Do expectations of future wealth increase outbound tourism? Evidence from Korea

Abstract

a b s t r a c tAs international tourism is generally considered a luxury good, models to date have shared an understanding that demand is dependent on discretionary income. However, consumption theories predict that a shift in demand can be induced without changes in actual earnings when expectations for future income are adjusted. This presumes demand for international tourism can be influenced by "wealth effects" from real estate and financial assets. This study tested for the wealth effect on Korean outbound travelers during the 20 years between 1989 and 2009. Korea is a unique place to examine in that Korean households possess housing assets and financial assets that are traded actively in markets. The results of this study favored the possibility of a significant wealth effect from housing on outbound travel demand, but not from financial assets. This may be explained by data sensitivity and the relative importance of financial assets in the Korean people's wealth portfolios. Implications and suggestions for future research are provided along with the findings of the study.

Does personal freedom influence outbound tourism?

“…This is in line with previous studies on determinants of outbound tourism (e.g. Kim et al, 2012;Lim, 1997). In addition, we found that the coefficient of travel costs is negative but is not statistically significant in the full sample of countries, developed countries and developing economies.…”

“…Thus, following existing studies on outbound tourism, income, exchange rate and travel costs were selected as control variables in the model specification. Income level in the origin country has been found to be an important explanatory variable that explains overseas travel (particularly for leisure purpose) because overseas travel is expensive and is generally regarded as a luxury good (Kim et al, 2012;Lim, 1997). It is to be expected that income influences the demand for outbound tourism positively.…”

“…While there have been a number of articles such as Lim (2004), Song, Romilly, and Liu (2000), Cortés-Jiménez, Pulina (2009), Seo, Park, andYu (2009), Kim, Park, Lee, and Jang (2012) and Seetaram (2012) investigating the economic determinants of outbound tourism (e.g. income level, consumer prices, travel costs and the exchange rate), very few empirical studies have examined the relationship between personal freedom and outbound tourism (with the notable exception of Karwacki, Deng, & Chapdelaine, 1997;King & Tang, 2009).…”

Sentiment, mood and outbound tourism demand

“…Such a proposition is consistent with the findings of Kim et al (2012) in relation to outbound tourism in Korea. Thus, we posit the first testable hypothesis:…”

Outbound Tourism Demand of Turkey: A Markov Switching Vector Autoregressive Approach

“…The results of the study show that the international tourism demand by South Korea is both income elastic and price elastic. Kim et al (2012) examined the Korean household asset effects on outbound travelling and their findings show the possibility of a significant wealth effect from housing on the outbound travel demand, but not from the financial assets. Che (2013) investigated the Taiwanese outbound tourism and the results show that a destination country's consumer price index (CPI) has a positive linear relation with the number of Taiwanese people travelling abroad.…”