The role of housing wealth, financial wealth, and social welfare in elderly households' consumption behaviors in China

Abstract

China is facing great challenges in providing decent living conditions for the elderly. The effects of housing wealth and the social welfare system on elderly households' consumption behaviors have been widely explored, but little is known about the heterogeneous effects of various wealth sources on consumptions of different economic groups of the elderly. Taking into account regional differences, this paper investigated the extent to which housing wealth, financial wealth, and social welfare influence the consumption behaviors of the elderly of various economic status. We employed the linear mixed model estimation and quantile regression by using the China Household Finance Survey data collected from 2011 to 2015. Results showed that a large urban–rural gap exists between the eastern, central, and western regions of China. Housing wealth exerts limited effects on the urban elderly households' consumption behaviors but has significant positive effects on the rural elderly households' consumption. The financial wealth and pension may offset part of the consumption inequality generated from annual household income. An increasing pension contributes more to medical and health care consumption for the poor households. Policymakers need to enhance the social welfare system to take care of the most vulnerable elderly group in the first place.