Volume 29, Issue 1


DOI: 10.24205/03276716.2020.14

BEHAVIORAL ECONOMIC ANALYSIS ON PSYCHOLOGICAL MECHANISM OF FARMERS’ MIGRATION CHOICES


Abstract
This paper aims to reveal the impacts of mental accounting and endowment effect on farmers’ migration choices. Based on the data from 2016 China Laborforce Dynamics Survey (CLDS), the principal component analysis (PCA) was introduced to determine the indices the endowment effect in each community. The indices were then applied to the individual data from the perspective of behavioral economics. After that, the binary logistic regression model was adopted to investigate how mental accounting, especially cognitive labelling and emotional labelling, and endowment effect influence farmers’ migration choices. The results show that emotional labelling has no impact, while cognitive labelling has a significant impact on farmers’ migration choices; mental accounting has a greater impact on farmers’ migration choices than endowment effect. Therefore, the following policies should be developed to encourage farmers to stay in rural areas: guide the income to flow into the mental accounting of recurrent income, and strengthen the endowment effect of the farmers. The research results can greatly promote the sustainable and healthy development of the rural economy in China.

Keywords
Mental Accounting, Endowment Effect, Population Migration, Boost.

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