Original scientific paper
https://doi.org/10.1080/1331677X.2022.2117229
Regional differences in urban residents' consumption behaviour in China: from the perspective of the habit formation time effect
Xuepin Wu
Yuge Xiong
Abstract
This study constructs a panel extended linear expenditure system
(ELES) model that includes the theory of internal habit formation
and expands the theoretical connotation of the original model. It
also decomposes the dynamic evolution characteristics of Chinese
urban residents’ psychological and physiological needs among
various consumption expenditures. It explains the partial causes
of the time effect in the panel ELES model from consumer behaviour.
We have obtained the following innovative conclusions after
the empirical analysis of urban residents’ consumption behaviour
in different regions of China. First, urban residents have habit
formation effects on seven types of consumption expenditure.
Second, the timeliness of the psychological needs of various commodity
expenditures differs between the eastern and mid-western
region of China, and this difference has expanded since 2013. The
COVID-19 pandemic has reduced the psychological needs for various
commodity expenditures while having little impact on physiological
needs. Finally, the study puts forward some policy
recommendations, such as tapping the potential of commodity
consumption with psychological needs growth, further enhance
the cultivation of low-income people’s consumption in the midwestern
region, and implementing more detailed consumption
supports with different regions’ consumption preferences.
Keywords
Time effect; habit formation; panel ELES model
Hrčak ID:
306457
URI
Publication date:
31.3.2023.
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