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Homeownership and Subjective Wellbeing in Urban China: Does Owning a House Make You Happier?

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Abstract

This paper examines the effect of homeownership status on individual subjective wellbeing indicators in urban China using a large nationally representative dataset. It is the first to gauge the relationship between homeownership and individual subjective wellbeing in the setting of China and is also among the few empirical studies concerning developing countries. The results show that the homeownership status does have a strong positive effect on both one’s housing satisfaction and overall happiness in urban China. Even after controlling for housing satisfaction in the equation, the homeownership status still positively affects one’s overall happiness, suggesting that the homeownership status might also contribute to other possible aspects of life satisfaction except for housing satisfaction. In addition, in terms of housing satisfaction, females seem to value much more on owning a house than males, while the subjective benefits of owing a house in large cities seem to be much smaller than in small cities.

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Notes

  1. See Dietz and Haurin (2003) for a detailed discussion of the private and social benefits of homeownership.

  2. The terms “happiness”, “subjective wellbeing” and “life satisfaction” are used interchangeably in this paper.

  3. Except for the reason that people purchase housing units in order to live a better or happier life, another possible reason for the strong housing demand in China’s cities might be that people speculate in the housing market if they believe that housing prices will continue to rise in the future.

  4. According to Shek (2010), the existing research studies on subjective wellbeing are predominantly conducted in the western developed nations and there are only very limited relevant evidences on China.

  5. Those public housing options include renting low-cost rental units (Lian Zu Fang) and purchasing special affordable units (Jing Ji Shi Yong Fang) for low-income urban households, and renting public rental units at below-market prices (Gong Gong Zu Lin Fang) and purchasing price controlled units (Xian Jia Fang) for mid-income households.

  6. See The Department of Sociology of Renmin University of China and the Survey Research Centre of Hong Kong University of Science and Technology (2006) for more detailed information about the survey. The latest available dataset of the survey is the 2006 wave.

  7. In total, there are 31 provinces, municipalities, and autonomous regions in mainland China. The three provinces or autonomous regions that were not covered in the survey are Qinghai, Ningxia, and Tibet. Because the population in these three regions only accounts for a very small proportion of the whole nation, missing them should not affect the national representativeness of the survey.

  8. Only the respondents are asked about their attitudes towards life satisfaction, and the survey does not provide any information on other household members in this regard.

  9. China’s cities can be ranked according to their administrative statuses: province level, deputy province level, prefecture level, county level, and town level. For more detailed knowledge about China’s city system, please refer to Chung and Lam (2004). We divide them into large and small ones in terms of their administrative levels. That is to say, those cities at the county level or below are recorded as small cities, while those at the prefecture level or above are named as large cities.

  10. For example, the homeownership rate of US households was about 68% in 2002 (Dietz et al. 2003; Shlay 2006).

  11. According to Ferrer-i-Carbonell and Frijters (2004), assuming ordinality or cardinality of subjective wellbeing indicators makes little difference, though economists usually prefer to assume the ordinality of these indicators. We also run OLS regressions and get similar results, which are not presented in this paper due to space limit. Wooldridge (2002, pp. 504–508) provides some details about the ordered probit model.

  12. To deal with the aforementioned concerns, a proper approach might be a natural experiment or an instrumental variable method (Dietz et al. 2003). However, given the available information in the dataset used in this paper, it is difficult to find good instrumental variables.

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Acknowledgments

I would like to thank valuable comments and suggestions from one anonymous referee. I acknowledge the Department of Sociology of Renmin University of China and the Survey Research Centre of Hong Kong University of Science and Technology for providing the survey data. This study is under the financial support from National Natural Science Foundation of China (No: 71003005; 71133003).

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  1. Dongling School of Economics and Management, University of Science and Technology Beijing, No. 30, Xueyuan Road, Haidian District, Beijing, 100083, China

    Feng Hu

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Hu, F. Homeownership and Subjective Wellbeing in Urban China: Does Owning a House Make You Happier?. Soc Indic Res 110, 951–971 (2013). https://doi.org/10.1007/s11205-011-9967-6

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