Good Days, Bad Days: Stock Market Fluctuation and Taxi Tipping Decisions
Using taxicab tipping records in New York City (NYC), we develop a novel measure of real-time utility and quantitatively assess the impact of wealth change on the well-being of individuals based on the core tenet of prospect theory. The baseline estimate suggests that a one-standard-deviation increa...
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Veröffentlicht in: | Management science 2021-06, Vol.67 (6), p.3965-3984 |
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description | Using taxicab tipping records in New York City (NYC), we develop a novel measure of real-time utility and quantitatively assess the impact of wealth change on the well-being of individuals based on the core tenet of prospect theory. The baseline estimate suggests that a one-standard-deviation increase in the stock market index is associated with a 0.3% increase in the daily average tipping ratio, which translates to an elasticity estimate of 0.3. The impact is short-lived and in line with the wealth effect interpretation. Consistent with loss aversion, we find that the impact is primarily driven by wealth loss rather than gain. We exploit Global Positioning System and timestamp information and design two difference-in-differences tests to establish causal inference. Exploitation of the characteristics of individual stocks suggests that the effect of wealth change on real-time utility is more pronounced in the stocks of firms with large market capitalization. Finally, our aggregate estimate suggests that annual tip revenue in the NYC taxi industry is associated with stock market fluctuations, ranging from −$17.5 million to $12.9 million.
This paper was accepted by Tyler Shumway, finance. |
doi_str_mv | 10.1287/mnsc.2019.3557 |
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This paper was accepted by Tyler Shumway, finance.</description><identifier>ISSN: 0025-1909</identifier><identifier>EISSN: 1526-5501</identifier><identifier>DOI: 10.1287/mnsc.2019.3557</identifier><language>eng</language><publisher>Linthicum: INFORMS</publisher><subject>Capitalization ; Change agents ; consumption ; Exploitation ; Global positioning systems ; GPS ; investor mood ; loss aversion ; Prospect theory ; Securities markets ; Stock exchanges ; stock market ; Stock prices ; Stocks ; taxi tipping ; Taxicabs ; Tips & tipping ; Wealth</subject><ispartof>Management science, 2021-06, Vol.67 (6), p.3965-3984</ispartof><rights>Copyright Institute for Operations Research and the Management Sciences Jun 2021</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c370t-241c718fe2df986624b5382945939d2e3b3777342731eb586cbf878171bd7e103</citedby><cites>FETCH-LOGICAL-c370t-241c718fe2df986624b5382945939d2e3b3777342731eb586cbf878171bd7e103</cites><orcidid>0000-0002-6466-7002 ; 0000-0002-6285-2191</orcidid></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktohtml>$$Uhttps://pubsonline.informs.org/doi/full/10.1287/mnsc.2019.3557$$EHTML$$P50$$Ginforms$$H</linktohtml><link.rule.ids>314,780,784,3692,27924,27925,62616</link.rule.ids></links><search><creatorcontrib>Tan, Weiqiang</creatorcontrib><creatorcontrib>Zhang, Jian</creatorcontrib><title>Good Days, Bad Days: Stock Market Fluctuation and Taxi Tipping Decisions</title><title>Management science</title><description>Using taxicab tipping records in New York City (NYC), we develop a novel measure of real-time utility and quantitatively assess the impact of wealth change on the well-being of individuals based on the core tenet of prospect theory. The baseline estimate suggests that a one-standard-deviation increase in the stock market index is associated with a 0.3% increase in the daily average tipping ratio, which translates to an elasticity estimate of 0.3. The impact is short-lived and in line with the wealth effect interpretation. Consistent with loss aversion, we find that the impact is primarily driven by wealth loss rather than gain. We exploit Global Positioning System and timestamp information and design two difference-in-differences tests to establish causal inference. Exploitation of the characteristics of individual stocks suggests that the effect of wealth change on real-time utility is more pronounced in the stocks of firms with large market capitalization. Finally, our aggregate estimate suggests that annual tip revenue in the NYC taxi industry is associated with stock market fluctuations, ranging from −$17.5 million to $12.9 million.
