Rent or Buy? The Role of Lifetime Experiences on Homeownership within and Across Countries

81 Pages Posted: 29 Jun 2020

See all articles by Ulrike Malmendier

Ulrike Malmendier

University of California, Berkeley - Department of Economics; University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Alexandra Wellsjo

University of California, Berkeley

Date Written: June 2020

Abstract

What explains the vast differences in homeownership rates across and within countries? We argue that individual lifetime exposure to inflation play a significant role in the decision to become homeowner. First, we show that immigrants' country-of-origin inflation experiences predict their homeownership rates in the US. Second, using household data from 20 European countries, we estimate that a one log-point increase in personally experienced inflation predicts a 19pp increase in the average individual's likelihood of homeownership. The relationship between homeownership and experienced inflation is robust to other determinants of homeownership as well as any differences across countries and over time.

JEL Classification: D03, D14, D83, D84, E03, E21, G02, G11, R31

Suggested Citation

Malmendier, Ulrike and Wellsjo, Alexandra, Rent or Buy? The Role of Lifetime Experiences on Homeownership within and Across Countries (June 2020). CEPR Discussion Paper No. DP14935, Available at SSRN: https://ssrn.com/abstract=3638039

Ulrike Malmendier (Contact Author)

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
(510) 642-8724 (Phone)
(510) 642-6615 (Fax)

HOME PAGE: http://www.econ.berkeley.edu/~ulrike/

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://www.iza.org/en/webcontent/personnel/photos/index_html?key=918

Alexandra Wellsjo

University of California, Berkeley ( email )

530 Evans Hall #3880
Berkeley, CA 94720-3880
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1
Abstract Views
98
PlumX Metrics