Advertisement

Journal of Happiness Studies

, Volume 19, Issue 2, pp 397–422 | Cite as

The Impact of Home Ownership on Life Satisfaction in Urban China: A Propensity Score Matching Analysis

  • Honghao Ren
  • Henk Folmer
  • Arno J. Van der Vlist
Research Paper

Abstract

China has implemented a series of socioeconomic reforms since 1978. One of the reforms allows urban residents to purchase their own houses rather than renting houses from state institutions which has resulted in a rapid increase in home ownership. This paper estimates the impact of home ownership on life satisfaction in urban China on the basis of the 2010 wave of the China General Social Survey. Special attention is paid to the methodological problem of confoundedness between the determinants of home ownership and life satisfaction. Propensity score matching (PSM) is applied to control it. The results show that PSM reduces upward estimation bias caused by confoundedness and that it is more appropriate to control confoundedness than ordered probit regression. The estimates furthermore indicate that home ownership has a significant positive impact on life satisfaction of medium- and high income urban residents. For low income urban residents, the impact is also positive, though insignificant. The outcomes connect to the objectives of national development policy and thus have several important policy implications. First, the central and local governments, especially in provinces where it is still low, may want to continue stimulating home ownership as it enhances life satisfaction. Secondly, specific programs may be designed to make home ownership financially affordable for low income groups. Thirdly, local governments may want to initiate or intensify urban (renewal) programs to improve poor public facilities including public transportation, green space and sports accommodations in the immediate vicinity of depressing low income neighborhoods.

Keywords

Home ownership Life satisfaction Confoundedness Propensity score matching Urban China 

Notes

Acknowledgements

The authors thank the Department of Sociology of Renmin University of China, and the Social Science Division of Hong Kong Science and Technology University, for data provision. They also thank the co-editor and the reviewers for their valuable comments and suggestions which have helped to improve the quality of the paper. The usual disclaimer applies.

