Homeownership and Happiness: Theory and Evidence from China
Read
DownLoad |
| Title | Homeownership and Happiness: Theory and Evidence from China
|
| Author | Tao Li, Yupeng Shi and Binkai Chen |
| Organization | School of Economics, Central University of Finance and Economics |
| Email | econlitao@gmail.com;shiyupeng@pku.edu.cn;chenbinkai@gmail.com |
| Key Words | Homeownership; Happiness; Liquidity Constraints; Precautionary Saving |
| Abstract | Housing has already become one of most important livelihood problems concerned by Chinese society. This paper studies the impacts of housing on the household happiness. Our theoretic model contributes to the existing literature by introducing two important channels from housing to happiness: liquidity constraints and precautionary savings. Based on the theoretic framework, this paper empirically analyzes the impact of homeownership on household head's happiness using China urban household survey data collected from 41 cities in 2009. Several important findings are derived. First, the effect of homeownership on happiness is significant different among different types of house property rights: owning commercial houses significantly improves happiness; while owning non-commercial houses does not have any significant impacts on happiness. Second, the 'marginal' happiness derived from the number of commercial housing does not decline. Further study shows that, the marginal utility of housing for people with strong precautionary savings motive and those who are more likely to be liquidity constrained is not declining, while the marginal utility of housing for people with weak precautionary savings motive and those who are less likely to be liquidity constrained is declining. These results strongly support our theoretical results. |
| Serial Number | WP89 |
| Time | 2011-07-20 |
|