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Housing wealth and household consumption in urban China

Author

Listed:
  • Zekai He

    (Southwestern University of Finance and Economics, China)

  • Jingjing Ye

    (Southwestern University of Finance and Economics, China)

  • Xiuzhen Shi

    (Zhejiang University of Technology, China)

Abstract

Using a large Chinese household survey data set, we investigate the effect of home value appreciation on urban household consumption. The paper identifies the causal effect of housing wealth using both Two-Stage Least Squares (2SLS) estimates and regression discontinuity designs. The research demonstrates that the housing boom in China has resulted in higher consumption and that a 10% increase in home wealth raises overall consumption by approximately 3%. The average marginal propensity to consume out of housing wealth is about 5 cents with substantial heterogeneity across household characteristics. The findings highlight the role of mortgage debts, health insurance, education and risk preference in explaining the variation in household consumption. Our results persist when we adopt different proxies for housing wealth.

Suggested Citation

  • Zekai He & Jingjing Ye & Xiuzhen Shi, 2020. "Housing wealth and household consumption in urban China," Urban Studies, Urban Studies Journal Limited, vol. 57(8), pages 1714-1732, June.
    • Handle: RePEc:sae:urbstu:v:57:y:2020:i:8:p:1714-1732
    DOI: 10.1177/0042098019844410
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    Cited by:

    1. Chengri Ding & Zhi Li, 2022. "City Size and Household Consumption in China," Land, MDPI, vol. 11(11), pages 1-14, November.
    2. Wang, Xize & Liu, Tao, 2022. "Home-made blues: Residential crowding and mental health in Beijing, China," SocArXiv cy8hz, Center for Open Science.
    3. Zhenshan Yang, 2023. "Human capital space: a spatial perspective of the dynamics of people and economic relationships," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-14, December.
    4. Li, Yu & Liu, Kai & Lu, Xiaoying & Wang, Ben Zhe & Zhou, Xuan, 2022. "Welfare housing and household consumption in urban China," Journal of Economic Behavior & Organization, Elsevier, vol. 195(C), pages 326-334.
    5. Beeler, Lisa & Zablah, Alex R. & Rapp, Adam, 2022. "Ability is in the eye of the beholder: How context and individual factors shape consumer perceptions of digital assistant ability," Journal of Business Research, Elsevier, vol. 148(C), pages 33-46.
    6. Li, Cheng & Zhang, Ying, 2021. "How does housing wealth affect household consumption? Evidence from macro-data with special implications for China," China Economic Review, Elsevier, vol. 69(C).
    7. Sujata Saha, 2023. "Impact of House Price Changes on Durable and Non-Durable Consumption in the United States," International Real Estate Review, Global Social Science Institute, vol. 26(1), pages 73-93.
    8. Andrea Brandolini, 2021. "The poverty debate in Italy: from politics to statistics," Questioni di Economia e Finanza (Occasional Papers) 648, Bank of Italy, Economic Research and International Relations Area.
    9. Liu, Shimeng & Zhang, Sisi, 2021. "Housing wealth changes and entrepreneurship: Evidence from urban China," China Economic Review, Elsevier, vol. 69(C).
    10. Dong Cheng, 2021. "Housing boom and non-housing consumption: evidence from urban households in China," Empirical Economics, Springer, vol. 61(6), pages 3271-3313, December.
    11. Xize Wang & Tao Liu, 2022. "Home-made blues: Residential crowding and mental health in Beijing, China," Papers 2207.07985, arXiv.org.

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