Correcting Second Home Equity in HRS/AHEAD: The Issues, a Method, and Preliminary Results

14 Pages Posted: 14 Feb 2008

See all articles by Honggao Cao

Honggao Cao

University of Michigan at Ann Arbor

F. Thomas Juster

affiliation not provided to SSRN

Date Written: June 1, 2004

Abstract

Second home equity is an important component of both housing equity and net worth for the old population. It has been covered, implicitly or explicitly, across all waves of HRS and AHEAD surveys. But due to a skip-pattern error, not all households with second homes were asked detailed questions about current market value, amount of mortgage, etc... The negative impact of the inconsistent treatment of second home on the estimation of housing equity and net worth is substantial. When the second home information is not collected for all the households who own second homes (as in AHEAD 1995 and HRS 1996), the second home equity measure based on the partial data is likely to suffer from selection bias, rendering vulnerable both measures of total housing equity and total net worth. This paper reports on an imputation method to correct for this bias that we demonstrate and find effective.

Suggested Citation

Cao, Honggao and Juster, F. Thomas, Correcting Second Home Equity in HRS/AHEAD: The Issues, a Method, and Preliminary Results (June 1, 2004). Michigan Retirement Research Center Research Paper No. WP 2004-081, Available at SSRN: https://ssrn.com/abstract=1092918 or http://dx.doi.org/10.2139/ssrn.1092918

Honggao Cao (Contact Author)

University of Michigan at Ann Arbor ( email )

500 S. State Street

F. Thomas Juster

affiliation not provided to SSRN ( email )

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