Education and happiness: does education expenditure undermine households’ subjective well-being? Evidence from China

Yongyi Zhu and Di Yu

Applied Economics, 2023, vol. 55, issue 50, 5925-5938

Abstract: Education expenditure accounts for a rising proportion of household income and gradually becomes a burden on households. Few studies have analysed whether the household’s subjective well-being (SWB) decreases under these conditions. To fill the gap, we explore the nexus between education expenditure and the SWB of households, using China Household Finance Survey data. The results confirm that education expenditure significantly attenuates the SWB of Chinese households. Moreover, empirical results suggest that the ‘arms race’ in education investment, the crowding out effect on other household consumption, and the synergy effect on family liabilities are three channels for education expenditure’s adverse effects on SWB. Further analysis shows that this expenditure’s detrimental impacts are more significant in provinces with high Gaokao pressure and the middle-income class, indicating that Gaokao pressure is the main driving force for the education arms race in China and that middle-class families are the most likely to be involved and be injured in the education arms race. Our findings confirm that the ‘double reduction’ regulation is necessary, and relevant policies require improvement to promote equality in education and achieve higher life satisfaction for people across China.

Date: 2023
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DOI: 10.1080/00036846.2022.2140772

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