Working Paper: NBER ID: w30465
Authors: Hanming Fang; Long Wang; Yang Yang
Abstract: We provide new evidence on the causal effects of housing wealth on consumer behavior. To overcome the empirical challenge of non-random housing wealth changes, we exploit the unexpected announcement of China's newest national-level new area—Xiong'an New Area—on April 1, 2017 as an exogenous shock to housing prices. We use a proprietary dataset of individual-level online consumption from the largest e-commerce company in China to measure various aspects of consumer behavior, such as consumption patterns, purchase hesitation, tolerance to unsatisfied products, and shirking (proxied by making online purchases during work hours). We explore the underlying mechanisms through which the housing shock affects consumer behavior; in particular, we attempt to disentangle the realizable and unrealizable housing wealth effects.
Keywords: housing wealth; consumer behavior; Xiongan New Area; China; online consumption
JEL Codes: D01; L81; R3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Announcement of the Xiongan New Area (R53) | Increase in housing prices in C3 (R31) |
| Announcement of the Xiongan New Area (R53) | Increase in housing prices in C9 (R31) |
| Increase in housing prices in C3 (R31) | Increase in consumer spending per item (D12) |
| Increase in housing prices in C9 (R31) | Increase in consumer spending per item (D12) |
| Increase in housing prices in C3 (R31) | Decrease in payment hesitance (G51) |
| Increase in housing prices in C3 (R31) | Decrease in likelihood of requesting returns (D81) |
| Increase in housing prices in C3 and C9 (R31) | Increase in likelihood of online purchases during work hours (J29) |
| Increase in housing prices in C9 (R31) | Increase in consumer spending per order (D12) |