Abstract: Consumption is the primary source of demand for maintaining sustained and stable economic growth. Thoroughly tapping into consumption potential and fully leveraging the driving role of consumption in economic growth are crucial for economic recovery and sustained development. Based on prospect theory, this study utilizes data from the China Household Finance Survey to explore the impact and mechanisms of the household income expectation gap on consumption behavior from both historical and social perspectives. The household income expectation gap significantly influences consumption but exhibits asymmetry. Generally, the positive income expectation gap has a greater impact on consumption than the negative one. The positive income social expectation gap significantly promotes consumption, while the negative one significantly inhibits consumption. Both positive and negative income historical expectation gaps significantly promote consumption. The positive income social expectation gap’s effect on current consumption is greater than that of historical expectation gap, but the opposite is true in the long term. Mechanism analysis indicates that the positive income expectation gap promotes consumption by enhancing household risk tolerance, while household risk tolerance is less likely to change when the income social expectation gap is negative. This research provides new insights and empirical evidence for understanding household consumption behavior and formulating policies to stimulate consumption demand.