Expanding domestic demand should be the strategic basis of the “dual circulation” development pattern. Consumption upgrading is an important starting point of expanding the domestic demand policy. Among them, the elderly has the potential to form a super-large-scale market with their huge population and accumulated wealth over the years, and they are a force that cannot be ignored in consumption upgrading. To promote the consumption upgrading of the elderly is the key to turn the inherent potential into real advantages. It is advisable to study how to promote the consumption upgrading from the most significant characteristics in the life of the elderly. The rise of various forms of social interaction for the elderly represented by the square dance is the most concerned feature of the elderly nowadays. Therefore, from the perspective of social interaction, it is of great practical significance to study its impact on the consumption upgrading of the elderly.

Based on the micro data of the China Health and Retirement Longitudinal Study (CHARLS), this paper examines the relationship between social interaction such as square dance and consumption upgrading of the elderly. For the first time, this paper takes the difference of information content transmitted by social interaction as the distinguishing standard of social interaction effect mechanism, analyzes the internal mechanism of social interaction influencing consumer behavior, and discusses the regulatory role of different situations such as filial support and skip-generation raising. The result shows that, social interaction has a significant positive impact on the consumption upgrading of the elderly, and the conclusion is still valid under the control of endogeneity. The mechanism test shows that although the social breadth will partly increase the conspicuous consumption of the elderly through the demonstration effect, the cognitive effect in social interaction actually improves the life quality of the elderly. Further research shows that filial support will enhance the promotion effect of social interaction on the consumption upgrading of the elderly, while skip-generation raising will weaken the promotion effect.

The conclusion is that paying attention to the spatial and temporal agglomeration effect of the elderly consumption market, increasing the public infrastructure of the elderly social activities, and reducing the pressure of the elderly intergenerational care will promote the consumption upgrading of the elderly. This paper discusses the driving force behind the consumption upgrading of the elderly from the perspective of social interaction, which is helpful to understand the consumption characteristics of the elderly, and provides some line of thinking about promoting the development of silver-hair market and constructing the “dual circulation” development pattern.