A Study Of The Effect Of The Life Expectancy On Chinese Residents’ Consumption Rate

Residents’ consumption plays an important role in the social production activities, and it is one of the main objectives of the government’s macroeconomic regulation to improve the level of consumption. It is of great significance to study the changes of residents’ consumption rate and to study the factors that determine the consumption rate since consumption is an essential factor of the economic growth. In addition, such study is also a focus in the field of economics. With the development of economy, both the structure of population and the residents’ consumption have been changing correspondingly, and the influence of population structure on the residents’ consumption has been getting scholars’ more and more attention. Since the reform and opening policy, the level of China’s economy, health care, science and technology has been greatly improved, the level of the residents’ health has been gradually increased, and the life expectancy has been significantly extended. According to the Modigliani’s life cycle theory, people tend to arrange their life consumption and savings on the basis of their length of life in order to achieve the utility maximization. Therefore, there is no doubt that the extension of the life expectancy will make the residents change their decisions on the consumption savings. As a result, the patterns of consumption and deposit and the resident’s consumption rate are to be affected. Life expectance has more and more obvious effect on the residents’ savings and consumption. There are more and more researches on the household saving rate at home and abroad. However, the scholars have not paid enough attention to the study of consumption rate. In the previous researches, less of scholars construct the model to analysis the effect of the life expectancy on residents’ consumption rate, and didn’t consider the effect of regional differences, so the study of expected life on residents’ consumption rate needs to be further improved.In order to confirm the effect of life expectancy on the residents’ consumption, this paper has analyzed the effect in detail based on the classic theory of consumption and the empirical data model. First, this thesis has made a brief literature review of the classic consumption theories in the field of economics. This thesis has made an integrated review on the researches of the life expectancy and the residents’ consumption at home and abroad and then has built a three-stage iterative model based on the life cycle theory, which has theoretically proved there is an inverse relationship between the life expectancy and the residents’ consumption. Second, based on the preceding qualitative analysis, this thesis has collected the panel data of 29 provinces and cities in the last 25 years from 1989 to 2013 as samples by using the quantitative analysis and has taken the population mortality as the proxy variables of the life expectancy. This thesis has conducted the empirical study by using the estimation method of the panel data. By adding the variables, it is concluded that the population mortality has a positive effect on the residents’ consumption rate. Meanwhile, this thesis has found that the population mortality has different influences on the residents’ consumption in different districts based on the division of East, Middle and West districts according to their geographical position. In order to verify the reliability of the results, this thesis takes the life expectancy as the direct proxy variable, divides the data of 29 provinces and cities from 1989 to 2013 into five parts, analyzes the data of national and regional panel data, and finally got the similar results to the benchmark return. Third, according to theoretical and empirical results, put forward the implementation of progressive retirement policy, the effective use of resources of aging, improve social security system to weaken the effect of life expectancy on Chinese residents’ consumption rate.