Working Paper
Costly Posturing

Presenting gifts at funerals, weddings, and other ceremonies held by fellow villagers have been regarded as social norms in Chinese villages for thousands of years. However, it is more burdensome for the poor to take part in these social occasions than for the rich. Because the poor often lack the necessary resources, they are forced to cut back on basic consumption, such as food, in order to afford a gift to attend the social festivals. For pregnant women in poor families, such a reduction in nutrition intake as a result of gift-giving can have a lasting detrimental health impact on their children. Using a primary census-type panel household survey in 18 villages in rural China, this paper first documents the fact that child health status has barely improved in the past decades despite more than double digit of annual per capita income growth. We show that social squeeze plays an important role in explaining this phenomenon. The toll of participating in social events is heavy for the poor—doubling the number of prenatal exposures to social ceremonies in a village would lower the height-for-age z-score of children born to poor families This finding sheds some light on the ‘food puzzle’ raised by Deaton as to why the nutritional status of the poor tends to be stagnant amid rapid income growth in developing countries.