This study examines the factors explaining the decline in consumption
propensity with 2006 and 2014 data of the ‘Household Income and Expenditure
Survey’. The Shapley method is applied for factor decomposition. The
proportion of subsidized products such as public education and welfare
(childcare) is 24.0%, and the proportion of products controlled by government
such as communication service and tobacco is 30.2%. Heating and fuel costs,
which may be affected by the drop in international oil prices, account for
16.3% of the decline in consumption propensity. However, the expenditure
related to food accounts for 36.78% of the decline in consumption propensity,
so that the households are suppressing consumption for the future.
While changes in income distribution, age of the household head, and the
number of householders do not explain the decline, the decrease of general
households, coupled with the hike of elderly households, accounts for 77.4%
of the decline. The impact of changes in taxes and public transfer income,
including social insurance premiums, on average consumption propensity is
unclear.