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Social networks, shocks, and household consumption in China

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  • Yang, Yang
  • Jiang, Jialing
  • Yin, Zhichao

Abstract

This paper provides new evidence on the effect of social networks on consumption using China Household Finance Survey panel data. Further, we examine the role social networks play in consumption when households face exogenous shocks. Heterogeneity analysis indicates that the positive impact of social networks on household consumption is greater in rural areas and for low-income groups. We also identify the mechanism of reducing precautionary savings as a channel. Moreover, social networks can alleviate the negative impact of exogenous shocks on consumption and play an informal insurance role. These findings provide a wealth of insights relevant to policymaking.

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  • Yang, Yang & Jiang, Jialing & Yin, Zhichao, 2021. "Social networks, shocks, and household consumption in China," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 111-122.
    • Handle: RePEc:eee:ecanpo:v:71:y:2021:i:c:p:111-122
    DOI: 10.1016/j.eap.2021.04.008
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    Cited by:

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    2. Huazhu Zheng & Jiao Qian & Guihuan Liu & Yongjiao Wu & Claudio O. Delang & Hongming He, 2023. "Housing prices and household consumption: a threshold effect model analysis in central and western China," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-16, December.
    3. He, Wen, 2023. "Social medical insurance integration and health care disparities in China: Evidence from an administrative claim dataset," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 20-39.
    4. Ma, Shaoyue & Man, Hecheng & Li, Xiao & Xu, Xiangbo & Sun, Mingxing & Xie, Minghui & Zhang, Linxiu, 2023. "How nonfarm employment drives the households’ energy transition: Evidence from rural China," Energy, Elsevier, vol. 267(C).
    5. Yang, Bo & Ma, Fang & Deng, Weihua & Pi, Yang, 2022. "Digital inclusive finance and rural household subsistence consumption in China," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 627-642.
    6. Zhang, Jiaping & Zhang, Huirong & Gong, Xiaomei, 2022. "Mobile payment and rural household consumption: Evidence from China," Telecommunications Policy, Elsevier, vol. 46(3).

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    More about this item

    Keywords

    Social networks; Shocks; Household consumption;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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