Monday, February 8, 2010

Sex ratio and competition, in China and American colleges

With more than 120 boys born for every 100 girls in China, parents of boys know that their sons will face a competitive marriage market. Shang-Jin Wei of Columbia and Xiaobo Zhang of the International Food Policy Research Institute argue that this accounts for a substantial portion of the high savings rate in China, as parents anticiipate that wealthier sons will marry more successfully, and that this spills over to the general economy:

The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China
NBER Working Paper No. 15093 June 2009

Abstract: While the high savings rate in China has global impact, existing explanations are incomplete. This paper proposes a competitive saving motive as a new explanation: as the country experiences a rising sex ratio imbalance, the increased competition in the marriage market has induced the Chinese, especially parents with a son, to postpone consumption in favor of wealth accumulation. The pressure on savings spills over to other households through higher costs of house purchases. Both cross-regional and household-level evidence supports this hypothesis. This factor can potentially account for about half of the actual increase in the household savings rate during 1990-2007.

And here's a summary by Wei at VOX: The mystery of Chinese savings

In the meantime, there's a shortage of boys on many American college campuses: this NY Times report suggests that this has changed the dating equilibrium in ways that concern not only savings behavior, but also sex . (The story doesn't explicitly mention savings behavior, the Times is a family newspaper): The New Math on Campus


MessageForce said...

This is a common problem in the Asian countries where the girls are not encouraged or in some cases allow to join a college. I am not able to imagine a day when this problem would be rectified.

MP said...

The skewed sex ratio in China is not a very plausible explanation of the high savings rate.

While families with sons may save more for dowries, families with daughters will anticipate this and save less. In equilibrium, there need not be any higher aggregate savings; just skewed savings.

Chirag said...

Rising imbalance in sex ratio is not limited to China, but is also prevalent in India.
Although, increased competition in the marriage market maybe one reason to postpone consumption in favor of wealth consumption, you may want to consider factors like:
1) Most of the Asian countries the population is very large. As, the population is large, there is a struggle/heavy competition for rich resources like good education and jobs. Parents of these children choose to save for the future than choosing to consume now because in future these savings may help in things like:
- Sponsoring the education abroad.
- Funding the businesses for the children.
Mostly, the male member is considered to be the chief earning member in the households. And most of the marriages are arranged(culture thing). Every parent will want their girl to live a comfortable life/life of luxury. Better education/ability to setup good businesses show strong genetics example: High IQ/Strong entrepreneurial abilities, plus ability to give a good living standards.