• ISSN: 2301-3567 (Print), 2972-3981 (Online)
    • Abbreviated Title: J. Econ. Bus. Manag.
    • Frequency: Quarterly
    • DOI: 10.18178/JOEBM
    • Editor-in-Chief: Prof. Eunjin Hwang
    • Executive Editor: Ms. Fiona Chu
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HOME > Archive > 2022 > Volume 10 Number 2 (Apr. 2022) >
JOEBM 2022 Vol.10(2): 97-103 ISSN: 2301-3567
DOI: 10.18178/joebm.2022.10.2.680

The Impact of Peer Effects on Housing Construction in Rural China

Tianqing Zheng, Kaiyun Wang, and Jiake Xie

Abstract—In rural China, a house built by oneself is not only a sign of wealth, but also a symbol of social status. Many families go into debt to build houses that exceed their wealth and one of the major reasons is the influence of peer effects. This paper studies the effects of houses already built by others on the newly constructed houses in the same village, and then analyze the comparison effect prevailing in rural China. Few existing studies have investigated rural housing construction in different parts of China, and to the best of our knowledge, we are the first to analyze it at the household level and examine the relationship between peer effects and rural housing construction. This paper also adopts the instrumental variable method to solve the endogeneity problem. We find that the area of houses built is significantly affected by the area of houses built by others in the same village in rural China. When the construction cost of nearby houses increases 1 yuan, the cost of newly built house increases by almost 1 yuan. The impact is similar on the area of housing construction: when the area of nearby houses increases 1 m2, the area of newly built houses increases 0.99 m2. This study provides important insights for the society to correctly guide rural people to reasonably plan the cost of housing construction and reduce unnecessary burdens like excess housing debts.

Index Terms—Peer effects, housing construction cost, housing area, rural China.

Tianqing Zheng is with the University of Manchester in Oxford Road, Manchester, United Kingdom (e-mail: zhengtq2000@163.com). Kaiyun Wang is with University of Michigan, USA (e-mail: kaiyunw@umich.edu). Jiake Xie is with the University of Sydney Camperdown, NSW 2006, Australia (e-mail: jxie5040@uni.sydney.edu.au).

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Cite:Tianqing Zheng, Kaiyun Wang, and Jiake Xie, "The Impact of Peer Effects on Housing Construction in Rural China ," Journal of Economics, Business and Management vol. 10, no. 2, pp. 97-103, 2022.

Copyright © 2022 by the authors. This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).

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