Housing Price and Health in Urban China

Abstract

Recently many studies have found that unemployment rate, housing price fluctuation and economic crisis would have an important influence on mental and physical health. Housing price has a significant impact on the economic and social development. Since the housing reform in 1998, the rapid development of the real estate industry has become an important factor driving China’s economic cycle fluctuations. However, some scholars have found that the continuing rise in housing price has brought about a series of social and economic problems, such as reducing consumption, income inequality and so on. Therefore, does the rising housing price affect the health and welfare in urban China?Theoretically, housing price will have an effect on the health in urban China by at least three underlying mechanisms. Firstly, it would bring a positive wealth effect to the health of local residents; Secondly, the rising housing price might raise housing purchase and rental costs, and have a negative effect on residents’ physical and mental health; Thirdly, housing price is also the signal of economic vitality, regional infrastructure and the public service system, it would bring down the uncertainty of future economic development and promote the health of residents. In this paper, we use the 2010−2014 wave of China Family Panel Studies（CFPS）to investigate the effect of housing price on health and the underlying mechanism in urban China.Further, we also find that housing price has a heterogeneous effect on health, which is consistent with a wealth effect, a slave effect, and economic development in the area. The positive effect of housing price on physical health is concentrated on those with two or more housing, larger housing, higher property value, without unmarried adult sons, high-income areas or first-tier cities. The negative effect of housing price on mental health is stronger for those with no housing, smaller housing, lower property value, low-income areas or non-first-tier cities. Finally, we analyze the influence path of housing price on health, and find that the rising housing price will significantly improve residents’ health care utilization, increase the probability of physical exercise, and reduce smoking and drinking behaviors.This paper tries to make some contributions in the following aspects: Firstly, in order to solve the endogenous problem caused by omitted variables and reverse causality, we use the province-fixed effect, year-fixed effect, and individual province-fixed effect. Secondly, we use a number of subjective and objective indicators to measure their mental and physical health to extend the connotation of health. Thirdly, we compare the results of multiple groups, finding that housing price has different effects on the health of residents with different characteristics, and verify the three mechanisms of housing price to health. Fourthly, we also investigate the influence path of housing price on physical health, finding that the promoting effect of housing price on physical health can be attributed to the increase of regular exercise and medical utilization, and the decrease of smoking and drinking behaviors.