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Lagging behind the Joneses: Relative Deprivation and Household Consumption in Rural China

Author

Listed:
  • Xiaodi Qin

    (School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, China)

  • Haitao Wu

    (School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, China)

  • Yifeng Xie

    (School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, China)

  • Xiaofang Zhang

    (School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, China)

Abstract

Based on the Chinese Family Panel Studies (CFPS) 2010–2018, this article investigates how relative deprivation influences household consumption in rural China. High-dimensional fixed-effects (HDFE), the instrumental variable (IV), and causal mediation analysis (CMA) are leveraged to estimate the causal effect and mechanisms. Results show that relative deprivation reduces survival-oriented consumption of food, development-oriented consumption of transportation, telecommunication, and education, as well as enjoyment-oriented of durable goods, and increases survival-oriented consumption of residence and development-oriented consumption of healthcare and medical services. Mechanism analysis indicates that relative deprivation decreases household consumption through the anticipated effect and increases it through a cognitive trap effect. On the whole, the anticipated effect prevails over the cognitive trap effect.

Suggested Citation

  • Xiaodi Qin & Haitao Wu & Yifeng Xie & Xiaofang Zhang, 2022. "Lagging behind the Joneses: Relative Deprivation and Household Consumption in Rural China," Agriculture, MDPI, vol. 12(11), pages 1-14, November.
    • Handle: RePEc:gam:jagris:v:12:y:2022:i:11:p:1912-:d:972097
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