The Lavish, the wealthy, and the healthy — Effect of housing wealth on health outcomes and behaviors

How does housing wealth affect people’s health outcomes and health behaviors? We study such an effect on the middle-aged and older population in China by exploiting a discontinuity in housing wealth generated by two housing policies under a regression discontinuity design (RDD) framework. These policies gave tax and down-payment breaks to owners of houses 90 $m^2$ or smaller. We find that increased housing wealth leads to exacerbated counts of self-reported health conditions. However, objective biomarker indicators only point to a negative effect on lung functionality. Other objective indicators, such as mortality and stroke, also point to the null effects. One explanation for such a discrepancy is that wealth not only has a direct impact on health but may also increase the possibility of having a health condition diagnosed. These hypotheses are also supported by our findings that increased housing wealth is accompanied by more frequent healthcare use. The negative effect of housing wealth on lung health, as indicated by both objective and subjective measures, can be attributed to worsened smoking habits. The results of our paper highlight several important biases that arise when the diagnostic effect is ignored in using subjective health indicators.