Positional spending and status seeking in rural China

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dc.creatorBrown, Philip H.
dc.creatorBulte, Erwin
dc.creatorZhang, Xiaobo
dc.date2010
dc.date2024-10-01T14:03:45Z
dc.date2024-10-01T14:03:45Z
dc.date.accessioned2026-06-27T15:27:41Z
dc.descriptionFocusing on a remote area in rural China, we use a panel census of households in 26 villages to show that socially observable spending has risen sharply in recent years. We demonstrate that such spending by households is highly sensitive to social spending by other villagers. This suggests that social spending is either positional in nature (that is, motivated by status concerns) or subject to herding behavior. We also document systematic relations between social spending and changes in higher order terms of the income distribution. In particular, and consistent with theories of rank-based status seeking, we find the poor increase spending on gifts as the income distribution tightens so that local competition for status intensifies. In addition families of unmarried men (who face grim marriage prospects given China's high sex ratios, especially in poor areas) intensify their competition for status by increasing their spending on weddings. The welfare implications of spending in order to “keep up with the Joneses” are potentially large, particularly for poor households.
dc.formatapplication/pdf
dc.identifierhttps://hdl.handle.net/10568/154771
dc.identifier.urihttp://hdl.handle.net/123456789/105076
dc.languageen
dc.publisherInternational Food Policy Research Institute
dc.rightsOpen Access
dc.sourceBrown, Philip H.; Bulte, Erwin; Zhang, Xiaobo. 2010. Positional spending and status seeking in rural China. IFPRI Discussion Paper 983. https://hdl.handle.net/10568/154771
dc.subjectspending
dc.subjectpoverty
dc.subjecthouseholds
dc.subjectmicroeconomics
dc.titlePositional spending and status seeking in rural China
dc.typeWorking Paper

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Instituto Internacional de Investigación sobre Políticas Alimentarias (IFPRI)