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The psychological costs of unsustainable housing commitments

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  • Taylor, Mark P.
  • Pevalin, David J.
  • Todd, Jennifer

Abstract

We explore the impact of unsustainable housing commitments on psychological well-being using data from the British Household Panel Survey. We test the hypotheses that (i) housing payment problems, housing arrears and the threat of eviction and repossession have adverse impacts on heads of household’s psychological well-being over and above those caused by financial hardship and (ii) these impacts are larger for homeowners than for tenants. Our results indicate that for both men and women persistent housing payment problems have significant psychological costs. We find that for men entering arrears and the imminent threat of home loss has deleterious impacts on psychological health. The sizes of these effects are independent of and larger in magnitude to those associated with financial hardship more generally. We also find housing payment arrears have a significantly greater impact on psychological wellbeing among homeowners than tenants.

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Paper provided by Institute for Social and Economic Research in its series ISER Working Paper Series with number 2006-08.

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Date of creation: 01 Mar 2006
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Publication status: published
Handle: RePEc:ese:iserwp:2006-08

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Postal: Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK
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Postal: Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK
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  1. Marmot, Michael & Ryff, Carol D. & Bumpass, Larry L. & Shipley, Martin & Marks, Nadine F., 1997. "Social inequalities in health: Next questions and converging evidence," Social Science & Medicine, Elsevier, Elsevier, vol. 44(6), pages 901-910, March.
  2. Boheim, Rene & Taylor, Mark P., 2000. "My Home Was My Castle: Evictions and Repossessions in Britain," Journal of Housing Economics, Elsevier, Elsevier, vol. 9(4), pages 287-319, December.
  3. Kau, James B, et al, 1995. "The Valuation at Origination of Fixed-Rate Mortgages with Default and Prepayment," The Journal of Real Estate Finance and Economics, Springer, Springer, vol. 11(1), pages 5-36, July.
  4. Ettner, Susan L., 1996. "New evidence on the relationship between income and health," Journal of Health Economics, Elsevier, Elsevier, vol. 15(1), pages 67-85, February.
  5. Brookes, Martin & Dicks, Mike & Pradhan, Mahmood, 1994. "An empirical model of mortgage arrears and repossessions," Economic Modelling, Elsevier, Elsevier, vol. 11(2), pages 134-144, April.
  6. Andrew Clark, 2001. "Unemployment As A Social Norm: Psychological Evidence from Panel Data," DELTA Working Papers, DELTA (Ecole normale supérieure) 2001-17, DELTA (Ecole normale supérieure).
  7. Brown, Sarah & Taylor, Karl & Wheatley Price, Stephen, 2005. "Debt and distress: Evaluating the psychological cost of credit," Journal of Economic Psychology, Elsevier, Elsevier, vol. 26(5), pages 642-663, October.
  8. Lambrecht, Bart & Perraudin, William & Satchell, Stephen, 1997. "Time to default in the UK mortgage market," Economic Modelling, Elsevier, Elsevier, vol. 14(4), pages 485-499, October.
  9. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 104(424), pages 648-59, May.
  10. Katharina Hauck & Nigel Rice, 2004. "A longitudinal analysis of mental health mobility in Britain," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 13(10), pages 981-1001.
  11. Ecob, Russell & Davey Smith, George, 1999. "Income and health: what is the nature of the relationship?," Social Science & Medicine, Elsevier, Elsevier, vol. 48(5), pages 693-705, March.
  12. Boheim, Rene & Taylor, Mark P, 2002. "Tied Down or Rome to Move? Investigating the Relationships between Housing Tenure, Employment Status and Residential Mobility in Britain," Scottish Journal of Political Economy, Scottish Economic Society, Scottish Economic Society, vol. 49(4), pages 369-92, September.
  13. Lea, Stephen E. G. & Webley, Paul & Levine, R. Mark, 1993. "The economic psychology of consumer debt," Journal of Economic Psychology, Elsevier, Elsevier, vol. 14(1), pages 85-119, March.
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Cited by:
  1. repec:ese:iserwp:2011-18 is not listed on IDEAS
  2. Jan Rouwendal & Peter Nijkamp, 2007. "Homeownership and Labour Market Behaviour: Interpreting the Evidence," Tinbergen Institute Discussion Papers, Tinbergen Institute 07-047/3, Tinbergen Institute, revised 03 Nov 2008.
  3. Janet Currie & Erdal Tekin, 2011. "Is there a Link Between Foreclosure and Health?," NBER Working Papers 17310, National Bureau of Economic Research, Inc.
  4. Felipe Kast & Dina Pomeranz, 2013. "Saving More to Borrow Less: Experimental Evidence from Access to Formal Savings Accounts in Chile," Harvard Business School Working Papers, Harvard Business School 14-001, Harvard Business School, revised Jun 2014.

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