Economic Policy Uncertainty,household Asset Allocation And Residents' Happiness

In today's era,various uncertainties are full of them.Since the financial crisis in2008,China's economy has been under constant downward pressure due to various emergencies such as the macroeconomic environment and the Sino-US trade war.In response to the problems existing in the economic operation and possible problems,the government has taken various measures to intervene in the macro economy in order to reduce economic fluctuations and stabilize the social situation.Compared with traditional economic policies,the economic policies formulated by the government to deal with various uncertain factors are usually more time-efficient,targeted,uncertain,and more concealed to the economic impact(Li & Yang,2015).Economic policy uncertainty is an important indicator for measuring uncertainty,It has been widely used in academia.In recent years,scholars have made great achievements in the study of economic policy uncertainty,mainly focusing on its macroeconomics indicators and microeconomic individual influences,while microscopic influences are mainly based on companies and financial institutions,and research on family influences needs to be expanded.Family is not only a participant in social life,but also an epitome of macroeconomic operations and an important representative of microeconomic individual activities.As an emerging branch of financial research in recent years,household finance can not only further expand the scope of financial research,but also have important academic value,and the conclusions of the study are beneficial to the government,the market and the family to produce certain social benefits.The allocation of household assets belongs to the research scope of household finance.The allocation of household assets is affected and restricted by many factors,but it has not yet involved economic policy uncertainty factors.With the expansion of family wealth and the diversification of investment channels,the willingness of households to realize asset value preservation and appreciation through asset allocation has gradually increased.However,economic policy uncertainty has slowed the growth of family wealth to a certain extent,and has also changed the structure and quantity of the family's assets from different aspects.The allocation of family assets not only affects the economic situation of residents,but also affects the subjective psychology of residents.The report of the19 th National Congress of the Communist Party of China stated that we should not forget our original heart and bear in mind the mission.The original heart and mission of the Chinese Communists are to seek happiness for the Chinese people and to revive the Chinese nation.Reasonable allocation of household assets not only helps the family to maintain and increase the value of family assets,improve the family's economic status,but also improve the quality of life of residents and improve the happiness index of residents.on the contrary,it may worsen the property of residents and reduce the residents' Subjective well-being.At the same time,economic policy uncertainty can also affect residents' well-being through other specific channels.With the development of China's economy from quantity oriented to quality oriented growth,the study of the relationship between economic policy uncertainty,household asset allocation and residents' well-being is not only helpful to provide reference for residents' family asset allocation behavior,enhance residents' subjective well-being,but also conducive to the rational allocation of resources and efficient use of assets,so that residents can fully enjoy economic and social progress and improved wealth management.Based on the above discussion,this paper studies the economic policy uncertainty,household asset allocation and residents' happiness into a whole framework.It not only summarizes the existing research,but also highlights the necessity of researching the problem,but also inspires the ideas for this research.Secondly,this thesis focuses on the theory of uncertainty,household asset allocation theory and happiness paradox,further consolidating the theoretical basis of the article,and also analyzes the mechanism of the interaction between economic policy uncertainty,household asset allocation and happiness.Thirdly,this paper uses empirical methods to analyze the impact of economic policy uncertainty on household asset allocation,household asset allocation on residents' well-being,and economic policy uncertainty on residents' well-being.In the empirical analysis of the uncertainty of economic policy on household asset allocation,this paper uses Probit model and Tobit model to investigate the probability,depth and asset structure of CFPS2010-2016 data family participation in financial market.In order to avoid possible endogenous problems,regression is carried out using the economic policy uncertainty index of the lag period.For the study of the relationship between household asset allocation and happiness,the three micro-databases of CFPS,CHFS and CHIP are used for estimation,not only considering the impact of various household asset and debt structures on residents' happiness,but also regresses the family leverage level as an important parameter to measure the household asset allocation,using the panel data and instrumental variable method to estimate the Ordered Probit model.In the study of the impact of economic policy uncertainty on residents' happiness,this paper uses CFPS four-phase household panel data to use multiple models at the same time,and takes the household asset structure as the main explanatory variable of asset allocation,not only examines the interrelationship between the three,but also explores the mechanism of the impact of economic policy uncertainty on happiness.Through these studies,this paper mainly draws the following conclusions:First,using the 2010-2016 micro-family data from the China Family Panel Studies(CFPS)project,this study look into the impact of economic policy uncertainty on households' asset allocation behavior.The empirical results show that economic policy uncertainties reduce the probability of household participation in financial markets,and households significantly reduce the ratio of risk assets in their financial portfolio as a result of precautionary motives.Further research has found that when uncertainties in