A Study On The Micro-Structure And Characteristics Of Chinese Household Consumption

Consumption,investment and export are called the "troikas" promoting economic growth.Among them,investment and export are both methods,while consumption and welfare are the ultimate goal of the economic growth.Only by increasing consumption and welfare can we improve people's living standards and truly embody the people-oriented Scientific Outlook on Development.In the past 40 years since China's reform and opening up,the consumption scale,consumption structure and consumption psychology of residents have been changing with the economic growth,showing different characteristics in different periods.At the same time,due to the one-child policy and other reasons,the population and age composition of Chinese households are also changing and affecting the consumption pattern of Chinese households.Therefore,it lends academic and practical importance to the study about consumption pattern of Chinese households and the impacts of demographic characteristics on household consumption decisions.Demand system is a structural model used to study consumption demand.This model studies the relationship between different types of consumption and its price and total expenditure,and it can analyze consumption situation comprehensively and systematically.On the basis of estimating the classical demand system,this study expands from the two dimensions of family structure and the structure among different families.The main work and contributions of this study are as follows:1.Unlike most of the existing Chinese literature,this paper uses a structural model for analysis.In the classical model,the consumption system is estimated using Chinese data,and the price elasticity of different commodity categories is calculated.The results can provide a comparison of Chinese experience for the existing literature.2.In terms of expanding the micro-perspective of the family,this paper refers to the Collective Model which appeared in recent years,it simplifies the model structure and modifies the hypothesis conditions according to Chinese data,so as to estimate the proportion of household members'consumption in the total household consumption(or resource shares).The resource shares allow us to study individual consumptions,such as bargaining power between men and women,differences in consumption patterns between one-child and two-child families,and so on.3.In terms of expanding relations between families,this paper introduces Peer Effect into the family consumption model by combining the Social Network Model which is at the forefront of current economic and sociological research.Considering the influence of interpersonal communication on consumption behavior,this model allocates families in different social networks,uses the average consumption of other people in the network as a key variable,and introduces it into the total consumption function of demand system,finally quantifies the influence of average consumption of other people in the group on their own consumption.With the help of panel model,we adopt two methods to deal with the heterogeneity of each group:fixed effect and random effect.We also use the method of intra-group pairing to make the observed values in each group have a paired observation value with the intra-group,so that the heterogeneity of each group can be eliminated by fixed effect and random effect.Considering the influence of interpersonal communication on consumption behavior,this model uses the average consumption of other people in the network as a key variable by allocating families in different social networks,and quantifies the influence of other peoples' average consumption on our own consumption.Similar to the methods dealing with panel data,we adopt two methods to deal with the heterogeneity of each group:fixed effect and random effect.We also use the method of intra-group pairing to make the observed values in each group have a paired observation,so that the heterogeneity of each group can be eliminated by fixed effect and random effect.The research contents of this paper include:In Chapter 4,we use the Almost Ideal Demand System(AIDS)and Quadratic AIDS model to analyse the data of China Family Panel Studies(CFPS)in 2010,2012 and 2014.And expenditure elasticity and price elasticity are used to analyse residents' consumption,industrial development and welfare level.The total expenditure is divided into eight categories:food,daily necessities,clothing,health care,transportation and communication,education and entertainment,residence and others.The study finds that the total expenditure elasticity of the eight categories of consumption from big to small is:others>education and entertainment>health care>residence>transportation and communication>food>clothing>daily necessities,the greater the total expenditure elasticity,the higher its proportion in total expenditure when income increases.The total expenditure elasticity of education and recreation is more than 1.3,which indicates that the current residents'demand for education and recreation is particularly high.With the increase of residents'income,the market of education and recreation industry will grow rapidly;the total expenditure elasticity of health care,residence and transportation and communications remains around 1,indicating that residents' demand for these three types of consumption is very stable;and the total expenditure elasticity of food,clothing and daily necessities is lower than 1.These three kinds of consumption all belongs to necessities,and the proportion will decrease grandually with the improvement of living standards.The price elasticity of the eight types of consumption is less than 0 except for education,entertainment and transportation,and the absolute values from small to large are:others<residences<clothing<food<health care.The higher the absolute value of price elasticity is,the more sensitive the residents are to the price.Residents are insensitive to the price of necessities such as housing,daily necessities,clothing and food.When the price of these necessities rises,total expenditure will increase and the welfare will be damaged.Chapter 5 estimates the data of China Household Finance Survey(CHFS)in 2011 by using the Collective Model based on the expanding demand system model(Dunbar et al.,2013).It obtains the resource shares of adult males,females and children,and verifies the impact of different demographic characteristics on the resource shares.The study finds that children's consumption accounts for 24%of the total expenditure in one-child families,and 38%in two-child families.In addition,with other variables under control,the share of women's resources is 15 percentage points higher than that of men,indicating that women's bargaining power in the family has surpassed men,but in the rural,men's resources are 6.7 percentage points higher than those in the urban,indicating that men's status in the family still remains high in the rural.Generally speaking,the total consumption of poor families is low and are mostly necessities,while wealthy families consume more luxuries,but the luxury consumption of children is very small,which will lead to a higher proportion of resources for children in poor families.However,this paper finds that parents in the rural families give much less to children than in the urban,which shows that rural children's living condition is much poorer.With the growth of age,children's consumption also rises,gradually squeezing parents' consumption,and mainly squeezing father's resources.We also found that the younger the age,the wider the age gap between men and women,and the lower the education level,the higher the bargaining power of women in the family.In addition,mothers will sacrifice more resources for their sons,while fathers will contribute more resources for their daughters.Chapter 6 elaborates the influence of social network on individual consumption behavior from a new perspective,and discusses the mechanism of peer effect in consumption,including its impact on utility and necessary consumption.This paper uses the demand system model with peer effect to analyse the data of China Family Panel Studies,and draws the following conclusions:Firstly,the increase of other people's consumption will decrease our own utility,and the lower the family income,the greater the negative marginal impact.Therefore,the increase of the gap between the rich and poor will reduce the utility of the middle and low-income people by peer effect,thus harm the whole welfare of society.Secondly,when the average consumption of other people in our group rises by 100 yuan,our necessary consumption will increase by 38 yuan,which means that 38%of our necessary consumption is to catch up with the consumption of other people around us.When peoples' income generally rises,about 38%of our income will become necessary expenditure because of the peer effect,which will lead to the decrease of the effect of income increase.On the contrary,when peoples' income generally declines,residents will also reduce the necessary expenditure accordingly.Based on the empirical results and the new condition of China in recent years,this paper puts forward some policy recommendations.Firstly,the government should increase the supply of science,education,culture and entertainment goods and services,and regulate the market.Secondly,the government should curb the rising real estate prices,and increase the supply of affordable housing such as public rental housing,low-rent housing and affordable housing in cities with high housing prices,so as to reduce child-rearing costs and pay attention to poor children in rural areas.Thirdly,the government should carefully assess the effects of policies such as income increase,poverty alleviation and tax reduction,and prevent the gap between the rich and poor from widening,and implement precise poverty alleviation.Finally,we will continue to improve basic public facilities and accelerate the livelihood projects to ensure the basic livelihood of residents.