References

  1. Abbay, A. G., & Rutten, R. (2016). Does spatial proximity to small towns matter for rural livelihood? A propensity score matching analysis in Ethiopia. Letters in Spatial and Resource Sciences. doi: 10.1007/s12076-015-0158-y.Google Scholar
  2. Ahuvia, A. C., & Friedman, D. C. (1998). Income, consumption, and subjective well-being: Toward a composite macromarketing model. Journal of Macromarketing, 18(2), 153–168.CrossRefGoogle Scholar
  3. Antonovsky, A. (1967). Social class, life expectancy and overall mortality. The Milbank Memorial Fund Quarterly, 45(2), 31–73.CrossRefGoogle Scholar
  4. Appleton, S., & Song, L. (2008). Life satisfaction in urban China: Components and determinants. World Development, 36(11), 2325–2340.CrossRefGoogle Scholar
  5. Appleyard, L., & Rowlingson, K. (2010). Home ownership and the distribution of personal wealth. York: Joseph Rowntree Foundation.Google Scholar
  6. Argyle, M. (2003). Causes and correlates of happiness. In D. Kahneman, E. Diener, & N. Schwarz (Eds.), Well-being: Foundations of hedonic psychology (pp. 353–373). New York: Russell Sage Foundation.Google Scholar
  7. Ball, R., & Chernova, K. (2008). Absolute income, relative income, and happiness. Social Indicators Research, 88(3), 497–529.CrossRefGoogle Scholar
  8. Blanchflower, D. G., & Oswald, A. J. (2004). Well-being over time in Britain and the USA. Journal of Public Economics, 88(7), 1359–1386.CrossRefGoogle Scholar
  9. Blanchflower, D. G., & Oswald, A. J. (2008). Is well-being U-shaped over the life cycle? Social Science and Medicine, 66(8), 1733–1749.CrossRefGoogle Scholar
  10. Bradley, R. H., & Corwyn, R. F. (2004). Life satisfaction among European American, African American, Chinese American, Mexican American, and Dominican American adolescents. International Journal of Behavioral Development, 28(5), 385–400.CrossRefGoogle Scholar
  11. Brockmann, H., Delhey, J., Welzel, C., & Yuan, H. (2009). The China puzzle: Falling happiness in a rising economy. Journal of Happiness Studies, 10(4), 387–405.CrossRefGoogle Scholar
  12. Caliendo, M., & Kopeinig, S. (2008). Some practical guidance for the implementation of propensity score matching. Journal of Economic Surveys, 22(1), 31–72.CrossRefGoogle Scholar
  13. Cheng, Z., Smyth, R., & Wang, H. (2013). Housing and subjective wellbeing in urban China. Monash University discussion paper, No. 39-13.Google Scholar
  14. Cheung, C. K., & Leung, K. K. (2004). Forming life satisfaction among different social groups during the modernization of China. Journal of Happiness Studies, 5(1), 23–56.CrossRefGoogle Scholar
  15. China Statistical Yearbook. (2014). China Statistical Yearbook. Beijing: National Bureau of Statistics of China.Google Scholar
  16. Chiuri, M. C., & Jappelli, T. (2003). Financial market imperfections and home ownership: A comparative study. European Economic Review, 47(5), 857–875.CrossRefGoogle Scholar
  17. Clark, W. A. V., & Dieleman, F. (1996). Households and housing: Choices and outcomes in the housing market. New Jersey: Center for Urban Policy Research.Google Scholar
  18. Darity, W., & Goldsmith, A. H. (1996). Social psychology, unemployment and macroeconomics. The Journal of Economic Perspectives, 10(1), 121–140.CrossRefGoogle Scholar
  19. Deaton, A., & Muellbauer, J. (1986). Economics and consumer behavior. Cambridge: Cambridge University Press.Google Scholar
  20. Dehejia, R. H., & Wahba, S. (1999). Causal effects in nonexperimental studies: Reevaluating the evaluation of training programs. Journal of the American Statistical Association, 94(448), 1053–1062.CrossRefGoogle Scholar
  21. Dehejia, R. H., & Wahba, S. (2002). Propensity score-matching methods for nonexperimental causal studies. Review of Economics and Statistics, 84(1), 151–161.CrossRefGoogle Scholar
  22. Demurger, S. (2001). Infrastructure development and economic growth: An explanation for regional disparities in China? Journal of Comparative Economics, 29(1), 95–117.CrossRefGoogle Scholar
  23. Diener, E. (2000). Subjective well-being: The science of happiness and a proposal for a national index. American Psychologist, 55(1), 34–43.CrossRefGoogle Scholar
  24. Diener, E., & Suh, M. E. (1998). Subjective well-being and age: An international analysis. Annual Review of Gerontology and Geriatrics, 17, 304–324.Google Scholar
  25. Diener, E., Suh, E. M., Lucas, R. E., & Smith, H. L. (1999). Subjective well-being: Three decades of progress. Psychological Bulletin, 125(2), 276–302.CrossRefGoogle Scholar
  26. Dietz, R. D., & Haurin, D. R. (2003). The social and private micro-level consequences of homeownership. Journal of Urban Economics, 54(3), 401–450.CrossRefGoogle Scholar
