A structural model of consumption : an application to China during the global financial crisis

Jan Piaw, Thomas VOON, Jan Cham VOON

Research output: Journal PublicationsJournal Article (refereed)

9 Citations (Scopus)

Abstract

In this paper, we develop a structural model of consumption by incorporating psychological constructs which constitute important antecedents of household consumption and provide crucial structural linkages to the mental accounting evaluation of saving or consumption. Our model is tested using structural equation modeling (SEM). The model is applied to China for measuring consumption expenditure under uncertainty emanating from the 2008 global financial crisis. An empirical test using 9784 new Chinese household survey data show that our structural model is a significant improvement over the existing behavioral life cycle model, as it is able to capture the psychological states affecting different groups of consumers such as employed workers and unemployed retirees. Our new structural model of consumption fits the data very well. The results have important implications for public policy assessment.
Original languageEnglish
Pages (from-to)284-288
Number of pages5
JournalThe Journal of Socio-Economics
Volume41
Issue number3
DOIs
Publication statusPublished - 1 Jun 2012

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Keywords

  • China
  • Consumption
  • Emotion
  • Financial crisis
  • Psychological states
  • Structural behavioral model

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