Abstract
This paper tests the influence of a Collectivist culture on savings behavior using China's household panel data. Researchers argue that households under a Collectivist culture save more than those under the Individualist culture. China is a large country with different ethnicities and cultures. Geographically, there are rice growing, wheat growing and herding provinces. The rice growing regions require more cooperative effort (collectivism) among farmers for irrigation etc., than others (Henrich, 2014; Talhelm et al., 2014). Another explanatory variable is the genetic diversity (large genetic distances) among the peoples within a community (Ashraf & Galor, 2013), which impedes solidarity and consequently less savings. We find that the Geography variable (measured by rice farming) offers a stronger prediction than the Genetic variable.
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