  27. Doling, J., Karn, V., & Stafford, B. (1986). The impact of unemployment on home ownership. Housing Studies, 1(1), 49–59.CrossRefGoogle Scholar
  28. Easterlin, R. A. (2001). Income and happiness: Toward a unified theory. The Economic Journal, 111(473), 465–484.CrossRefGoogle Scholar
  29. Easterlin, R. A. (2003). Explaining happiness. Proceedings of the National Academy of Sciences, 100(19), 11176–11183.CrossRefGoogle Scholar
  30. Easterlin, R. A., Morgan, R., Switek, M., & Wang, F. (2012). China’s life satisfaction, 1990–2010. Proceedings of the National Academy of Sciences, 109(25), 9775–9780.CrossRefGoogle Scholar
  31. Eichholtz, P., & Lindenthal, T. (2014). Demographics, human capital, and the demand for housing. Journal of Housing Economics, 26, 19–32.CrossRefGoogle Scholar
  32. Elsinga, M., & Hoekstra, J. (2005). Homeownership and housing satisfaction. Journal of Housing and the Built Environment, 20(4), 401–424.CrossRefGoogle Scholar
  33. Feather, N. T. (1990). The psychological impact of unemployment. Berlin: Springer.CrossRefGoogle Scholar
  34. Feijten, P., Mulder, C. H., & Baizán, P. (2003). Age differentiation in the effect of household situation on first-time homeownership. Journal of Housing and the Built Environment, 18(3), 233–255.CrossRefGoogle Scholar
  35. Ferrer-i-Carbonell, A. (2005). Income and well-being: An empirical analysis of the comparison income effect. Journal of Public Economics, 89(5), 997–1019.CrossRefGoogle Scholar
  36. Fisher, J. D., & Gervais, M. (2011). Why has home ownership fallen among the young? International Economic Review, 52(3), 883–912.CrossRefGoogle Scholar
  37. Fisher, L. M., & Jaffe, A. J. (2003). Determinants of international home ownership rates. Housing Finance International, 18(1), 34–42.Google Scholar
  38. George, L. K. (2006). Perceived quality of life. Handbook of Aging and the Social Sciences, 6, 320–336.Google Scholar
  39. Grinstein-Weiss, M., Yeo, Y., Anacker, K., Van Zandt, S., Freeze, E. B., & Quercia, R. G. (2011). Homeownership and neighborhood satisfaction among low-and moderate-income households. Journal of Urban Affairs, 33(3), 247–265.CrossRefGoogle Scholar
  40. Harkness, J., & Newman, S. J. (2002). Homeownership for the poor in distressed neighborhoods: Does this make sense? Housing Policy Debate, 13(3), 597–630.CrossRefGoogle Scholar
  41. Haybron, D. (2007). Life satisfaction, ethical reflection, and the science of happiness. Journal of Happiness Studies, 8(1), 99–138.CrossRefGoogle Scholar
  42. Heckman, J. J., Ichimura, H., & Todd, P. (1998). Matching as an econometric evaluation estimator. The Review of Economic Studies, 65(2), 261–294.CrossRefGoogle Scholar
  43. Heinrich, C., Maffioli, A., & Vazquez, G. (2010). A primer for applying propensity-score matching. Inter-American Development Bank, working paper, No. IDB-TN-161.Google Scholar
  44. Helderman, A. C., Mulder, C. H., & Ham, M. (2004). The changing effect of home ownership on residential mobility in the Netherlands, 1980–98. Housing Studies, 19(4), 601–616.CrossRefGoogle Scholar
  45. Horley, J., & Lavery, J. J. (1995). Subjective well-being and age. Social Indicators Research, 34(2), 275–282.CrossRefGoogle Scholar
  46. Hu, F. (2013). Homeownership and subjective wellbeing in urban China: Does owning a house make you happier? Social Indicators Research, 110(3), 951–971.CrossRefGoogle Scholar
  47. Huang, Y., & Clark, W. A. (2002). Housing tenure choice in transitional urban China: A multilevel analysis. Urban Studies, 39(1), 7–32.CrossRefGoogle Scholar
  48. Kahneman, D., & Krueger, A. B. (2006). Developments in the measurement of subjective well-being. The Journal of Economic Perspectives, 20(1), 3–24.CrossRefGoogle Scholar
  49. Kain, J. F., & Quigley, J. M. (1972). Housing market discrimination, home ownership, and saving behavior: Reply. The American Economic Review, 62(3), 263–277.Google Scholar
  50. Kalyuzhnova, Y., & Kambhampati, U. (2008). The determinants of individual happiness in Kazakhstan. Economic Systems, 32(3), 285–299.CrossRefGoogle Scholar
  51. Kantor, Y., Möhlmann, J., Nijkamp, P., & Rouwendal, J. (2015). Homeownership, mortgages, and unemployment. Letters in Spatial and Resource Sciences, 8(3), 253–265.CrossRefGoogle Scholar
  52. Li, Z., Folmer, H., & Xue, J. (2014). To what extent does air pollution affect happiness? The case of the Jinchuan mining area, China. Ecological Economics, 99, 88–99.CrossRefGoogle Scholar
  53. Li, S. M., & Li, L. (2006). Life course and housing tenure change in urban China: A study of Guangzhou. Housing Studies, 21(5), 653–670.CrossRefGoogle Scholar
