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Climate variations, culture and economic behaviour of Chinese households

Author

Listed:
  • Dayong Zhang

    (Southwestern University of Finance and Economics)

  • Jun Li

    (Southwestern University of Finance and Economics)

  • Qiang Ji

    (Chinese Academy of Sciences)

  • Shunsuke Managi

    (Kyushu University)

Abstract

Societies adapt to climate variations and develop unique cultures that lead to distinctive economic behaviour across different regions. To estimate the climate-economic link and test the hypothetical role of culture, this paper uses a nationwide survey at the household level in China, together with historical temperature data at the prefectural city level for empirical analysis. The results show the significant role of local climate variations on consumption, savings and investment decisions by households. Harsh weather conditions are associated with lower consumption, lower income and higher savings. Such climate characteristics are also associated with a lower probability of purchasing risky financial assets. Using a sample of migrating families, we find strong evidence that culture is an important channel in the climate-economic relationship. Additional support for this view is found through the “catching up with the Joneses” effect documented in the economics literature. Overall, this research provides an alternative perspective for understanding the long-term behavioural impact of climate change.

Suggested Citation

  • Dayong Zhang & Jun Li & Qiang Ji & Shunsuke Managi, 2021. "Climate variations, culture and economic behaviour of Chinese households," Climatic Change, Springer, vol. 167(1), pages 1-18, July.
    • Handle: RePEc:spr:climat:v:167:y:2021:i:1:d:10.1007_s10584-021-03145-6
    DOI: 10.1007/s10584-021-03145-6
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    References listed on IDEAS

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    Cited by:

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    2. Chunyan He & Anjie Li & Ding Li & Junlin Yu, 2022. "Does Digital Inclusive Finance Mitigate the Negative Effect of Climate Variation on Rural Residents’ Income Growth in China?," IJERPH, MDPI, vol. 19(14), pages 1-19, July.

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