In the Mood to Consume: Effect of Sunshine on Credit Card Spending

48 Pages Posted: 23 Oct 2017 Last revised: 12 Oct 2020

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

Souphala Chomsisengphet

Government of the United States of America - Office of the Comptroller of the Currency (OCC)

Stephan Meier

Columbia University - Columbia Business School

Xin Zou

Hong Kong Baptist University (HKBU)

Date Written: October 12, 2020

Abstract

Using a large, representative sample of high-frequency credit card transactions in the United States, this paper examines the causal effect of sunshine-induced mood on contemporaneous household credit card spending. We document a 0.3 percent increase in credit card spending in response to a one-unit increase in the same-day local abnormal sunshine. The spending response is stronger for consumers with higher credit card debt, lower FICO score, and shorter tenure with the bank. The effect manifests in long-term, durable goods spending, and is not driven by other weather conditions, complementarity between sunshine and consumption, or intentional choice of consumption time. We document similar responses of spending on seasonal and non-seasonal goods and during times with high and low sunshine levels. Finally, the sunshine effect occurs among consumers with various characteristics.

Keywords: Credit Cards, Mood, Sunshine, Household Finance, Consumption

JEL Classification: D12, D14, E21, H31

Suggested Citation

Agarwal, Sumit and Chomsisengphet, Souphala and Meier, Stephan and Zou, Xin, In the Mood to Consume: Effect of Sunshine on Credit Card Spending (October 12, 2020). Journal of Banking and Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3014541 or http://dx.doi.org/10.2139/ssrn.3014541

Sumit Agarwal

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)

HOME PAGE: http://www.ushakrisna.com

Souphala Chomsisengphet

Government of the United States of America - Office of the Comptroller of the Currency (OCC) ( email )

400 7th Street SW
Washington, DC 20219
United States

Stephan Meier

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Xin Zou (Contact Author)

Hong Kong Baptist University (HKBU) ( email )

Department of Economics
Kowloon, Hong Kong
Hong Kong

HOME PAGE: http://sites.google.com/site/shirleyxinzou/

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