Abstract: Based on the Theory of Mental Account and Conservation of Resources Theory, this paper uses the data of “China Household Finance Survey” in 2011 to examine the impact and mechanism of house demolition on family consumption. On the basis of the problem of eliminating the sample self-selection, the robust research results obtained by the empirical test show that house demolition significantly increases the level of family consumption. That is, the consumption of demolition family is significantly higher than that of non-demolition family. However, family wealth and health have a significantly positive regulating effect on the relationship between house demolition and family consumption. Through further heterogeneity research, this paper also finds that relative to non-demolition families, housing demolition significantly improves the consumption of relocate households with houses, but does not significantly increase the consumption of relocate households without houses. This paper analyzes the impact of house demolition on family consumption from the perspective of sociology, economics and psychology, reveals its impact mechanism, provides new insights for human economic behavior and results, and fills the existing theoretical vacancies. At the same time, the findings of this paper have important reference value and guiding significance for the government to formulate consumption policies and promote economic growth.

Key words: house demolition, family consumption, family wealth, health, mental account, Conservation of Resources Theory