Research Of Urban Residents' Consumption Behaviors Based On The Habit Formation

This paper unites theory of precautionary saving and specific practical consumption in China's urban residents, builds consumption function on urban residents' consumption habit, income, income risk and wealth goals. According to Chinese per capita income of urban residents and their per capita consumption panel data from 2002 to 2008 in 31 provinces and municipalities, it sets up the static and dynamic panel data econometric model with individual effects, and the dynamic panel data model is more effective and consistent on the parameter estimate. Our conclusions are as follows, firstly, the intensity of consumption habit of urban residents is 0.1094, which implies that the past urban residents' intensity of consumption would affect the present consumption. Secondly, based on consumption habit, the urban residents'marginal propensity to consume is 0.7786. Thirdly, the current consumption of urban residents'elasticity of income risks is -0.05132. Fourthly, the individual effects of each region are quite different and western provinces have greater individual effect.From the point view of different regions, firstly, national urban residents consumption habit formation parameter is 0.1094, which is much lower than the Shanghai 0.3071, Henan 0.2127 and Sichuan 0.3512, which not only shows the current spending of urban residents in China rarely rely on consumer spending in the previous one, and shows that there are many different spending habits between developed regions and underdeveloped regions, showing the heterogeneity of the region. Secondly, national urban residents'marginal propensity to consume based on consumption habits is 0.7786, much higher than Shanghai 0.5624, Henan 0.7146 and Sichuan 0.6904, which indicates that they spend vast majority of its current income on current consumption. Thirdly, the income risk the flexibility of urban residents in China on current consumption is -0.05132, after getting the absolute value, more than Shanghai -0.0319, but much less than Sichuan -0.0674 and Henan -0.0750, which not only illustrates that the urban residents'uncertainty of income on the consumption goes down as the economy becomes more and more developed, but also states heterogeneity of regional precautionary savings. The greater the risk of their income is, more cautious their consumption is.In General, the consumption habit is one important variable in the consumption function. the consumption habit not only has a certain explanatory power for precautionary savings of urban residents, but also has a certain explanatory power for liquidity excess whether it makes the serious inflation and asset bubble or not. All mentioned above accords with the reality of national consumption of urban residents very well.