Habit formation under stress: How COVID-19 reshaped Chinese consumer behavior — short-term disruptions and long-term behavioral entrenchment

During the COVID-19 pandemic, external shocks like social distancing, supply chain disruptions, and economic uncertainty reshaped consumption patterns, accelerating the shift from offline dependence toward digital, contactless, and precautionary savings-oriented habits. However, it remains unclear whether these changes represent temporary adaptations or persistent structural transformations. Using panel data on urban and rural household consumption across 115 prefecture-level cities from 2016 to 2022, supplemented by transaction records from the Taobao platform, this study employs difference-in-differences (DID) and regression discontinuity design (RDD) methodologies to identify the causal impact of the pandemic. By controlling for per capita disposable income, levels of digital economic development, and other confounding factors, we isolate the net effect of COVID-19 and evaluate both its short- and long-term influences. The analysis shows the pandemic reduced consumption across urban and rural residents, with gradual recovery. Urban areas experienced larger declines than rural regions, demonstrating a dichotomy between “structural contraction in cities versus adaptive recovery in rural areas”. Structurally, the pandemic induced a dual short-term phenomenon: consumption downgrading (a shift toward essential goods under survival pressure, reflected in a rising Engel coefficient) coexisted with consumption upgrading (a shift toward higher-quality, green products, and digital services driven by health and ecological awareness), while the long-term trajectory pointed toward upgrading. Offline consumption gave way to online platforms, with digital spending normalizing from emergency shifts. These findings reveal the shift from reactive reaction to habit formation, informing retail channel optimization, unlocking rural demand, and advancing green–digital integration to support high-quality post-pandemic economic recovery efforts.