Identifying the Benefits from Home Ownership: A Swedish Experiment

82 Pages Posted: 29 May 2016 Last revised: 23 Nov 2016

Paolo Sodini

Stockholm School of Economics - Department of Finance

Stijn Van Nieuwerburgh

New York University Stern School of Business, Department of Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Roine Vestman

Stockholm University - Department of Economics; Swedish House of Finance

Ulf von Lilienfeld‐Toal

Universite du Luxembourg

Multiple version iconThere are 3 versions of this paper

Date Written: November 21, 2016

Abstract

This paper studies the economic benefits of home ownership. Exploiting a quasi-experiment surrounding privatization decisions of municipally-owned apartment buildings, we obtain random variation in home ownership for otherwise similar buildings with similar tenants. We link the tenants to their tax records to obtain information on demographics, income, mobility patterns, housing wealth, financial wealth, and debt. These data allow us to construct high-quality measures of consumption expenditures. Home ownership causes households to move up the housing ladder, work harder, and save more. Consumption increases out of housing wealth are concentrated among the home owners who sell subsequent to privatization and among those who receive negative income shocks, evidencing a collateral effect.

Keywords: home ownership, housing wealth, marginal propensity to consume out of housing wealth, privatization of social housing

JEL Classification: D12, D31, E21, G11, H31, J22, R21, R23, R51

Suggested Citation

Sodini, Paolo and Van Nieuwerburgh, Stijn and Vestman, Roine and von Lilienfeld‐Toal, Ulf, Identifying the Benefits from Home Ownership: A Swedish Experiment (November 21, 2016). Swedish House of Finance Research Paper No. 16-11; Paris December 2016 Finance Meeting EUROFIDAI - AFFI. Available at SSRN: https://ssrn.com/abstract=2785741

Paolo Sodini

Stockholm School of Economics - Department of Finance ( email )

Sveavagen 65, Box 6501
SE-113 83 Stockholm
Sweden
46 8 7369165 (Phone)
46 8 312327 (Fax)

HOME PAGE: http://www.hhs.se/secfi/People/Faculty/Finpso/finp

Stijn Van Nieuwerburgh (Contact Author)

New York University Stern School of Business, Department of Finance ( email )

44 West 4th Street
Suite 9-190
New York, NY 10012-1126
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Roine Vestman

Stockholm University - Department of Economics ( email )

S-10691 Stockholm
Sweden

HOME PAGE: http://www.ne.su.se/

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

Ulf Von Lilienfeld‐Toal

Universite du Luxembourg

L-1511 Luxembourg
Luxembourg

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