This paper comprehensively examines how subjective well-being (SWB) is influenced by various aspects of housing — tenure, living conditions, and housing values — based on an individual panel from the China Household Finance Survey. We employ a two-way fixed effects model to reduce the endogeneity problems of housing choices. Our findings suggest that housing plays a comparable role to income and wealth in SWB and that housing inequality and living experience both matter a great deal. Moreover, the positive impacts of home ownership on SWB reported by prior research are likely quality of life effects masked in home ownership. Results are robust to ordered logistic estimation with individual fixed effects. What we document carries important implications for housing policies, and these are generalizable to other countries.

We estimate the causal effect of income on happiness using a unique dataset of Chinese twins. This allows us to address omitted variable bias and measurement errors. Our findings show that individual income has a large positive effect on happiness, with a doubling of income resulting in an increase of 0.26 scales or 0.37 standard deviations in the four-scale happiness measure. We also find that income matters most for males and the middle-aged. Our results highlight the importance of accounting for various biases when studying the relationship between socioeconomic status and subjective well-being.