Do spending comparisons affect spending and satisfaction?

We investigate the effect of spending comparisons with a new survey approach that asks respondents about satisfaction and expenditure decisions, both before and after they receive hypothetical information about what others in their communities are spending. We ask about four goods which vary in observability—wine served at a dinner party, an uncle's funeral, life insurance, and a donation to a non-profit organization. Compared to respondents who were told that others in their community were spending more than they, respondents told that others were spending less tended both to reduce their spending and increase their satisfaction.