Impact of digital divide on household consumption: Role of mental health and happiness

Xinjian Wang, Yihao Ding, Qiang Dong, Shuai Sun and Zhixiao Chen

International Review of Economics & Finance, 2025, vol. 99, issue C

Abstract: Digital inequality remains a significant yet underexplored determinant of household economic behavior. Despite extensive research on the digital divide's impact on education, employment, and social inclusion, its influence on household consumption patterns has received limited attention. Addressing this gap, this study examines the mechanisms through which digital exclusion shapes household spending behavior, emphasizing the mediating roles of mental health and happiness. Using data from the 2020 China Family Panel Studies (CFPS), we employ instrumental variable estimation, Heckman selection correction, and quantile regression to establish causal relationships. The findings reveal that the digital divide significantly constrains household consumption, both directly by limiting technological access and indirectly by affecting psychological well-being. The effects are particularly pronounced among lower-consumption households, highlighting the uneven economic consequences of digital exclusion. These results underscore the need for policies that address not only technological accessibility but also the psychological impacts of digital disparities to foster inclusive economic growth.

Keywords: Digital divide; Household consumption; Mental health; Happiness; Quantile regression (search for similar items in EconPapers)
JEL-codes: D12 I31 O33 R20 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:99:y:2025:i:c:s105905602500190x

DOI: 10.1016/j.iref.2025.104027

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