@article{Chen:115516,
      recid = {115516},
      author = {Chen, Xi},
      title = {Accounting for Social Spending Escalation in Rural China},
      address = {2011},
      number = {925-2016-72997},
      pages = {42},
      year = {2011},
      abstract = {It has been widely recognized that the poor spends a  significant proportion of their 
income on social spending  even at the expense of basic consumption. What are the  
motives behind the observed lavish social spending among  the poor? We attempt to 
test three competing explanations  at the social link level, risk pooling, peer effect, and  
status concern, via a uniform framework based on a unique  primary dataset. The data 
set include household  information from a three wave census type household survey  as 
well as a long term gift record for all households in  three villages in a poor region in 
rural China.  Our  dyadic estimations confirm the prevalence of peer influence  and the 
status seeking motive in shaping gift spending and  its rapid growth, while risking pooling 
is not a  significant explanatory factor. A 1% increase in peers’  gift spending per occasion 
leads to a 0.13% 0.34% increase  in one’s own gift per occasion, depending on whether  
household fixed effect or pairwise fixed effect dyadic  model is estimated. Status seeking 
for the bottom 25% and  the middle 50% groups significantly pushes up gift  expenditure. 
Moreover, large windfall income and marriage  market pressure further intensify status 
competition,  escalating gift giving behavior.},
      url = {http://ageconsearch.umn.edu/record/115516},
      doi = {https://doi.org/10.22004/ag.econ.115516},
}