| ID | 168350 |
| Title Proper | Home value misestimation and household behavior |
| Other Title Information | evidence from China |
| Language | ENG |
| Author | Gao, Nan ; Liang, Pinghan |
| Summary / Abstract (Note) | Households often make errors when self-assessing their housing wealth. By using the Chinese Households Finance Survey, we show that Chinese urban households systematically overestimate their home value. This bias is significantly related to household consumption: a one standard deviation increase in the extent of estimation bias is associated with a 10% increase in household consumption. Our main results are robust against a variety of robustness checks, e.g., taking into account the expectations of future home price, using the interviewee's estimation as the instrumental variable for the household self-estimation, implementing the hedonic model on an external data source to assess real homevalue, etc.. Further, we show that overestimated households are more likely to take risk in financial market, and have a larger amount of immediate and conspicuous consumption. These findings have policy implications for the recent debate about property tax, indicating the unintended consequences of property tax through providing more precise information about home value. |
| `In' analytical Note | China Economic Review Vol.55 , Jun 2019: p.168-180 |
| Journal Source | China Economic Review 2019-06 |
| Key Words | Decision Making ; China ; Consumption ; Household ; Misestimation ; House Value |