Will High Household Saving in China Persist? An Application of the Conspicuous Consumption Theory

2017. International Journal of Economic Behavior 7(1): 3-24

Posted: 30 Jun 2017 Last revised: 20 Nov 2017

See all articles by Xiaofen Chen

Xiaofen Chen

Truman State University - Department of Economics

Lin Zhang

Independent

Date Written: June 1, 2017

Abstract

Expanding from Veblen’s conspicuous consumption theory, this paper provides new explanations on China’s household saving behavior. Using provincial level data, it finds evidence that urbanization, increased mobility of the population, and a greater degree of openness all depress household saving, likely through higher conspicuous consumption. This result is robust with different estimators and specifications. Among the conventional explanatory variables, the paper finds support for the permanent income theory, but little evidence for the life cycle theory.

Keywords: conspicuous consumption; household saving Chinese economy; cultural changes; international openness; urbanization; population mobility

Suggested Citation

Chen, Xiaofen and Zhang, Lin, Will High Household Saving in China Persist? An Application of the Conspicuous Consumption Theory (June 1, 2017). 2017. International Journal of Economic Behavior 7(1): 3-24, Available at SSRN: https://ssrn.com/abstract=2995004

Xiaofen Chen (Contact Author)

Truman State University - Department of Economics ( email )

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Kirksville, MO 63501
United States
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Lin Zhang

Independent ( email )

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