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More wealth, less leisure? Effect of housing wealth on tourism expenditure in China

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  • Chuanyong Zhang

    (Shanghai Jiao Tong University, China)

  • Guoliang Feng

    (China Investment Corporation, China)

Abstract

Elastic consumption is determined by both the income and wealth effect. However, few studies shed light into the effect of illiquid wealth. In this study, we explore this question by examining the effect of housing wealth on one particular consumption of high elastic, tourism expenditure, in China. By using data from China Family Panel Studies in 2010 and 2012, we find that the change in house prices has a positive and significant effect on tourism expenditure. Particularly, by controlling the income effect, we find that for every 1% increase in house prices, tourism expenditure grew by 0.4%. Moreover, we investigate the crowding out effect of mortgage payments and find that the change in the wealth of households with mortgages has a positive but not significant effect on tourism expenditure. We also note that tourism expenditure does not affect the expenditure on necessities or durable goods, but indeed crowds out expenditure on educational training and other high elastic goods.

Suggested Citation

  • Chuanyong Zhang & Guoliang Feng, 2018. "More wealth, less leisure? Effect of housing wealth on tourism expenditure in China," Tourism Economics, , vol. 24(5), pages 526-540, August.
    • Handle: RePEc:sae:toueco:v:24:y:2018:i:5:p:526-540
    DOI: 10.1177/1354816618754748
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    4. Luojia Wang & Kerui Du & Bin Fang & Rob Law, 2023. "Escape from air pollution: How does air quality in the place of residence shape tourism consumption?," Tourism Economics, , vol. 29(4), pages 1074-1099, June.

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