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Peer effects in rural housing demand: Evidence from China

Author

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  • Zhang, Anquan
  • Ni, Pengfei
  • Ling, Chen

Abstract

This paper utilizes data from the China Household Finance Survey 2011 to study peer effects in housing demand in rural China. We find that focal households' housing consumption is heavily influenced by peer households' housing consumption. Evidence from placebo tests, IV estimates and robust tests suggests that the relationship is causal. In addition, we show that status seeking and social learning play important roles in determining peer effects in the demand for rural houses. Finally, we explore the heterogeneity in peer effects and determine that the leading mechanism is status seeking.

Suggested Citation

  • Zhang, Anquan & Ni, Pengfei & Ling, Chen, 2022. "Peer effects in rural housing demand: Evidence from China," China Economic Review, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:chieco:v:73:y:2022:i:c:s1043951x22000451
    DOI: 10.1016/j.chieco.2022.101787
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    More about this item

    Keywords

    Peer effects; Rural housing demand; Social learning; Status seeking;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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