What are the Social Benefits of Homeownership? Experimental Evidence of Low-Income Households

35 Pages Posted: 1 Feb 2011

See all articles by William G. Gale

William G. Gale

Brookings Institution

Gregory Mills

The Urban Institute

Gary V. Engelhardt

Syracuse University - Center for Policy Research; Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Michael D. Eriksen

University of Cincinnati - Department of Finance - Real Estate

Date Written: May 2010

Abstract

We estimate the social benefits of homeownership using an exogenous instrument based on randomly assigned treatment status from a field experiment that subsidized saving for home purchase for low-income renters through Individual Development Accounts (IDAs). This approach attempts to eliminate the potential correlation present in previous analyses between unobserved individual characteristics leading to homeownership and traits leading to provision of social capital or local amenities. Consistent with previous work, we show that homeownership positively affects political engagement in simple probits. Instrumental variable probits, however, show no impact of homeownership on political involvement. IV results for other social outcomes are less conclusive. The analysis suggests that with the use of an exogenous instrument, it is possible to generate results that are different from the previous literature. Our results also suggest that being eligible to open an IDA did not spur households to provide more social capital or local amenities.

Keywords: homeownership, social benefits

JEL Classification: H2, R2

Suggested Citation

Gale, William G. and Mills, Gregory and Engelhardt, Gary V. and Eriksen, Michael D., What are the Social Benefits of Homeownership? Experimental Evidence of Low-Income Households (May 2010). Journal of Urban Economics, Vol. 67, No. 3, 2010. Available at SSRN: https://ssrn.com/abstract=1752381

William G. Gale (Contact Author)

Brookings Institution ( email )

1775 Massachusetts Avenue, NW
Washington, DC 20036
United States
202-797-6148 (Phone)
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Gregory Mills

The Urban Institute ( email )

2100 M Street, NW
Washington, DC 20037
United States
202-261-5841 (Phone)
202-452-1840 (Fax)

HOME PAGE: http://www.urban.org

Gary V. Engelhardt

Syracuse University - Center for Policy Research ( email )

426 Eggers Hall
Syracuse, NY 13244
United States
315-443-4598 (Phone)
315-443-1081 (Fax)

Dartmouth College - Department of Economics ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Michael D. Eriksen

University of Cincinnati - Department of Finance - Real Estate ( email )

College of Business Administration
Cincinnati, OH 45221
United States

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