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Impact of digital divide on household consumption: Role of mental health and happiness

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  • Wang, Xinjian
  • Ding, Yihao
  • Dong, Qiang
  • Sun, Shuai
  • Chen, Zhixiao

Abstract

Digital inequality remains a significant yet underexplored determinant of household economic behavior. Despite extensive research on the digital divide's impact on education, employment, and social inclusion, its influence on household consumption patterns has received limited attention. Addressing this gap, this study examines the mechanisms through which digital exclusion shapes household spending behavior, emphasizing the mediating roles of mental health and happiness. Using data from the 2020 China Family Panel Studies (CFPS), we employ instrumental variable estimation, Heckman selection correction, and quantile regression to establish causal relationships. The findings reveal that the digital divide significantly constrains household consumption, both directly by limiting technological access and indirectly by affecting psychological well-being. The effects are particularly pronounced among lower-consumption households, highlighting the uneven economic consequences of digital exclusion. These results underscore the need for policies that address not only technological accessibility but also the psychological impacts of digital disparities to foster inclusive economic growth.

Suggested Citation

  • Wang, Xinjian & Ding, Yihao & Dong, Qiang & Sun, Shuai & Chen, Zhixiao, 2025. "Impact of digital divide on household consumption: Role of mental health and happiness," International Review of Economics & Finance, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:reveco:v:99:y:2025:i:c:s105905602500190x
    DOI: 10.1016/j.iref.2025.104027
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    References listed on IDEAS

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    More about this item

    Keywords

    Digital divide; Household consumption; Mental health; Happiness; Quantile regression;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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