Due to early housing reform, a high level of marketization, and rapidly rising housing prices, housing class stratification in Shanghai has more theoretical and practical significance.

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In recent years, research on the public’s sense of happiness and fairness has been in the spotlight. The two research subjects share an emphasis on the differences in perception created by social class stratification.

However, whether it adopts theoretical analysis or an empirical model, current research usually studies class stratification in terms of income, education level and occupation, whereas few studies incorporate home ownership into the analytical framework.

Given this, the author conducted empirical research on the different perception of happiness and justice among urban housing stratum using survey data from Shanghai. The survey was carried out by Shanghai Academy of Social Sciences in early 2011 and the households were randomly selected. Those surveyed are regular residents who have stayed in Shanghai for at least three months, and the total sample is 1,500 households.

 

Classification
Based on the housing class theory, this paper groups urban homeowners in a presumably ideal state. First, there are homeowners and renters. Then, according to housing equity, homeowners are further categorized into owners with mortgages and those who pay in full upon purchase. Finally, the classification takes tenure access into consideration and owners are labeled as having market ownership, meaning that people buy properties on the open market, as well as subsidized and inherited ownership.

According to the survey, the sample consists of more than 37 percent renters and almost 63 percent homeowners, among which almost 7 percent have mortgages and nearly 56 percent are debt free. If looked at another way, nearly 25 percent are market ownership, about 27 percent are subsidized while almost 11 percent inherited property.

Survey responses indicate that the public’s sense of happiness is relatively high on the whole, with nearly 57 percent reporting that they relatively satisfied, satisfied or very satisfied with their lives, while around 12 percent reported discontent.

However, public contentment with justice is considerably low. Nearly 48 percent said they were disappointed with social income distribution, while more than 22 percent said it is fair.
As we can see, there is a paradox of “high happiness, low fairness” perception among the general populace, reflecting the complexity and contradiction of social mentality as well as conflicting attitudes toward private and public sectors.

 

Homeowners vs. renters
We started with bivariate analysis and discovered a distinctive gap between property owners and renters when it comes to their perception of happiness and fairness.

Compared to renters, homeowners responded “relatively satisfied” more by a margin of 13 percentage points, “satisfied” by 1 percentage point, and “very satisfied” by 4 percentage points. On average, homeowners are more than 18 percentage points happier than renters.

Similarly, surveyed homeowners are around 8 percentage points more likely to think social income distribution is “relatively fair” and 1 percentage point more likely to think it is “very fair” than renters, leading to a 9 percentage-point difference in fairness perception.

Next, we applied a logical regression model to control other variables and still saw a perception difference. When other variables remain unchanged, homeowners are 2.33 times more likely than renters to score higher in terms of happiness on a scale of 1 to 7, and 1.74 times higher in terms of fairness on a scale of 1 to 5.

To delve further into the issue, when other variables controlled, homeowners with mortgages and those who pay in full are respectively 1.71 and 2.46 times happier than renters. However, in terms of sense of justice, there is little difference between homeowners and renters. Only those who are free from loans claim a higher sense of fairness.

 

Possible explanations
The benefit that homebuyers gain in the process of obtaining housing property can explain this finding. In the last 10 years, housing prices have skyrocketed in China’s large and medium-sized cities, so newcomers have to rely on loans to buy property and pay high interest, whereas locals and those who have arrived early secured fully paid property. The time difference has created such a huge gap between the two groups that clearly the former are disappointed and feel the situation is unfair.

At the same time, the government’s real estate regulation policy, as it turns out, has repeatedly led to successive rounds of home price increases, causing mortgage-holders to lose confidence in the government and society.

In short, though the mortgage-paying class owns property, it pays an enormous price to do so. Therefore, their perception of justice is similar to that of renters, though they might have a higher sense of happiness than the latter group.

When we examine homeowners in accordance to their tenure access, we found that people who are in possession of market ownership and subsidized ownership are 1.70 and 2.95 times happier than renters. However, in terms of the sense of fairness, market ownership scores similarly with renters, while subsidized ownership does give people a better sense of justice.
 

 

In the end, the differentiated perception results from the actual gains people receive in the housing market. Those who bought houses at market prices evidently feel much more stress than those who have received subsidies.

In addition, it is not hard to predict that people with inherited ownership report much higher sense of happiness and fairness.

 

Future reference
When comparing the effect housing and occupation have on urban residents in Shanghai, the paper determines the former carries huge weight in people’s judgments. In other words, property ownership can be used to better explain people’s subjective perception.

For a long time, Chinese scholars focused on the role occupation has played in social stratification amid China’s reform and transformation. In recent years, scholars have begun to view property ownership as a result and an indicator rather than a driving force in the process of class stratification, thus contributing little theoretical analysis to the matter.

However, based on the findings, property ownership, including the wider sense of property, has continued to affect social class stratification and may serve as another vital system in parallel to the occupational system. Such findings also reflect the concern of some scholars that a housing class is coming into being in China, and to a degree, such a classification is spelt by China’s urban social transformation, especially the housing privatization reform and the deformed real estate development.

Due to early housing reform, a high level of marketization, and rapidly rising housing prices, housing class stratification in Shanghai has more theoretical and practical significance. But it probably could represent first-tier cities, such as Beijing, Guangzhou and Shenzhen, its reference for other large and medium-sized Chinese cities might be limited.

In conclusion, in the contemporary era, though people who borrow a substantial amount of money from banks to buy properties are homeowners on the surface, they have also burdens, so they are only nominal winners. In contrast, those who bought houses early and paid in full or those who have obtained subsidized properties are the true winners.

Thus, the benefit homeowners receive in the real estate market leads to an internal heterogeneity among the home-owning class. Only the true winners have a higher sense of happiness and fairness, while those who appear to gain could not share the feeling.

It is also worth noting that the comparative studies of happiness and justice perception show that the two are associated but also quite different. The mechanism that determines people’s perception in private and public lives is not the same. In this light, current research is far from sufficient if it focuses on only one of the two emotions when analyzing the changes brought by China’s development.

This paper offers evidence that an improvement in material wealth increases one’s sense of happiness but does not necessarily bring a sense of fairness, which could only be enhanced through institutional reform.

Online questionnaires about people’s sense of happiness often associate unhappiness with justice, wealth gap, privileged groups and other livelihood issues, proving that elevated sense of happiness could not overshadow injustice in social lives.  

Nevertheless, in-depth analysis of the urban home-owning class and the wealthy class should be an important research subject in the future.

               
Li Jun is from the Institute of Sociology at Shanghai Academy of Social Sciences.