The health-wealth nexus for the elderly: Evidence from the booming housing market in China

Abstract

A large body of literature has investigated the health-wealth nexus. Most studies exploit exogenous shocks to wealth, such as lottery prizes and inheritances, to investigate the causal effects of wealth on health, especially in developed countries. This paper draws on data from the China Health and Retirement Longitudinal Study (CHARLS) to first examine the impacts of wealth on the health of the elderly in China. Following the method of Lovenheim and Mumford (2013), I use growth in household housing wealth driven by prefecture-level housing market as an exogenous variation in household-level wealth in China. The findings indicate that wealth has causal effects on individual health-related outcomes. Surprisingly, the growth in housing wealth imposes mixed effects on health conditions and, in fact, reduces healthy activities and healthcare utilisation. As their housing wealth increases, people with lower education levels generally suffer worse physical health and engage in fewer healthy behaviours than those with higher education levels, making health literacy a possible explanation for the mixed health-wealth nexus for the elderly in China.