Housing for All: The Confucian Tradition and the Growth of House Prices

Rising housing prices have made housing an important livelihood issue of concern to all sectors of Chinese society. The Confucian political ambition has always focused on the cultivation of xiu-qi-zhi-pin, the implementation of people-oriented benevolent governance, and the improvement and enhancement of social livelihoods, so the Confucian culture may have an important influence on the governance philosophy and behavior of local officials, and thus on the growth of housing prices. Based on the policy framework of separating the birthplace and office of local officials, this paper uses data from 283 prefecture-level cities in China from 2009—2015 to estimate the impact of Confucian culture, measured by the density of Jinshi in Ming and Qing Dynasties, on housing price growth using an epidemiological approach. It finds that local officials heavily influenced by Confucian culture significantly reduce house prices. Specifically, for every one standard deviation increase in the density of jinshi in a local official’s birthplace, the real house price in their place of employment will decrease by about 1.13%, and the average annual growth rate of real house price will decrease by about 1.01%, a finding that is robust to a series of tests. Extended analysis suggests that Confucian culture weakens the incentives of local officials to push up housing prices due to promotion incentives, and that optimizing the land supply structure for commercial housing sites is an important policy tool for local officials influenced by Confucian culture to regulate housing prices.