Housing wealth, family relationship and mental health: Evidence from China

Mental health conditions are becoming a significant public health concern in the developing world. This paper examines the impact of housing wealth on an individual's mental health through the lens of family relationships. By leveraging the differential effects of China's National Six Policy, which modified down payment ratios and property deed taxes based on house size, we apply a Regression Discontinuity (RD) design to isolate the causal impact of housing wealth shocks on mental health outcomes. The analysis reveals that individuals experiencing positive housing wealth shocks exhibit lower rates of depression, increased life satisfaction, and greater confidence in the future. Additionally, we find that the effects of housing wealth shocks are particularly pronounced for individuals of lower socioeconomic status. The paper further explores the mechanisms through which housing wealth influences mental health, including improved marital satisfaction, stronger parent-child relationships, increased financial investments in children's education, changes in consumption patterns, alterations in employment status, more leisure time, and reduced health risk behaviors. Our findings underscore the substantial impact of housing wealth on enhancing household well-being, particularly in developing countries.