Effects of superstition on household consumption: Evidence from “zodiac-year” beliefs in China

This paper investigates the impact of superstition, specifically beliefs in misfortune during one's zodiac year, on household consumption in China. Utilizing data from the China Family Panel Studies (CFPS), our analysis reveals a significant decrease in household consumption during individuals' zodiac year. Further exploration indicates that this decline is attributed to heightened risk perception and an “infectious effect”, where the superstition spread through social interactions. The zodiac effect is more pronounced among individuals with Eastern religious beliefs, the elderly, non-Communist Party members, those without college degrees, and urban residents. Additional scrutiny shows that this effect permeates various consumption categories, with an increased impact on durables. Importantly, no anticipatory or lingering impacts are observed, suggesting the effect is contained to the zodiac year. Although financial well-being remains unchanged, the decline in self-reported happiness points to non-monetary welfare losses stemming from superstitiously motivated consumption cuts.