Housing Shock and Online Consumption

To establish the causal relationship between housing price appreciation and online consumption behavior, this study exploits a unique and comprehensive dataset assembled from October 1, 2016 to December 31, 2018 by the largest e-commerce company in China. In order to overcome the empirical challenges faced by existing literature due to the non-random nature of housing price changes, this study investigates a unique institutional setting in China, namely the announcement of the newest national-level special economic zone, Xiong’an New Area, as an exogenous shock to the housing price. The study focuses on three areas of interest. First, we examine how exogenous and unanticipated wealth shocks impact household online consumption behaviors. Second, we study the dynamic change of online consumption behaviors before and after the housing shock, and determine whether the behavioral responses persist in the long run. Third, we explore the underlying mechanisms through which the housing shock affects consumption behaviors. In particular, we attempt to disentangle the collateral effects from the housing wealth effects