How Financial Factors Shape Household Happiness in China’s Aging Population
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Abstract
The pursuit of happiness becomes increasingly complex within China’s rapidly aging population, as economic transitions and evolving social structures reshape the foundations of well-being. This study investigates the impact of aging on household happiness, with a specific focus on risk aversion, financial literacy, and household debt. Utilizing data from the China Household Finance Survey (CHFS) for 2015, 2017, and 2019, and applying ordered logistic regression models, the analysis reveals that a higher proportion of older household members is generally associated with reduced happiness, primarily due to increased risk aversion and financial conservatism. However, financial literacy significantly moderates this effect, enabling older households to make more informed decisions and maintain greater emotional and financial stability. Notably, the study reveals a modest yet surprising positive relationship between household debt and happiness, suggesting that, when managed effectively, debt can provide liquidity and support financial flexibility in aging households. These findings underscore the importance of promoting targeted financial literacy programs, particularly for older and multigenerational families, as well as developing debt management tools tailored to the needs of aging populations. Policymakers are encouraged to support intergenerational cohabitation through tax incentives, flexible housing schemes, and financial planning services, thereby strengthening household resilience and enhancing overall well-being in the face of demographic aging.
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