  54. Li, T., Shi, Y., & Chen, B. (2012). An empirical study of urban Chinese homeownership: A happiness economics perspective. Economic Research Journal, 9, 69–82. (in Chinese).Google Scholar
  55. Lin, J., Zhou, S., & Wei, W. (2012). Prices of urban real estate, housing property and subjective well-being. Finance and Trade Economics, 5, 114–120. (in Chinese).Google Scholar
  56. Long, S. K., Stockley, K., & Yemane, A. (2009). Another look at the impacts of health reform in Massachusetts: Evidence using new data and a stronger model. The American Economic Review, 99(2), 508–511.CrossRefGoogle Scholar
  57. Lu, L. (1999). Personal or environmental causes of happiness: A longitudinal analysis. The Journal of Social Psychology, 139(1), 79–90.CrossRefGoogle Scholar
  58. Mak, S. W., Choy, L. H., & Ho, W. K. (2007). Privatization, housing conditions and affordability in the People’s Republic of China. Habitat International, 31(2), 177–192.CrossRefGoogle Scholar
  59. Manoj, M., & Verma, A. (2015). Activity-travel behaviour of non-workers belonging to different income group households in Bangalore, India. Journal of Transport Geography, 49, 99–109.CrossRefGoogle Scholar
  60. Melin, R., Fugl-Meyer, K. S., & Fugl-Meyer, A. R. (2003). Life satisfaction in 18- to 64-year-old Swedes: In relation to education, employment situation, health and physical activity. Journal of Rehabilitation Medicine, 35(2), 84–90.CrossRefGoogle Scholar
  61. Michalos, A. C. (2008). Education, happiness and wellbeing. Social Indicators Research, 87(3), 347–366.CrossRefGoogle Scholar
  62. Mohan, J., & Twigg, L. (2007). Sense of place, quality of life and local socioeconomic context: Evidence from the survey of English housing, 2002/03. Urban Studies, 44(10), 2029–2045.CrossRefGoogle Scholar
  63. Mulder, C. H., & Hooimeijer, P. (1995). Moving into owner-occupation: Compositional and contextual effects on the propensity to become a homeowner. Journal of Housing and the Built Environment, 10(1), 5–25.CrossRefGoogle Scholar
  64. Oishi, S., Diener, E. F., Lucas, R. E., & Suh, E. M. (1999). Cross-cultural variations in predictors of life satisfaction: Perspectives from needs and values. Personality and Social Psychology Bulletin, 25(8), 980–990.CrossRefGoogle Scholar
  65. Opoku, R. A., & Abdul-Muhmin, A. G. (2010). Housing preferences and attribute importance among low-income consumers in Saudi Arabia. Habitat International, 34(2), 219–227.CrossRefGoogle Scholar
  66. Parker, L., Watson, D., & Webb, R. (2011). Family fortunes: Gender-based differences in the impact of employment and home characteristics on satisfaction levels. The Journal of Socio-Economics, 40(3), 259–264.CrossRefGoogle Scholar
  67. Pavot, W., & Diener, E. (1993). Review of the satisfaction with life scale. Psychological Assessment, 5(2), 164–172.CrossRefGoogle Scholar
  68. Pinquart, M., & Sörensen, S. (2000). Influences of socioeconomic status, social network, and competence on subjective well-being in later life: A meta-analysis. Psychology and Aging, 15(2), 187–224.CrossRefGoogle Scholar
  69. Ren, H., & Folmer, H. (2016). Determinants of residential satisfaction in urban China: A multi-group structural equation analysis. Urban Studies. doi: 10.1177/0042098015627112.Google Scholar
  70. Riddick, C. C. (1985). Life satisfaction determinants of older males and females. Leisure Sciences, 7(1), 47–63.CrossRefGoogle Scholar
  71. Rohe, W. M., & Stegman, M. A. (1994). The effects of homeownership: On the self-esteem, perceived control and life satisfaction of low-income people. Journal of the American Planning Association, 60(2), 173–184.CrossRefGoogle Scholar
  72. Rohe, W. M., & Stewart, L. S. (1996). Homeownership and neighborhood stability. Housing Policy Debate, 7(1), 37–81.CrossRefGoogle Scholar
  73. Rohe, W. M., Van Zandt, S., & McCarthy, G. (2002). Home ownership and access to opportunity. Housing Studies, 17(1), 51–61.CrossRefGoogle Scholar
  74. Rohe, W. M., Van Zandt, S., & McCarthy, G. (2013). The social benefits and costs of homeownership: A critical assessment of the research. In J. R. Tighe & E. J. Mueller (Eds.), The affordable housing reader (pp. 196–212). New York: Routledge.Google Scholar
  75. Rosenbaum, P. R., & Rubin, D. B. (1985). Constructing a control group using multivariate matched sampling methods that incorporate the propensity score. The American Statistician, 39(1), 33–38.Google Scholar
  76. Rossi, P. H. (1955). Why families move. New York: MacMillan.Google Scholar
