Dose The Great Famine Experience Change One’s Risk Preference

As is known to all,the Chinese household saving rate remains extraordinarily high,even in the modern social security system gradually perfect.Why Chinese prefer savings? Why Chinese tend to be conservative? Chen,Zhang(2011) argue people have suffered from chronic shortage of material.Namely,the famine experience has changed the long-term risk preference of people.At present, from the domestic and foreign literature,the quantitative research is not much about combining the personal experience and individual risk preferenc.This paper sorted out the agricultural statistical data of 1949-1979 years of 123 counties in Henan Province,try to have a quantitative analysis about whether famine has changed people’s risk preference or not, using the double difference model.In the literature review and historical background, this paper emphatically introduces the different causes of great famine, the background about state monopoly for purchase and marketing. Because the causes are different,the psychological impact on the experienced person is different.Before and after the great famine(1959-1961), people change the choose for the planting structure of crops, by this, to identify this change is caused by the changed risk preferences or reaction to the policy.Then,we proposed two theoretical assumptions.the first,famine changes not the long-term risk preference,they realize that state monopoly for purchase and marketing of typical play a important role for famine.In order to avoid the policy factors,Farmers will increase economic crops sown area, to actively resist policy state monopoly for purchase and marketing.Second, farmers aware of the occurrence of famine is not too much relations with policy system.in their mind,the crop failures is primary reason because of bad weather. Famine painful has left the mark in the soul of people who have experienced. It has changed risk preference, making the experienced people in later life to be more conservation.In the following seeding selection,they will put more elements in some hunger、drought resistance grain food so as to keep considering to survive.We use cash crops sown area ratio(y1) and coarse food grain production proportion of total output of grain(y2) as the explained variable, famine severity(drt) as the key explanatory variables,select 1950-1956 as the base year,,different period after the famine as the control period.By continuously adding control variables,this paper uses the double difference model, two-way fixed effects to have the regression results.Finally,through the empirical analysis, we concluded that:after the famine, the choice behavior has been changed,however,the famine experience not make people’s long-term risk preferences to be more conservation.Instead,through the regression result,we find that the famine mortality higher,economic crop acreage proportion(y1) bigger,coarse food grain production proportion of total grain yield(y2) smaller. Therefore,we support the first hypothesis theory.Finally,we verify the cause of famine occurrence,finding the cash crops sown area ratio and mortality is significantly negative correlation,which further supports our hypothesis.