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Climate variations, culture and economic behaviour of Chinese households

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Abstract

Societies adapt to climate variations and develop unique cultures that lead to distinctive economic behaviour across different regions. To estimate the climate-economic link and test the hypothetical role of culture, this paper uses a nationwide survey at the household level in China, together with historical temperature data at the prefectural city level for empirical analysis. The results show the significant role of local climate variations on consumption, savings and investment decisions by households. Harsh weather conditions are associated with lower consumption, lower income and higher savings. Such climate characteristics are also associated with a lower probability of purchasing risky financial assets. Using a sample of migrating families, we find strong evidence that culture is an important channel in the climate-economic relationship. Additional support for this view is found through the “catching up with the Joneses” effect documented in the economics literature. Overall, this research provides an alternative perspective for understanding the long-term behavioural impact of climate change.

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Notes

  1. www.chfs.swufe.edu.cn.

  2. The cultural effects are unlikely to change over time. To check this, we also use the 2015 round survey and the results are reported in appendix 2.

  3. Source of data: www.data.cma.cn.

  4. For the list of variables and their basic descriptive statistics, see Table 1.

  5. Discretionary consumption is for goods and services that are non-essential for consumers but desirable. Examples include durable goods, entertainment, leisure activities etc.

  6. City-specific control variables may be correlated and thus cause problems. We follow the comments of an anonymous reviewer to check correlations and the sensitivity of our results to these variables. It is found that the correlations are generally low. City level GDP is the most important variable but the main results stand irrespective to the choices (please refer to appendix 7 for more information).

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Acknowledgements

Supports from the National Natural Science Foundation of China under Grant No. 71974159 and No. 72022020, 111 Project Grant No. B16040 are acknowledged.

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Authors and Affiliations

  1. Research Institute of Economics and Management, Southwestern University of Finance and Economics, Chengdu, China

    Dayong Zhang & Jun Li

  2. Institute of Science and Development, Chinese Academy of Sciences, Beijing, China

    Qiang Ji

  3. Urban Institute & School of Engineering, Kyushu University, Fukuoka, Japan

    Shunsuke Managi

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  1. Dayong Zhang
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  2. Jun Li
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  3. Qiang Ji
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  4. Shunsuke Managi
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Correspondence to Shunsuke Managi.

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Zhang, D., Li, J., Ji, Q. et al. Climate variations, culture and economic behaviour of Chinese households. Climatic Change 167, 9 (2021). https://doi.org/10.1007/s10584-021-03145-6

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