Risk-Related Expenditure Pressure and Urban–Rural Consumption Structure in China Provincial Evidence

Abstract

This paper examines how household risk tolerance may affect effective demand and innovation incentives in China. It argues that low-asset households are more likely to adopt stability-seeking consumption and career choices when medical, employment, education, and asset risks are difficult to absorb. This behavior may weaken development-oriented consumption and reduce market signals for innovation-oriented products and services. Using provincial urban-rural consumption data from the China Statistical Yearbook for 2015-2024, the paper analyzes the relationship between medical and health care expenditure shares and education, culture, and recreation expenditure shares. The descriptive results show that rural medical expenditure shares are higher than urban shares in 89.0% of province-year observations, while rural education, culture, and recreation shares are lower than urban shares in 67.1%. A two-way fixed-effects model indicates that a one-percentage-point increase in the rural-urban medical expenditure share gap is associated with a 0.216-percentage-point decline in the rural-urban education, culture, and recreation share gap. The findings suggest a structural tension between risk-related expenditure pressure and development-oriented consumption space.