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Centuries of memory: Historical disasters and modern household savings

Author

Listed:
  • Yao, Dongmin
  • Xu, Aohan
  • Zhang, Shiyu
  • Yu, Shuguang

Abstract

This study examines the impact of historical disasters on contemporary household saving rates in China. Using a unique dataset that combines detailed disaster records from the Ming and Qing Dynasties (1368–1911) and China Family Panel Studies, this study reveals that historical disasters significantly increase contemporary household saving rates. Robustness tests confirm this result. Mechanism analysis suggests that risk preference is a key channel: historical disasters increase risk aversion, thereby strengthening the motivation for precautionary saving. A theoretical model of cultural transmission is developed, and heterogeneity analysis shows that the effect is stronger in regions with more diverse cultural transmission channels, as reflected in more deeply rooted Confucian and clan cultures. By incorporating historical and cultural perspectives, this study offers a novel explanation for the persistently high household saving rates observed in China.

Suggested Citation

  • Yao, Dongmin & Xu, Aohan & Zhang, Shiyu & Yu, Shuguang, 2025. "Centuries of memory: Historical disasters and modern household savings," China Economic Review, Elsevier, vol. 94(PA).
    • Handle: RePEc:eee:chieco:v:94:y:2025:i:pa:s1043951x25001695
    DOI: 10.1016/j.chieco.2025.102511
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    Keywords

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    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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