The impact of the digital economy on the cost of living of the population: Evidence from 160 cities in China

Abstract

: The cost of living has shown a gradual upward trend in recent years, which has seriously impacted the quality of life and well-being of residents. This study empirically examines the impact of the digital economy on residents’ cost of living and the mechanisms behind it by measuring the digital economy and cost of living indicators in 160 cities in China from 2010 to 2020. The results show that the digital economy can significantly reduce the cost of living for the population. The “marginal effect” of the digital economy on the cost of living is found to be non-linearly decreasing as the level of the digital economy increases, and the more severe the air pollution, the weaker the impact of the digital economy on the cost of living, using a threshold variable of the digital economy and air pollution. Finally, the analysis of mechanisms shows that environmental regulation and healthcare are important ways in which the digital economy can play a role in reducing the cost of living for the population. Meanwhile, this study reveals the intrinsic link between the digital economy and the cost of living, which is important for alleviating the cost of living and enhancing people’s well-being.