Hanming Fang, at the University of Pennsylvania – Department of Economics; National Bureau of Economic Research (et al.), isn’t claiming the paper highlighted today is revelatory. There’s no doubt people feel better and spend more when home prices rise than when they fall.
What’s new in this work however is the data being compared and, by implication, the extra information provided to policy-makers and retailers.
In April 2017 the Chinese government announced a new area, Xiong’an, had been chosen as the sight for a multi-year project to remove certain key administrative functions out of Beijing. Property prices in this locale then rocketed providing just the sort of ‘clean’ data social scientists are always looking for to disentangle trends.
Another ‘clean’ dataset was applied on the other side of the analysis, that of online commerce patterns in this area. Using online consumption data it was possible to monitor transactions irrespective of their payment method (previous work has relied on credit card transactions and merchant reports, the first not so broad and the latter not so reliable) and as addresses for delivery could be mapped a direct relationship of who was doing what and where could be established.
The details are only for serious wonks who can get into all of it by following this link Housing Wealth and Online Consumer Behavior. For the merely curious I’ll just jump to the conclusions.
Yes, the impact of higher home prices was associated with higher online spending. There was, in addition, a marked difference between those able to sell their property and those restricted (to avoid an ugly scrum the government mandated a sales freeze initially in some areas) in terms of how much spending that translated into.
My two-pennyworth would be, with property prices in China faltering and a need to gin up the economy planners are usefully reminded of the crystal-clear relationship between home prices and consumption.
Just saying.
Happy Sunday.