More wealth, less leisure? Effect of housing wealth on tourism expenditure in China

Abstract

Elastic consumption is determined by both the income and wealth effect. However, few studies shed light into the effect of illiquid wealth. In this study, we explore this question by examining the effect of housing wealth on one particular consumption of high elastic, tourism expenditure, in China. By using data from China Family Panel Studies in 2010 and 2012, we find that the change in house prices has a positive and significant effect on tourism expenditure. Particularly, by controlling the income effect, we find that for every 1% increase in house prices, tourism expenditure grew by 0.4%. Moreover, we investigate the crowding out effect of mortgage payments and find that the change in the wealth of households with mortgages has a positive but not significant effect on tourism expenditure. We also note that tourism expenditure does not affect the expenditure on necessities or durable goods, but indeed crowds out expenditure on educational training and other high elastic goods.

Living standard and Chinese tourism participation

“…In particular, Yu et al (2013) found out that income levels and consumption habits are significantly correlated with tourism expenditures of rural households; while, Zhang (2014) detected that income expectations and risk preferences have a significant impact on urban households' decision regarding tourism spending. Zhang and Feng (2018) have also demonstrated that the level of illiquid wealth of households is positively correlated to tourism expenditures.…”

“…Initial studies have provided insight into the tourism development process and helped discern the dynamics by using aggregate data in a macroeconomic perspective (Li, Pan, Law, & Huang, 2017;Ning, 2000;Wang, 2009;Yang, Pan, Evans, & Lv, 2015). Other researchers have analysed Chinese tourists' consumption behaviour with a microeconomic perspective, evidencing the influence of income level (Lin, Mao, & Song, 2015;Yu, Huang, & Fang, 2013;Zhang, 2014), socio-demographic characteristics (Lin et al, 2015;Zhang, 2014), house price (Zhang & Feng, 2018) and risk preference (Zhang, 2014) on tourism expenditure. Moreover, Fu, Cai, and Lehto (2017) started from Confucianism, presented a qualitative analysis of motivations of Chinese households to travel.…”

Determinants of Chinese households' tourism consumption: Evidence from China Family Panel Studies

“…The marital status and education level of the head of household has also appeared in the literature. Zheng and Zhang (2013) discovered that married households had a higher level of tourism consumption, whereas Skuras, Petrou, and Clark (2006) and Zhang and Feng (2018) indicated that marital status had no significant impact. Some studies have combined the head of household's age and marital status, presence of children, and age of children (if applicable) to represent the family life cycle.…”

“…We also explore psychographic features, such as travelers' attitudes and opinions that have been insufficiently assessed in individual-level tourism consumption research and have not yet been a focus of household-level tourism consumption studies. Second, we refer to cross-sectional data for , 2016, and 2018. This database allows us to capture a comprehensive range of factors influencing household tourism consumption (except travel-related factors), and three consecutive rounds of survey data enable us to identify several stable medium-term trends in this world-leading tourist market.…”

The effect of housing wealth on tourism consumption in China: Age and generation cohort comparisons

“…According to the hypothesis of housing wealth effects, tourist spending is determined by the total wealth of a consumer, and it cannot only be explained by regular income. However, the importance of housing assets in the tourism field is rarely considered as an influencing factor that determines tourism consumption (Zhang and Feng, 2018). Real income, whether it is absolute income or relative income, has long been emphasized as the decisive factor that determines the traveling consumption.…”