Study On The Differences Of The Different Income Groups Of Chinese Town Residents In Consumer Characteristics And Its Influencing Factors

Our country has experienced the great change from planned economy to market economy since 1920s, during which our basic task is to Speed up the process of market-oriented economy, which means that consumption will play an important part in the guidance and regulation of the allocation of the resources and economic development. However, the consumption behavior of town residents has varied greatly in the recent years. The propensity to consume of town residents has been declining. Average propensity to consume has dropped from 0.85 in 1990 to 0.76 in 2005, with an average annual 0.6 percentage point decline. At the same time, however, Savings deposits of town residents have increased from 15.49 billion Yuan at the end of 1978 to 9.878923 trillion Yuan at the end of 2004, with an average annual growth rate of about 29.5%, which is much higher than the rate of economic growth and the growth rate of income of town residents.The rate of resident consumption in our country has been on the low side for a long time. The government, in order to stimulate consumption, has implemented a lot of countermeasures of expanding domestic demand, such as lowering interest rates consecutively for eight times from 1996 to 2002, introducing personal tax on interest income and abolishing the hedge savings, but national consumption is still difficult by standing up vigorously slowly. The exploration of the deep-seated factors affecting residents' consumption behaviors can contribute to solving the problem of insufficient consumption demands fundamentally.Along with the introduction of market economy to the area of income distribution after 1992, the income gap of town residents is widening obviously. The widening income gap makes every kind of eternal environment and internal restriction different income level of town residents is facing different. Therefore, the traits of consumption behavior of different income level of town residents should be different. Learning the traits of consumption behavior of different income level of town residents and then identifying the corresponding impact factors has important practical significance in guiding consumption and production.As is said by Xuheng Zang, as a behavior system, the consumer is very simple. The complexity of the surface its behavior displays is mainly the reflection of the complexity of its environment. In other words, Consumers have a strong ability of adaptability, reflected in their behavior are the characteristics of the external environment. Based on the above Knowledge, this paper starts with the analysis of the consumption behavior of different income level of town residents, and then studies the factors affecting the traits of consumption. First of all, I analyze the consumer behavior assumptions hidden behind the Neoclassical Consumption Function. After that, I compare the eternal environment and internal restriction different income level of town residents is facing with those assumptions in order to choose different consumption function suitable for use. Finally, I use the statistical data to estimate the model. The analysis shows that we can divide the town residents into three categories according to the consumer behavior: one very close to the Cairns hypothesis, another near to the Cairns hypothesis but greatly influenced by the expenditure uncertainties brought by the reform, the other very close to the Friedman hypothesis.There is one thing to explain: the reason why this paper uses the data from 1992 up to now is that we put forward the reform goal of the establishment of market economic system after 1992, which means that the dramatic expansion of the income gap between town residents occurred in the early 90s. We can see this point from the changes of the Gini coefficient of town residents. Gini coefficient of town residents has rose from 0.25 in 1992 to 0.32 in 2004, more than 0.465 in 2004.we can also demonstrate the income gap with the proportion various income classes of the population income account for the total population income. In 2004, the proportion that the total amount of the property of the highest 10% of the households according to income accounted for all the property is near to 50%, while the lowest 10% only accounted for 1%. This means that we can establish Chinese town residents within high, medium and low income groups and this delineation is also basically stable.