Costly Posturing: Relative Status, Ceremonies and Early Child Development in China

Xi Chen, Yale University
Xiaobo Zhang, International Food Policy Research Institute (IFPRI)

Presenting gifts at ceremonies held by fellow villagers have been regarded as social norms in Chinese villages. It's more burdensome for the poor, as they often lack the necessary resources and are forced to cut back on basic consumption to afford a gift. For pregnant women in poor families, a reduction in nutrition intake as a result of gift-giving has lasting detrimental health impacts on children. Using a primary census-type panel household survey in rural China, we document the fact that child health status has barely improved in the past decades despite more than double digit annual per capita income growth. We show that social squeeze plays an important role in explaining this phenomenon. The toll of participating in social events is heavy for the poor. This finding sheds light on the puzzle why nutritional status of the poor tends to be stagnant amid rapid income growth in developing countries.