  77. Rossi, P. H., & Weber, E. (1996). The social benefits of homeownership: Empirical evidence from national surveys. Housing Policy Debate, 7(1), 1–35.CrossRefGoogle Scholar
  78. Ruprah, I. J. (2010). Does owning your home make you happier?: Impact evidence from Latin America. Inter-American Development Bank, working paper, No. OVE/WP-02/10.Google Scholar
  79. Scopelliti, M., Carrus, G., Adinolfi, G., Suarez, C., Colangelo, G., Lafortezza, R., et al. (2016). Staying in touch with nature and well-being in different income groups: The experience of urban parks in Bogotá. Landscape and Urban Planning, 148, 139–148.CrossRefGoogle Scholar
  80. Shu, X., & Zhu, Y. (2009). The quality of life in China. Social Indicators Research, 92(2), 191–225.CrossRefGoogle Scholar
  81. Sivanathan, N., & Pettit, N. C. (2010). Protecting the self through consumption: Status goods as affirmational commodities. Journal of Experimental Social Psychology, 46(3), 564–570.CrossRefGoogle Scholar
  82. Smith, J. P. (2003). Trends and projections in income replacement during retirement. Journal of Labor Economics, 21(4), 755–781.CrossRefGoogle Scholar
  83. Smith, J. A., & Todd, P. E. (2005). Does matching overcome LaLonde’s critique of nonexperimental estimators? Journal of Econometrics, 125(1), 305–353.CrossRefGoogle Scholar
  84. Susin, S. (2002). Rent vouchers and the price of low-income housing. Journal of Public Economics, 83(1), 109–152.CrossRefGoogle Scholar
  85. Tano, S. (2014). Internal migration of young adults–heterogeneity in effects on labor income by school grades (p. 880). No: Umeå Economic Studies.Google Scholar
  86. The 2010 Population Census of China. (2012). The 2010 Population Census of China. Beijing: National Bureau of Statistics of China.Google Scholar
  87. Van der Vlist, A. J., Gorter, C., Rietveld, P., & Nijkamp, P. (2002). Residential mobility and local housing market differences. Environment and Planning A., 34, 1147–1164.CrossRefGoogle Scholar
  88. Van Praag, B., & Baarsma, B. E. (2005). Using happiness surveys to value intangibles: The case of airport noise. The Economic Journal, 115(500), 224–246.CrossRefGoogle Scholar
  89. Veenhoven, R. (1991). Questions on happiness: Classical topics, modern answers, blind spots. In F. Strack, M. Argyle, & N. Schwarz (Eds.), Subjective wellbeing, an interdisciplinary perspective (pp. 7–26). London: Pergamon Press.Google Scholar
  90. Wan, G. H. (1996). Income elasticities of household demand in rural China: Estimates from cross-sectional survey data. Journal of Economic Studies, 23(3), 18–33.CrossRefGoogle Scholar
  91. Wang, H., Su, F., Wang, L., & Tao, R. (2012). Rural housing consumption and social stratification in transitional China: Evidence from a national survey. Housing Studies, 27(5), 667–684.CrossRefGoogle Scholar
  92. Welsch, H. (2006). Environment and happiness: Valuation of air pollution using life satisfaction data. Ecological Economics, 58(4), 801–813.CrossRefGoogle Scholar
  93. Winkelmann, L., & Winkelmann, R. (1998). Why are the unemployed so unhappy? Evidence from panel data. Economica, 65, 1–15.CrossRefGoogle Scholar
  94. Wooldridge, J. M. (2010). Econometric analysis of cross section and panel data. London: MIT Press.Google Scholar
  95. Wu, H. F., & Tam, T. (2014). Economic development and socioeconomic inequality of well-being: A cross-sectional time-series analysis of urban China, 2003–2011. Social Indicators Research, 124(2), 401–425.CrossRefGoogle Scholar
  96. Yu, Z. (2006). Heterogeneity and dynamics in China’s emerging urban housing market: Two sides of a success story from the late 1990s. Habitat International, 30(2), 277–304.CrossRefGoogle Scholar
  97. Zajacova, A., Lynch, S. M., & Espenshade, T. J. (2005). Self-efficacy, stress, and academic success in college. Research in Higher Education, 46(6), 677–706.CrossRefGoogle Scholar
  98. Zhang, K., Yi, Y., & Zhang, W. (2014). Environmental total factor productivity and regional disparity in China. Letters in Spatial and Resource Sciences, 7(1), 9–21.CrossRefGoogle Scholar
  99. Zumbro, T. (2014). The relationship between homeownership and life satisfaction in Germany. Housing Studies, 29(3), 319–338.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2016

Authors and Affiliations

  • Honghao Ren
    • 1
    • 2
  • Henk Folmer
    • 2
    • 3
  • Arno J. Van der Vlist
    • 2
  1. 1.Department of Economics, School of Humanities, Economics and LawNorthwestern Polytechnical UniversityXi’anChina
  2. 2.Department of Economic Geography, Faculty of Spatial SciencesUniversity of GroningenGroningenThe Netherlands
  3. 3.College of Economics and ManagementNorthwest A&F UniversityYanglingChina

Personalised recommendations