February 2, 2010

HOW MUCH DO YOU HAVE TO SAVE TO BUY A CORPSE BRIDE?:

Why Do The Chinese Save So Much?: There are too many men--and hoarding cash is one way to triumph in a competitive marriage market. (Shang-Jin Wei, 02.02.10, Forbes)

The resulting pressure on the marriage market in China might induce men and parents with sons to do things to make themselves more competitive. Increasing savings, mostly by cutting down on the family's spending, is one logical way to do that. Wealth helps to increase a man's competitive edge in the marriage market. Ironically, increased savings does not change the total number of men who get married in the aggregate. In this sense, the increased savings is socially inefficient. However, from an individual household's viewpoint, when the competition for a marriage partner is tough, it cannot afford to save less than its competitors. I call this effect "keeping up with the Zhangs."

In our study we compared savings data across regions and in households with sons versus those with daughters. We found that not only did households with sons save more than households with daughters on average, but also that households with sons tend to raise their savings rate if they happen to live in a region with a more skewed sex ratio.

Even those not competing in the marriage market must compete to buy housing and make other significant purchases, pushing up the savings rate for all households.

The effect is significant. The household savings rate in China rose from about 16% of disposable income in 1990 to over 30% today, which is much higher than most countries.

Posted by Orrin Judd at February 2, 2010 6:41 AM
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