Can Temptation Explain Housing Choices in Later Life?

32 Pages Posted: 24 Jul 2013

See all articles by Viola Angelini

Viola Angelini

University of Groningen - Faculty of Economics and Business; Netspar

Alessandro Bucciol

University of Verona - Department of Economics; Netspar; Bocconi University

Matthew Wakefield

University of Bologna

Guglielmo Weber

University of Padua - Department of Economics; Centre for Economic Policy Research (CEPR); Institute for Fiscal Studies (IFS)

Date Written: May 26, 2013

Abstract

We use individual life-history data on twelve European countries to investigate the role of temptation in explaining the decision to become home-owners relatively late in life. The model we consider takes into account the standard motives for saving and investing in illiquid assets such as housing and individual retirement accounts, but recognizes that illiquid assets may be used by individuals who find it hard to procrastinate current consumption to control the temptation linked to having plenty of cash on hand. The evidence we produce is consistent with the notion that tempted individuals first resort to illiquid financial assets to control temptation, but as retirement age approaches they are more likely to use home-ownership as a commitment device.

Keywords: Temptation, housing, duration models, bivariate mixed proportional hazard

JEL Classification: D12, D14, G11

Suggested Citation

Angelini, Viola and Bucciol, Alessandro and Wakefield, Matthew and Weber, Guglielmo, Can Temptation Explain Housing Choices in Later Life? (May 26, 2013). Netspar Discussion Paper No. 05/2013-021. Available at SSRN: https://ssrn.com/abstract=2297349 or http://dx.doi.org/10.2139/ssrn.2297349

Viola Angelini (Contact Author)

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Alessandro Bucciol

University of Verona - Department of Economics ( email )

Via Cantarane 24
Verona, 37129
Italy
+39 045.802.8278 (Phone)
+39 045.802.8529 (Fax)

HOME PAGE: http://www.sites.google.com/site/abucciol/

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

Matthew Wakefield

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40100
Italy

Guglielmo Weber

University of Padua - Department of Economics ( email )

via Del Santo 33
Padova, 35123
Italy
+39 049 827 4271 (Phone)
+39 049 827 4221 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
41
Abstract Views
402
PlumX Metrics