| Chinese transition economy was from the beginning of 1990 s.With deepening of the market economy,domestic residents’ income and welfare are obviously advanced.However,during this process,the uncertainties from market economy are in large numbers,especially in education,health care,pension and other aspects of the system reform that make individuals take increasing economic risks.Chinese residents choose more cautious consumption,along with the phenomenon “continuous-low consumption growth ”.The theory of habit formation is a better explanation of this phenomenon,mainly because habit formation is similar to a cautious behavior,stronger habit formation corresponding lower marginal consumption propensity.Habit formation can decrease the uncertainties,and will eventually lead to lower current consumption and higher savings(1).The utility comes from not only the current consumption,but also the habit stock accumulated by past consumption under habit formation.Consumers with habit are closer to reality.Hence,habit formation with more repeated consumption will make consumers feel bored,reducing the effective consumption,and result in the loss of utility.However,the low consumption growth does not mean less satisfaction,and the satisfaction level represents the degree of the consumption rationality.Consumption rationality means one is satisfied with his consumption decision and he has already adapted to the current economic environment.In consequence,he is unresponsive for the short-term policy shock.However,the rational consumption state is not constant and the rational consumers will adjust their habits according to the surrounding conditions,gradually,their consumption reached another rational state with higher consumption and utility level.Thus,if a consumer is rational,consumption growth promotion should be based on long-term and from improvement for the overall economic structure.If a consumer has low degree rationality,economic policies with stimulating aggregate demand such as income improvement,liquidity constraints reduction will still be effective to help ease the formation of habits and promote consumption growth.Thus whether consumption is rational will put forward the growth path of consumption suitable for Chinese urban and rural residents.And it can provide us an explanation for weak aggregate demand policies currently(1).Domestic relative documents on consumption under habit formation are still in the initial stage which need extensive and in-depth study,especially for consumption rationality.This paper mainly analyzes the consumption rationality for Chinese urban and rural residents with the relative economic data from 1995-2014,including measuring the habit formation effect,testing consumption rationality or not and make analysis from the results.We will put forward suitable growth paths for urban and rural residents.The paper is divided into four parts,which are organized as follows:The first part contains chapters 1,2 and 3,which is the research basis of the paper.Chapter 1 is introduction,which mainly introduces the background of the subject,the purpose and significance of the research,the research approaches and the methods,the innovation points and further study issues.Chapter 2 reviews the relevant research literature.Foreign literature includes theories of consumption,habit formation and consumption rationality.The domestic literature mainly reviews the research on the phenomena of Chinese residents’ continued low consumption.Chapter 3 introduces the general theory and representative mathematical economic models of habit formation.The second and the third parts contains six chapters,which are the main research contents of this paper.The second part contains chapters 4 and 5,which gives the basic idea of the main problem.Chapter 4 provides relative explanation of the consumption rationality we set under habit formation,including the target,the definition,the satisfied conditions and the inspection process and method of rational consumption.Chapter 5build an utility function under habit formation,and its first order condition is seen as the basic model of the equilibrium analysis.The third part contains chapters 6,7,8,9,which make an empirical analysis of the consumption rationality for Chinese urban and rural residents during this period and give a way for consumption growth.Chapter 6 is a general analysis of residents’ consumption,which is used to get the income effect,habit strength and the real effective consumption values.Chapter 7 inspects the consumption rationality of urban and rural residents in China.First,the paper estimates habit parameters,and gets the equilibrium consumption values.Then test the consumption rationality according to the satisfied conditions set in chapter 4.Chapter 8 make an explanation for the test results that the consumption is rational or irrational.And Chapter9 puts forward the consumption growth paths for Chinese urban and rural residents based on the analysis of the test results for consumption rationality issue.The fourth part summarizes the paper’s main conclusions.The main conclusions include:(1)Rural residents have strong habit formation.Their habits sustained long time and the habits adjustment subjected to preference were inflexible.(2)Urban residents’ consumption were rational while their counterparts,rural residents’ consumption were irrational during this period.(3)Habit formation can be an explanation for consumption rationality and irrationality.Strong habit will make the effective consumption and the utility more loss and eventually deviate the equilibrium level of consumer utility maximization.(4)Decreasing habit formation is useful for urban and rural residents’ consumption growth,specially,for urban residents,we should pay attention to long-term and improve the unbalanced economic structure with aggregate demand and supply.The innovation points of this paper are as follows:(1)The paper defines three concepts under habit formation,“preference external phase consistency hypothesis”,“consumption rationality” and “consumption choice instantaneous flexibility”.(2)The paper introduces two parameters to depict the features of habit formation,including the time length and the habit adjusting flexibility subjected to preference.(3)The paper forms two views,one is different habit formation cause consumption rationality and irrationality,the other is habit formation may be seen as external expression of the uncertainty cognition reflecting the identification and disposal abilities to uncertainties,but not the external response of the number of uncertainties. |
