The Great Famine and Household Saving in China

The Great Famine in China (1959-1961) is one of the most dramatic tragedies in history, which may have long term consequences for economic behaviors of the Chinese population. In particular, we explore whether it continues to have impacts on household saving choices. Employing a dataset across 122 Chinese counties, we find that the saving rates of rural households in 2002 tend to be higher in counties where the famine was severer; and the impact of the famine is even larger, once its severity is instrumented. Evidence from individual preference data shows that people are more willing to cultivate thrift in children in provinces more severely affected. These findings are consistent with the hypothesis that the Great Famine altered the thrifty attitude of survivors and subsequent generations.

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