Measuring the External Benefits of Homeownership

Posted: 1 Dec 2010

See all articles by N. Edward Coulson

N. Edward Coulson

University of California, Irvine - Paul Merage School of Business

Herman Li

California State University, Sacramento

Date Written: November 29, 2010

Abstract

We use panel data, endogenous switching and instrumental variables to assess the externality value of neighborhood home-ownership. Using the cluster samples of the 1985, 1989 and 1993 American Housing Survey, we find some variation in the estimate of this value, depending on the assumptions made about the unobservable neighborhood and unit attributes. The most reliable estimates suggest that the externality value of ownership is approximately $1000/year, exceeding the deadweight loss of the mortgage interest tax deduction for all but the highest income households.

JEL Classification: R5

Suggested Citation

Coulson, N. Edward and Li, Herman, Measuring the External Benefits of Homeownership (November 29, 2010). 46th Annual AREUEA Conference Paper, Available at SSRN: https://ssrn.com/abstract=1717014

N. Edward Coulson (Contact Author)

University of California, Irvine - Paul Merage School of Business ( email )

Paul Merage School of Business
Irvine, CA California 92697-3125
United States

Herman Li

California State University, Sacramento ( email )

6000 J Street
Sacramento, CA 95819
United States

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