THE HAPPINESS CODE OF DIGITAL INCLUSIVE FINANCE: EVIDENCE FROM CHINA

Using China Household Finance Survey (2011–2017) panel data and Peking University’s Digital Inclusive Finance Index, this study applies a two-way fixed-effects model to investigate the heterogeneous effects of digital financial inclusion (DFI) on the happiness of urban versus rural residents. Our findings reveal that DFI significantly elevates happiness among traditionally excluded groups, specifically low-education groups and rural-to-urban migrants. Crucially, we demonstrate that the breadth of service coverage drives stronger welfare effects than usage depth, refining the understanding of DFI’s pathways to well-being. Furthermore, we identify a critical moderating role of financial literacy, where high-literacy groups exhibit diminishing marginal gains due to entrenched reliance on traditional finance. These results provide a solid micro-foundation for policy, demonstrating that prioritizing inclusive access over sophisticated products is key to narrowing the urban-rural well-being gap and advancing sustainable, people-centered development.