An Empirical Study Of The Relationship Between Consumer Expectation And Consumption Behavior

Expectation plays an important role in consumer theory. From Keynesian's absolute income hypothesis to Friedman's permanent income hypothesis to precautionary saving theory, all of those consumer's theories based on different consumer expectation pattern. However, because of different economic institution and market environment, those theories cannot apply to China's data directly. So in this paper we approach to China's consumption function in three new points. Firstly, we argue the relationship between consumer's income expectation and their consumption behaviors according to different income groups. Secondly, we argue how the expectation of institution transition put impacts on consumer's behaviors. Lastly, we argue the influences of the expectation of market environment on consumer's behaviors. Therefore from the discussion above we draw a conclusion that the improvement of consumer's expectation is a key to expand current consumption demand.