Has China’s Competition For Brides Led To Global Imbalances?

Competition for brides, due to gender imbalance, has led to China’s huge savings. That’s according to a study reported by Wall Street Journal Blog.

Writes the Wall Street Journal, (bold emphasis original italics mine)

Too few brides may be contributing to China’s trade imbalance.

That’s because “desperate parents” are using education and wealth to make their sons stand out as catches in an increasingly competitive marriage market, Professor Wei said.

Speaking on a panel at the Council on Foreign Relations in New York on the U.S.-China trade imbalance, Professor Wei said that China’s efforts in the past ten years to step up the social safety net haven’t reassured consumers enough to ease their savings.

Most Chinese consumers save for their children and for retirement, Professor Wei said, a finding put forth in a paper he wrote with Xiaobo Zhang, “The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China.”

Acknowledging that the marriage market was somewhat “outside macroeconomic thinking,” Professor Wei said that his research shows a “very clear pattern” of household savings rates — as well as entrepreneurship — rising as the competition for brides becomes more keen. He and Mr. Zhang, a senior research fellow at the International Food Policy Research Institute, elaborated on the phenomenon in another paper, published last month by the National Bureau of Economic Research, “Sex Ratios, Entrepreneurship, and Economic Growth in the People’s Republic of China.”

The most recent paper explains that areas in China with an acute imbalance of young men seeking wives tend to benefit economically from a high level of hard work and entrepreneurship. The authors attribute this initiative to the competitive marriage market. Young men who want to begin businesses have to turn to their families for start-up money; parents and relatives prepare for that by saving.

My comments:

While there may be some truth to this, which is why this study came about, this seems more of an example of Nassim Taleb’s narrative of Birds do not write books on birds

Think of the following event. A collection of priestly persons from Harvard or some such place lecture birds how to fly. The bird flies. They write books, articles, and reports that in fact the bird has obeyed them, an impeccable causal link. They even believe their own theories. Birds write no such books, conceivably because they are birds, so we never get their side of the story. Meanwhile, the priests broadcast theirs.

I don’t think the desire of every Chinese family to save is about securing a “bride”.

If this is true then once a groom marries, the couple tends to wind down savings as the incentive to acquire a bride has already been achieved. But of course the argument extends to the next generation, thus becomes circular.

Marriage is just a part of our manifold social activities, surely there many other factors involved such the state of undeveloped capital markets, uncertainties over health, cultural quirks, and government policies among many others.

The above is also a good example of the predilection to aggregate people with numbers and of the experts’ tendency to fall for the clustering illusion trap-seeing patterns where there is none.

Moreover, the study also puts into context Jessica Hagy’s graph of social signalling here.

Of course for me global imbalances is no more than another charade where experts try to pass the blame of their national policies to the others.

This is aside from the folly of applying reductio ad absurdum arguments into people’s trading activities, which has been seen and argued in the context of politics, based on statistical figures rather than trading activities as seen from the human dimensions.

Bottom line: Patterns or correlations does not imply causation.