This paper was accepted by Tyler Shumway, finance.</description><subject>Capitalization</subject><subject>Change agents</subject><subject>consumption</subject><subject>Exploitation</subject><subject>Global positioning systems</subject><subject>GPS</subject><subject>investor mood</subject><subject>loss aversion</subject><subject>Prospect theory</subject><subject>Securities markets</subject><subject>Stock exchanges</subject><subject>stock market</subject><subject>Stock prices</subject><subject>Stocks</subject><subject>taxi tipping</subject><subject>Taxicabs</subject><subject>Tips & tipping</subject><subject>Wealth</subject><issn>0025-1909</issn><issn>1526-5501</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2021</creationdate><recordtype>article</recordtype><recordid>eNqFkD1PwzAURS0EEqWwMltiJcEfcWyzQUtbpCIGymw5joPcNnGwE4n-exKFnek96Z17n3QAuMUoxUTwh7qJJiUIy5Qyxs_ADDOSJ4whfA5mCBGWYInkJbiKcY8Q4oLnM7BZe1_CpT7Fe_isp-0RfnTeHOCbDgfbwdWxN12vO-cbqJsS7vSPgzvXtq75gktrXBwu8RpcVPoY7c3fnIPP1ctusUm27-vXxdM2MZSjLiEZNhyLypKykiLPSVYwKojMmKSyJJYWlHNOM8IptgUTuSkqwQXmuCi5xYjOwd3U2wb_3dvYqb3vQzO8VIQNVYxKkQ1UOlEm-BiDrVQbXK3DSWGkRltqtKVGW2q0NQSSKeCayoc6_sf_AioIadA</recordid><startdate>20210601</startdate><enddate>20210601</enddate><creator>Tan, Weiqiang</creator><creator>Zhang, Jian</creator><general>INFORMS</general><general>Institute for Operations Research and the Management Sciences</general><scope>AAYXX</scope><scope>CITATION</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope><orcidid>https://orcid.org/0000-0002-6466-7002</orcidid><orcidid>https://orcid.org/0000-0002-6285-2191</orcidid></search><sort><creationdate>20210601</creationdate><title>Good Days, Bad Days: Stock Market Fluctuation and Taxi Tipping Decisions</title><author>Tan, Weiqiang ; Zhang, Jian</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c370t-241c718fe2df986624b5382945939d2e3b3777342731eb586cbf878171bd7e103</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2021</creationdate><topic>Capitalization</topic><topic>Change agents</topic><topic>consumption</topic><topic>Exploitation</topic><topic>Global positioning systems</topic><topic>GPS</topic><topic>investor mood</topic><topic>loss aversion</topic><topic>Prospect theory</topic><topic>Securities markets</topic><topic>Stock exchanges</topic><topic>stock market</topic><topic>Stock prices</topic><topic>Stocks</topic><topic>taxi tipping</topic><topic>Taxicabs</topic><topic>Tips & tipping</topic><topic>Wealth</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Tan, Weiqiang</creatorcontrib><creatorcontrib>Zhang, Jian</creatorcontrib><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>Management science</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Tan, Weiqiang</au><au>Zhang, Jian</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Good Days, Bad Days: Stock Market Fluctuation and Taxi Tipping Decisions</atitle><jtitle>Management science</jtitle><date>2021-06-01</date><risdate>2021</risdate><volume>67</volume><issue>6</issue><spage>3965</spage><epage>3984</epage><pages>3965-3984</pages><issn>0025-1909</issn><eissn>1526-5501</eissn><abstract>Using taxicab tipping records in New York City (NYC), we develop a novel measure of real-time utility and quantitatively assess the impact of wealth change on the well-being of individuals based on the core tenet of prospect theory. The baseline estimate suggests that a one-standard-deviation increase in the stock market index is associated with a 0.3% increase in the daily average tipping ratio, which translates to an elasticity estimate of 0.3. The impact is short-lived and in line with the wealth effect interpretation. Consistent with loss aversion, we find that the impact is primarily driven by wealth loss rather than gain. We exploit Global Positioning System and timestamp information and design two difference-in-differences tests to establish causal inference. Exploitation of the characteristics of individual stocks suggests that the effect of wealth change on real-time utility is more pronounced in the stocks of firms with large market capitalization. Finally, our aggregate estimate suggests that annual tip revenue in the NYC taxi industry is associated with stock market fluctuations, ranging from −$17.5 million to $12.9 million.
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subjects | Capitalization Change agents consumption Exploitation Global positioning systems GPS investor mood loss aversion Prospect theory Securities markets Stock exchanges stock market Stock prices Stocks taxi tipping Taxicabs Tips & tipping Wealth |
title | Good Days, Bad Days: Stock Market Fluctuation and Taxi Tipping Decisions |
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