Summary:
Understanding the determinants of household consumption is important for understanding the national economy. Scholars try to explain the dilemma of low consumption in certain countries or regions by studying cultural differences, but these studies are restricted by the limitations of data and technology, making the impact of culture on residents' consumption unclear. The mainstream view consists of theories of informal institutions, risk preferences and consumption concepts. These theories explain why culture affects individuals' consumption from different perspectives. As an important aspect of cultural characteristics, collectivism-individualism is an important object of cultural and economic research and worthy of further study. The best known definition of collectivism is given by Hofstede (1980). He defines a collectivist society as one whose residents enter into a strong and closely connected inner group at birth that provides lifelong security for them. Additionally, the residents should be absolutely loyal to the group. Many scholars point out that this cultural characteristic is also applicable to the study of individuals. Gorodnichenko and Roland (2012) measure the index of collectivism in a culture at the individual level and provide strong support for the quantitative analysis of this paper. The collectivist culture of China is mainly reflected in blood relationships or circles of acquaintances. Stable social networks, social integration and emotional expression are reflected in the close relationships between the members of an inner group and self-control reflects the self-restraint prevalent in collectivist culture. These four dimensions form the core of collectivist culture in this paper. Using a large sample of individual survey data from the China Family Panel Studies (CFPS), we construct a comprehensive index of collectivism to analyze its impact on China's household consumption. The results confirm that the comprehensive collectivism concept has a significant and stable positive effect on consumption in China. Social networks, social integration and emotional expression have significant positive effects on China's household consumption, but the sense of self-control has the opposite result. The influence of trust, an often used cultural variable, is not significant. Empirical analysis of different types of consumption shows that steady social networks significantly increase different types of consumption. Social integration significantly increases food, education, culture and entertainment consumption. Emotional expression significantly promotes clothing, housing, transportation, communication and other consumption. Self-control ability inhibits expenditures except on clothing and medical insurance. The comprehensive collectivism index has a significant positive effect on all types of consumption. When allowing for heterogeneity in the level of Internet penetration, we find that collectivism has a weaker effect on consumption in areas with greater Internet penetration. The results are still significant when using robust methods to address issues of endogeneity. These conclusions have an important policy implication. To improve the accuracy of policies, the government should pay attention to the effect of collectivism on consumption and the differences caused by regional differences in the informatization level. This paper makes the following contributions. We measure the concept of collectivism from the perspective of the individual and explore its effect on consumption in China. This study both fills a gap in the literature and provides a new perspective for the interdisciplinary research of economics, sociology and psychology. It is worthwhile to pay attention to the steady positive effect of the family social network on different types of consumption, which proves that the core of collectivism in China is “family collectivism.”
Au, C.C. , and J.V. Henderson, 2006, “How migration restrictions limit agglomeration and productivity in China”, Journal of Development Economics, 80(2), pp.350～388.
[14]
Carroll, C.D., J.R. Overland and D.N. Weil , 2000, “Saving and Growth with Habit Formation”, American Economic Review, 90(3), pp.341～355.
[15]
Chamon, M.D., and E.S. Prasad, 2010, “Why Are Saving Rates of Urban Households in China Rising？”, American Economic Journal: Macroeconomics, 2(1), pp.93～130.
[16]
Chou, S.Y., J.T. Liu and J.K. Hammitt, 2003, “National Health Insurance and Precautionary Saving: Evidence From Taiwan”, Journal of Public Economics, 87(9～10), pp.1873～1894.
[17]
Chui, A.C.W. , and C.C.Y. Kwok, 2009, “Cultural practices and life insurance consumption: An international analysis using GLOBE scores”, Journal of Multinational Financial Management, 19(4), pp.273～290.
[18]
Gorodnichenko, Y. , and G. Roland, 2011, “Which Dimensions of Culture Matter for Long-Run Growth？”, American Economic Review, 101(3), pp.492～498.
[19]
Gorodnichenko, Y. , and G. Roland, 2012, “Understanding the Individualism Collectivism Cleavage and its Effects: Lessons from Cultural Psychology”, In the Institutions and Comparative Economic Development, Eds. by Aoki M., T. Kuran and G. Roland, pp.213～243.
[20]
Gorodnichenko, Y., and G. Roland, 2015, “Culture, Institutions and Democratization”, NBER Working paper, No. 21117.
[21]
Hirschman, E.C. , and M.B. Holbrook,1982,“Hedonic Consumption: Emerging Concepts, Methods and Propositions”, Journal of Marketing, 46(3), pp.92～101.
[22]
Hofstede, G., 1980, Culture's Consequences, International Differences in Work-Related Values. Published by Sage Press.
[23]
Hofstede, G., 2001, Culture's consequences: Comparing values, behaviors, institutions and organizations across nations. Published by Sage Press.
[24]
Kacen, J.J., and J.A. Lee, 2002, “The Influence of Culture on Consumer Impulsive Buying Behavior”,Journal of Consumer Psychology, 12(2), pp.163～176.
[25]
Kroeber, A., 2011,“China's Consumption Paradox: Causes and Consequences”, Eurasian Geography and Economics, 52 (3), pp.330～346.
[26]
Licht, A.N., C.Goldschmidt and S.H. Schwartz,2007,“Culture rules: The foundations of the rule of law and other norms of governance”, Journal of Comparative Economics, 35(4),pp.659～688.
[27]
Ma, G., and W. Yi, 2010, “China's high saving rate: myth and reality”, International Economics, 122:5～39.
[28]
Markus, H.R., and S. Kitayama, 1991,“Culture and the Self: Implications for Cognition, Emotion, and Motivation.”,Psychological Review, 98(2), pp.224～253.
[29]
Modigliani, F, and S.L. Cao, 2004, “The Chinese Saving Puzzle and the Life Cycle Hypothesis”, Journal of Economic Literature, 42(1),pp.145～170.
[30]
Mooij, M.D., 2011, Consumer Behavior and Culture, Published by Sage Press.
[31]
Triandis, H.C., 1998, “Converging measurement of horizontal and vertical individualism and collectivism”, Journal of Personality and Social Psychology, 74 (1), pp.118 ～128.
[32]
Weber, E.U., and C.K. Hsee, 1999,“Models and mosaics: investigating cross-cultural differences in risk perception and risk preference”,Psychonomic Bulletin and Review, 6(4),pp.611～617.
[33]
Wei, S.J., and X. Zhang,2011,“The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China”, Journal of Political Economy, 119(3), pp.511～564.
[34]
Wong, N.Y., and A.C. Ahuvia,1998,“Personal taste and family face: Luxury consumption in Confucian and western societies”, Psychology & Marketing, 15(5), pp.423～441.
