Degree
Doctor of Philosophy (PhD)
Department
Economics
Document Type
Dissertation
Abstract
This dissertation examines household consumption behavior in India, highlighting the roles of income shocks, expectations, and cultural norms.
Chapter 1 investigates heterogeneity in the marginal propensity to consume (MPC) using semi-structural methods applied to rich household panel data. I find a monthly MPC of 0.27 following a transitory income shock, with significant variation across groups: from 0.23 in urban households to 0.57 in rural households, and from 0.14 in high-income households to 0.41 in low-income households. Rainfall shocks, used as exogenous variation in income, yield similar estimates, reinforcing the results. These findings have important implications for designing effective monetary and fiscal policies in emerging economies.
Chapter 2 explores how expectations and forecast errors shape consumption. Using granular microdata, we show that Indian households are generally optimistic about the future, particularly in urban and higher-income groups, but can also be ``under-optimistic” when actual outcomes are better than expected. Forecast errors have an independent effect on consumption beyond realized income changes, underscoring the importance of beliefs in household decision-making.
Chapter 3 analyzes the impact of revealed son preference on spending patterns. Leveraging nationally representative panel data from 2014 to 2019, I identify households that continue childbearing after a firstborn daughter until having a son. These households spend about 31\% more on education and modestly more on other consumption categories, while health spending shows no significant difference. The associations remain robust to controls for parental incomes and mother's state of origin. Subsample and heterogeneity analyses confirm the widespread influence of son preference on resource allocation, especially toward educational investment.
Together, these chapters provide new evidence on how transitory shocks, expectations, and cultural preferences interact to drive household consumption choices. The results contribute to a deeper understanding of consumption dynamics in developing economies and offer insights for policies that promote welfare, resilience, and human capital development.
Date
7-9-2025
Recommended Citation
Sun, Jingya, "THE EMPIRICS OF HOUSEHOLD CONSUMPTION SPENDING: EVIDENCE FROM INDIA" (2025). LSU Doctoral Dissertations. 6846.
https://repository.lsu.edu/gradschool_dissertations/6846
Committee Chair
Areendam Chanda
DOI
10.31390/gradschool_dissertations.6846