Internet use and consumption diversity: Evidence from rural China

Puneet Vatsa, Junpeng Li, Phong Quoc Luu and Julio Cesar Botero‐R

Review of Development Economics, 2023, vol. 27, issue 3, 1287-1308

Abstract: The Internet is integral to modern living. While the Internet is ubiquitous in China's urban areas, its uptake is still lagging in the country's rural regions—the development potential of the Internet remains untapped, and despite China's steep economic growth during the 21st century, the living standards in its rural regions remain low. The Internet can accelerate rural development in China. This study is focused on analyzing whether and to what extent Internet use affects consumption diversity, an indicator of the quality of life, in rural China. To this end, we employ the instrumental‐variable‐based two‐stage endogenous treatment regression model to analyze the 2018 China Family Panel Studies survey data. The modeling approach allows us to account for the endogeneity of Internet use. The results show that consumption diversity is positively associated with Internet use. Furthermore, it rises with household income, household size, and wealth. Whether the Internet is accessed via smartphones or computers has no bearing on household consumption diversity. We also find that education, household income, and wealth increase one's predicted probability of using the Internet. The results also point to regional differences in consumption diversity and the likelihood of using the Internet.

Date: 2023
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