Peer Effects in Consumption Among Chinese Rural Households |
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| Authors: | Chen Ling Anquan Zhang Xiaopeng Zhen |
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| Affiliation: | 1. School of Public Finance and Taxation, Zhejiang University of Finance and Economics, Hangzhou, Zhejiang, China;2. School of Economics, Southwestern University of Finance and Economics, Chengdu, Sichuan, China;3. School of Economics and Management, Shanxi University of Science and Technology, Xi’an, Shanxi, China |
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| Abstract: | This article attempts to identify peer effects in household consumption in rural China using the Chinese Household Finance Survey (CHFS) 2011 data. In addition to the selection effect, reflection problem and correlated effect, we address the actual peer problem via the matching method in identifying the peer effect. It is found that as peer household’s consumption expenditure increases by 1%, the household’s consumption would increase by 0.24%. It is also found that richer households are more susceptible to peer pressure in consumption decisions. Finally, household is more sensitive to changes in the consumption of poorer peers, relative to their richer peers. |
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| Keywords: | Caliper matching household consumption nearest neighbor matching peer effect |
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