Abstract:

According to the estimates of the Kyrgyz Ministry of Economic Development and Trade, Kyrgyz citizens spend around 2 billion USD on weddings, funerals and other ceremonies per year while the GDP of the country was 6.55 billion USD in 2016 (the World Bank). Such massive amounts of spending on celebrations pose a serious threat to households’ welfare especially in a country with high poverty levels. This paper explores the effect of spending on celebrations on the welfare of Kyrgyz households using a novel dataset “Life in Kyrgyzstan” that covers 3,000 households over three years (2011 to 2013). The results indicate that there is no significant effect of holding a celebration and the corresponding spending on total income of the household. However, there is a statistically and economically significant effect of hosting a festive event on consumption of bought food items of the household. Interestingly, the amount of spending on celebration works to attenuate the negative effect from holding a celebration. These results show that expenses on celebrations, which are more conspicuous in nature, may divert the valuable resources away from productive uses, which could otherwise help households in their fight against poverty.