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Abstract

This study leverages panel data from the China Family Panel Studies (CFPS) to uncover a robust relationship between housing wealth and mental health among children aged 10–15. Using instrumental variable approach, we find that a 1% increase in housing wealth causes a 7.1% improvement in children’s mental health status across various dimensions like anxiety and self-esteem. Heterogeneity analysis shows that the positive impact of housing wealth on children’s mental health is more pronounced in households owning larger and higher-value homes. We identify financial stress relief, reduced housing crowding, better parental mental health, and enhanced social skills as key mechanisms driving the housing wealth-child mental health link. Our study provides novel empirical evidence that housing markets shape children’s non-cognitive development beyond just consumption. These results highlight that stable housing conditions and home values can reduce inequalities by cultivating socio-emotional skills vital for child well-being.

Keywords

housing wealth mental health children wealth effect debt overhang effect

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Wealth and Health: On the Relationship Between Housing Prices and Children’s Mental Health

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