At Vox, Philip Hans Franses--professor of applied econometrics at the Erasmus School of Economics--and Heleen Mees--researcher at Erasmus School of Economics--take a look at money illusion in China.  And they find that Chinese consumers are signficantly less prone to money illusion--making decisions based on the nominal value of a good as opposed to the real value--than American consumers.

Our results show that considerations of happiness, morale, and job satisfaction are intimately related with each other, in contrast to economic considerations. The default decision-making framework for respondents in China appears to be dominated by economic considerations, while the default decision-making framework for respondents in the US appears to be dominated by considerations of happiness, morale and/or job satisfaction. This may well reflect the difference in affluence between respondents in the US and China, with the former having already conquered the top layers of Maslow's pyramid of needs while (many of) the latter find themselves still scrambling at the bottom (Maslow 1943). It also suggests that affluent societies are more prone to money illusion and, hence, more susceptible to irrational exuberance (Akerlof and Shiller 2009).

It is important to note that there are two distinct reasons why respondents in China are less prone to money illusion than respondents in the US.

First, when asked specifically to judge a transaction on economic terms, respondents in China are more likely to correctly choose the transaction with the highest real monetary value.

Second, if no guidance is given on whether to judge a transaction on economic terms or terms of wellbeing, respondents in China are more likely to adopt a decision-making framework that is dominated by economic considerations.

In other words, Chinese people are more likely to correctly choose the transaction with the highest real monetary value instead of the transaction with the highest nominal monetary value.

Read Are Chinese individuals prone to money illusion? here.