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Staff Publications

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    'Staff publications' is the digital repository of Wageningen University & Research

    'Staff publications' contains references to publications authored by Wageningen University staff from 1976 onward.

    Publications authored by the staff of the Research Institutes are available from 1995 onwards.

    Full text documents are added when available. The database is updated daily and currently holds about 240,000 items, of which 72,000 in open access.

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Record number 409018
Title Positional spending and status seeking in rural China
Author(s) Brown, P.; Bulte, E.H.; Zhang, X.
Source Journal of Development Economics 96 (2011)1. - ISSN 0304-3878 - p. 139 - 149.
DOI https://doi.org/10.1016/j.jdeveco.2010.05.007
Department(s) Development Economics Group
WASS
Publication type Refereed Article in a scientific journal
Publication year 2011
Keyword(s) risk-sharing networks - interdependent preferences - happiness - income - dowry - insurance - behavior - externalities - arrangements - performance
Abstract Focusing 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 (i.e., 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. We find that the implications of status seeking for spending are not unidimensional—they vary across income groups and expenditure categories. In particular, and consistent with theories of rank-based status seeking, we find that the poor increase spending on funerals and gifts as competition for status intensifies. In addition, poor families of grooms expend more for wedding ceremonies as local income competition increases, while the families of brides do not. The welfare implications of spending in order to "keep up with the Joneses" are potentially large, particularly for poor households.
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