MARRIAGE MARKET MATCHING AND CONSPICUOUS CONSUMPTION IN CHINA

Visible expenditures which convey higher socioeconomic status may help individuals differentiate themselves in the marriage market when there is competition for partners and imperfect information. We examine a unique dataset of automobile purchasers in China to investigate the extent to which skewed sex ratios influence expenditure decisions for this highly visible commodity. Using a triple difference approach, we show that unmarried male consumers who face an unfavorable sex ratio purchase more expensive, luxury vehicles than their married peers. Lower income borrowers and those residing in regions with the worst sex ratios exhibit the largest relative degree of conspicuous consumption. In addition to the direct cost of consumption signaling, we demonstrate that this behavior generates negative externalities in the form of lower average fuel economy and higher average vehicle weight. As it has worsened sex ratios, status competition and the associated negative repercussions we identify represent unintended consequences of China's one child policy. (JEL O12, E21, J12)