We study the effects of Confucian social norms on savings rates in China. In our simple two-period model, parents have the option to invest in either a risk-free asset or their children’s human capital. We assume that the filial piety norms and thus the enforcement mechanisms for supporting old-age parents differ across regions. Consequently, the probability of children’s non-performance of their repayment obligations to parents and the returns parents can expect from investing in their children vary. We test the model predictions using data from the China Household Finance Survey. We find that stronger Confucian social norms reduce the gap in the savings rate between families with sons and with daughters. Modeling default by children as a function of the prevailing social norms gives us the flexibility to study the impacts of declining Confucian influence on consumption–savings trends in China.

We consider a general social choice environment that has multiple agents, a finite set of alternatives, independent types, and atomless type distribution. We show that for any Bayesian incentive compatible mechanism, there exists an equivalent deterministic mechanism that (1) is Bayesian incentive compatible; (2) delivers the same interim expected allocation probabilities and the same interim expected utilities for all agents; and (3) delivers the same ex ante expected social surplus. This result holds in settings with a rich class of utility functions, multidimensional types, interdependent valuations, and in settings without monetary transfers. To prove our result, we develop a novel methodology of mutual purification, and establish its link with the mechanism design literature.