Political Polarization Affects Households’ Financial Decisions: Evidence from Home Sales

56 Pages Posted: 9 Mar 2021

See all articles by W. Ben McCartney

W. Ben McCartney

University of Virginia - McIntire School of Commerce

John Orellana

affiliation not provided to SSRN

Calvin Zhang

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Date Written: March 6, 2021

Abstract

Political identity and partisanship are salient features of today’s society. Using deeds records and voter rolls, we show that current residents are more likely to sell their homes when opposite-party neighbors move in nearby than when unaffiliated or same-party neighbors do. This is especially true when the new neighbors are politically active, consistent with an animosity between parties mechanism. We conclude that affective polarization is not limited to purely political settings and affects one of the household’s most important financial decisions, their home transactions.

Keywords: Political Polarization, Residential Choice

JEL Classification: D10, H31, R20

Suggested Citation

McCartney, W. Ben and Orellana, John and Zhang, Calvin, Political Polarization Affects Households’ Financial Decisions: Evidence from Home Sales (March 6, 2021). The Journal of Finance, volume 79, issue 2, 2024 [10.1111/jofi.13315], Available at SSRN: https://ssrn.com/abstract=3799220 or http://dx.doi.org/10.1111/jofi.13315

W. Ben McCartney (Contact Author)

University of Virginia - McIntire School of Commerce ( email )

P.O. Box 400173
Charlottesville, VA 22904-4173
United States

John Orellana

affiliation not provided to SSRN

Calvin Zhang

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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