Abstract

http://ssrn.com/abstract=343800
 
 

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The Benefits of the Home Mortgage Interest Deduction


Edward L. Glaeser


Harvard University - John F. Kennedy School of Government, Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)

Jesse M. Shapiro


University of Chicago; National Bureau of Economic Research (NBER)

October 2002

Harvard Institute Research Working Paper No. 1979

Abstract:     
The home mortgage interest deduction creates incentives to buy more housing and to become a homeowner, and the case for the deduction rests on social benefits from housing consumption and homeownership. There is little evidence suggesting large externalities from the level of housing consumption, but there appear to be externalities from homeownership. Externalities from living around homeowners are far too small to justify the deduction. Externalities from homeownership are larger, but the home mortgage interest deduction is a particularly poor instrument for encouraging homeownership since it is targeted at the wealthy, who are almost always homeowners. The irrelevance of the deduction is supported by the time series which shows that the ownership subsidy moves with inflation and has changed significantly between 1960 and today, but the homeownership rate has been essentially constant.

Number of Pages in PDF File: 62

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Date posted: October 22, 2002  

Suggested Citation

Glaeser, Edward L. and Shapiro, Jesse M., The Benefits of the Home Mortgage Interest Deduction (October 2002). Harvard Institute Research Working Paper No. 1979. Available at SSRN: http://ssrn.com/abstract=343800 or http://dx.doi.org/10.2139/ssrn.343800

Contact Information

Edward L. Glaeser (Contact Author)
Harvard University - John F. Kennedy School of Government, Department of Economics ( email )
Littauer Center
Room 315A
Cambridge, MA 02138
United States
617-496-2150 (Phone)
617-496-1722 (Fax)
Brookings Institution
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Washington, DC 20036-2188
United States
National Bureau of Economic Research (NBER)
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Jesse M. Shapiro
University of Chicago ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-2688 (Phone)
773-834-8172 (Fax)
HOME PAGE: http://home.uchicago.edu/~jmshapir/
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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