Bequest motives in the housing wealth effect: A new perspective from China

Abstract

While previous studies have extensively explored the impact of housing wealth on household consumption, only a limited number have investigated the role of bequest motives. This study focuses on understanding how bequest motives influence household consumption and decisions related to the intergenerational transfer of housing assets. Using panel data from three waves of the China Family Panel Studies collected biennially from 2014 to 2018, we empirically assess the housing wealth effect (HWE) and find that bequest motives play a significant negative role in this context, producing a dampening effect on household life satisfaction. Our results also suggest that the influence of bequest motives on housing wealth is more prominent among economically disadvantaged households, households with higher levels of education, and middle-aged and older households. These findings imply that implementing inheritance taxes could facilitate the leveraging of the HWE, ultimately promoting increased household consumption.