The impact of people’s perception of livelihood risks on household consumption in China

Household consumption has emerged as a key driver of economic growth in China. This study empirically investigates whether perceptions of livelihood risks constrain household consumption, utilizing data from the 2014, 2016, 2018, and 2020 waves of the China Family Panel Studies (CFPS). The results indicate that perceptions of livelihood risks significantly suppress household consumption, leading to both reduced consumption levels and a narrower consumption structure. A mechanism analysis reveals that perceptions of livelihood risks reduce consumption by eroding consumer confidence. Furthermore, households’ risk preferences and proactive government interventions serve as effective moderating factors, significantly mitigating the negative impact of perceptions of livelihood risks, thus offering supporting household consumption. This study contributes new evidence to the growing literature on the economic impacts of risk perceptions and offers valuable insights for policymakers seeking to enhance livelihood development and stimulate economic growth.