A probit analysis of consumer behaviour in rural China

The success of the economic reforms in rural China has raised the living standards of rural households. This is reflected in households' consuming goods and services that were not previously part of their consumption pattern. However, because of differences in economic and demographic characteristics, not every household has been able to increase consumption. Consequently, it will be useful to investigate how the likelihood of consuming such goods and services is affected by economic and demographic factors. In this paper, the probit model is used to compute the marginal and mean probabilities of consumption of five such goods and services, namely, Food away from home, Recreation, Medical Care, Transport, and Postage. The empirical results show that the estimated probabilities of consuming the first three goods are more sensitive to changes in the underlying economic and demographic factors, while the probabilities of consuming the latter two goods are more sensitive to changes in the model structure.