Too old to spend? Understanding the consumption of the elderly in China

The aging of the population is a major phenomenon around the world, and it is of paramount importance to understand the economic behaviors of the elderly. By analyzing a proprietary account-level dataset from a major tech company in China, we attempt to clarify the consumption patterns of the elderly and establish several stylized facts. First, we observe a smooth decrease in consumption since the age of 40, instead of a structural reduction at any age. Second, the composition of consumption varies significantly among cohorts. The elderly spend significantly less on appearance-related categories and entertainment but not on dining, which contradicts the popular argument that food expenditure is substituted by home production (i.e. cooking at home). Third, the elderly is less likely to use consumer credit than the younger generations but the elderly that already become consumer credit users exhibit usage patterns not significantly different from the young. Lastly, with the COVID-19 pandemic, the elderly increase their medical and health expenditures but reduce total consumption. We discuss the plausible reasons why some of our findings are in contrast with the existing literature.