Exploring the Effects of Consumption Expenditures on Life Satisfaction in China

This study, using data from China Family Panel Studies, investigates how different types of consumption expenditures affect individuals’ life satisfaction in China. The results demonstrate that overall consumption expenditures and savings are positively associated with life satisfaction irrespective of whether income remains constant or not. When the components of consumption expenditures are scrutinized, increased spending on conspicuous goods augments life satisfaction while increased spending on basic goods diminishes it after controlling for confounding factors. Evidence of relationship heterogeneity across income groups is presented: conspicuous spending contributes to life satisfaction in low- and middle-income groups; however, increased basic consumption expenditures have a negative impact on the lowest and second lowest income groups, but no effect on higher income groups. This study contributes to the research on consumption and wellbeing in emerging markets with significant implications for marketing and policy.