economic policies grow,male residents,singletons,and urban show a steeper decline in the likelihood and depth of their participation in financial markets compared with females,married households,and rural households,respectively.In addition,economic policy uncertainty can significantly increase the proportion of household financial assets,housing assets,production and operation assets in total household assets,while economic policy uncertainty for household durable consumer goods assets has a significant inhibitory effect on them.Second,from the regression results of the impact of household asset allocation on residents' subjective well-being.This paper first uses the CFPS2010-2016 household panel data for benchmark estimation.The results show that compared with income,household assets significantly improve the subjective well-being of residents,and household debt has a significant inhibitory effect on residents' happiness,residents' subjective well-being decreases significantly with the increase of household level leverage.Similar conclusions have been drawn from the regression of CHFS2011-2015 panel and CHIP2013 cross-section household data.Specific to the impact of family assets and liabilities structure on happiness,in terms of household assets,relative to income housing assets have less impact on happiness,land will significantly reduce residents' happiness,durable consumer goods,financial assets,production and operation assets will increase Residents' happiness.As for household debt,household-owned housing debt significantly increases residents' well-being,while financial debt has a significant inhibitory effect on residents 'subjective well-being.Housing and living liabilities will reduce residents' happiness relative to income and assets,and durable consumer goods such as automobiles will increase residents' happiness.The increase in the proportion of family property income,wage income,transfer income,and operating income in the family's total income weight has gradually weakened the the promotion of residents' well-being.At the same time,household asset allocation will also affect residents' happiness through two mechanisms: consumption channel and "comparison effect".Household-owned housing debt improves the residents' happiness by increasing property income,and reduces the promotion effect on residents' happiness by reducing the operating income to a certain extent.Household financial debt has little effect on property income,mainly alleviates the inhibitory effect of financial debt on residents' well-being by increasing operating income to a certain extent.Third,for the relationship between economic policy uncertainty and residents' happiness.Based on the economic uncertainty index(EPU)constructed by Baker et al.(2016)and the micro-family data of CFPS2010-2016,this paper studies the interaction between the above three.It not only studies the direct impact of economic policy uncertainty on residents' well-being,but also finds that economic policy uncertainty can affect residents' well-being through household asset allocation and expected channels.Economic policy uncertainty significantly reduces the level of family happiness.In the context of economic policy uncertainty,households has significantly mitigated this negative impact to a certain extent by improving financial assets the proportion of assets in total,but the decline in the share of household consumer goods assets and the reduction of expected future levels have significantly reduced the level of family happiness.In addition,The impact of economic policy uncertainty through housing asset and production and operation asset structure on family well-being is not significant.According to the above conclusions,it not only provides inspiration for the allocation of household assets,but also provides a useful reference for the government's macro-control and market services,thus further enhancing the subjective well-being of residents.This article mainly receives the following policy recommendations: First,in terms of family,when the family is carrying out asset allocation,it should not only pay attention to the changes of the national economic policy,but also rationally analyze according to the external economic environment,its own property status and the trend of the financial market,reasonably allocate the proportion of various assets of the family,use leverage appropriately,but also avoid excessive leverage.Focus on learning various investment and financial management knowledge,promote the moderate consumption while maintaining the value of the assets,maintain good consumption habits,reduce blind consumption and purchase excessive debt of real estate,and cannot blindly compare.More funds should be used to improve household living consumption levels and investment management,so that the individual's happiness level can benefit more with the change of household asset structure.Second,as far as the government is concerned,when formulating various economic policies,we should try to maintain the continuity and stability of the policy,avoid short-term and frequent changes in economic policies,and “change the policy toward the future”,thus releasing a large amount of uncertain "signals" of economic policies to the market,which will affect the adjustment of the number of assets of the family's economic entities and the changes in their future expectations,thereby reducing the level of family happiness.Broaden the consumption and investment channels of residents,and actively guide the family to use the effective proportion of various asset allocations.On the one hand,it can improve the domestic consumption level to provide incentives for economic endogenous growth,on the other hand,it can also fully and effectively utilize social resources with the improvement of residents' well-being.Third,as for market,in providing economic services to families,we should also pay close attention to the various economic policies formulated by the government.In addition to timely adjustment of industrial structure and provide better quality products and services according to economic policies,we should also release timely families with the correct interpretation of these policies,to avoid the family's misinterpretation or misjudgment of economic policy uncertainty has a greater impact on its asset allocation behavior,and bear a certain economic loss,it will also have a negative impact on family happiness.