Financial assets and happiness: evidence from the China Household Finance Survey

ABSTRACT

Using the China Household Finance Survey Data, this article studies the effect of financial assets on happiness. The empirical results based on a series of regression models show that (1) household financial assets have a significant impact on individual’s happiness; (2) the effect of different types of financial assets on happiness is heterogeneous and having certificates of deposit has a positive impact on happiness whilst holding stocks will significantly reduce individual’s happiness; (3) the value of certificates of deposit has certainly improved happiness, whilst the value of holding stocks, funds, has no significant effect and (4) the relationship between the value of certificates of deposit and happiness varies with a household income level, but not risk attitude.

KEYWORDS:

• Financial assets
• happiness
• household income
• risk attitude

JEL CLASSIFICATION:

• D10
• H31
• R20

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ The four waves of CHFS consist 113,878 households in China from year 2011, 2013, 2015 and 2017. The fifth wave of CHFS was conducted in 2019. However, the data are still not available to the public.

² Within the 96,778 sample, the number of observations for owning different types of financial assets is different. 20,855 households have the certificate of deposits. 10,162 households hold stocks and 3,925 households holdmutual funds.

³ The general regression setup is as follows:

1 $Happines{s}_i={\beta }_0+{\beta }_{1}F{A}_{i,j,t}+{\beta }_{2}I{R}_{i,j,t}\ast F{A}_{i,j,t}+{\beta }_3{X_{i,t}}^{\prime }+{\epsilon }_i,$1

where $F{A}_{i,j,t}$ denote the financial assets like certificates of deposit, stocks and mutual funds. $I{R}_{i,j,t}$ denote the interaction variable like household income and risk attitude. ${X_{i,t}}^{\prime }$ is a vector of control variables. ${\epsilon }_i$ is an error term that captures the unobservable factors that influence happiness.

Additional information

Funding

This research was supported by the Soft Science Research Foundation of Department of science and technology of Shaanxi Province [2021KRM002] and the Scientific Research Foundation of Department of Education of Shaanxi Province [20JZ006].