Shattered Housing

57 Pages Posted: 9 Feb 2022

See all articles by Jonas Happel

Jonas Happel

Frankfurt School of Finance & Management

Yigitcan Karabulut

Frankfurt School of Finance & Management; CEPR

Larissa Schäfer

Frankfurt School of Finance & Management

Selale Tuzel

University of Southern California - Marshall School of Business - Finance and Business Economics Department

Date Written: February 7, 2022

Abstract

Do negative housing shocks lead to persistent changes in household attitudes toward housing and homeownership? We use the residential destruction of Germany during World War II (WWII) as a quasi-experiment and exploit the reasonably exogenous region-by-cohort variation in destruction exposure. We find that WWII-experiencing cohorts from high destruction regions are significantly less likely to be homeowners decades later, controlling for regional differences and household characteristics. Underlying this effect are changes in household attitudes towards homeownership that also extend to preferences for housing consumption, with little or no support for risk preferences, income and wealth effects, or supply-side factors.

Keywords: Housing, homeownership, household finance, experience effects, war destruction

JEL Classification: G11, G41, G51, R21, R31

Suggested Citation

Happel, Jonas and Karabulut, Yigitcan and Schäfer, Larissa and Tuzel, Selale, Shattered Housing (February 7, 2022). Available at SSRN: https://ssrn.com/abstract=4029064 or http://dx.doi.org/10.2139/ssrn.4029064

Jonas Happel

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

Yigitcan Karabulut

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

CEPR ( email )

London
United Kingdom

Larissa Schäfer

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

Selale Tuzel (Contact Author)

University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )

Marshall School of Business
Los Angeles, CA 90089
United States

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