| Abstract: |
While in standard housing economics housing is regarded as an asset and a
consumption good, we study in this paper the consequences for housing prices
if housing is also a status good. More concretely, if a family’s housing
wealth relative to others is an important marker for relative status in the
marriage market, then competition for marriage partners might motivate people
to pursue a bigger and more expensive house/apartment beyond its direct
consumption (and financial investment) value. To test the empirical validity
of the hypothesis, we have to overcome the usual difficulty of not being able
to observe the intensity of status competition. Our innovation is to explore
regional variations in the sex ratio for the pre-marital age cohort across
China, which likely has triggered variations in the intensity of competition
in the marriage market. The empirical evidence appears to support this
hypothesis. We estimate that due to the status good feature of housing, a rise
in the sex ratio accounts for 30-48% of the rise in real urban housing prices
in China during 2003-2009. |