DO HIGH TEMPERATURES DAMPEN CHINESE URBAN HOUSEHOLD CONSUMPTION?

Abstract

Increased extreme heat is one of the clearest manifestations of climate change, but its impact on household consumption is poorly understood. This paper estimates the effects of high temperatures on total household consumption. We find an inverted U-shaped relationship, with high temperatures (≥ 30∘C) reducing total household consumption by 7.18% compared with the reference group from 5∘C to 10∘C. In the living consumption subcategory, expenditures for eating out decline by 9.59%, whereas expenditures for protective gear, fuel, and housing increase. Expenditures in the going-out category generally decrease but vary with distance, vehicles, and sites. Spending on all types of public transportation and outdoor recreation decreases regardless of distance, whereas private transportation and short-distance indoor recreation expenditures increase slightly. Our findings indicate that households alleviate high-temperature impacts mainly by reducing expenditures outside the home and increasing expenditures on at-home or indoor activities.