cars. We estimate Engel curves including demographic and socio-economic variables and different specifications on the group effect Reference groups are defined on the basis of regional variables and age group and schooling of the household head.

Our findings show that reference groups influence visible goods consumption at the household level, although they highly depend on the reference group modelization. Given other things equal, in the four cases, visible consumption is negatively associated to average income of the reference group. However, in the case of Mexico this relation only becomes significant when the relative position of the household within the reference group is accounted for. At the same time, in Argentina, Brazil and Mexico, a higher relative income in relation to the average of the reference group, turns out into higher visible consumption.
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