The Impact of Income Distribution Gaps on Individual Consumption Decisions

Xizhuo Zhou ()
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Xizhuo Zhou: Macquarie University Sydney, Business College

A chapter in Proceedings of the 2025 International Conference on Hybrid Commerce, Human Capital, and Economic Dynamics (ICHCH 2025), 2026, pp 855-862 from Springer

Abstract: Abstract With the sustained development of the global economy, income distribution gaps have been expanding in synchrony with economic growth. This situation makes income inequality a key factor influencing individual and societal development. This paper examines the mechanisms through which income distribution gaps influence individual consumer decision-making at the micro level. The paper aims to expose the differences in consumption behavior among different income groups when confronting unequal income distribution and the underlying drivers behind these differences. By analyzing the impact of different income distributions on individual consumption decisions, this study reveals how income inequality stimulates changes in individual consumption desires and decision-making through differences in relative income. Compared to high-income groups, a social composition with greater income disparities leads to lower consumption levels among low-income groups. Through analyzing different income distributions, this study shows how income inequality stimulates changes in individual consumption expectations and decisions through relative income differences. The research has the result that compared to high-income groups, larger income gaps lead to the development of stronger feelings of relative deprivation among low-income groups. Then it influences their consumption decisions, including consumption levels and preferences. The research demonstrates that income distribution gaps are not merely economic issues but may also become potential factors affecting community stability. Therefore, how to improve and coordinate income distribution, and mitigate the psychological and behavioral impacts of income gaps on individual consumption decisions may become a key area of focus for future research.

Keywords: Income Inequality; Consumption Decision; Relative Deprivation; Heterogeneous Effect (search for similar items in EconPapers)
Date: 2026
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DOI: 10.2991/978-2-38476-585-0_96

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