Home Equity Use and the Life Cycle Hypothesis
AbstractThe life cycle hypothesis of consumption assumes the household to take a life-time perspective on all resources available for consumption, and to use the assets accumulated during the life-time to fund later consumption. Typically, households in the middle, high earning years, are able to save; younger and older households borrow or dissave. For many, a large share of accumulated household assets reside in home equity. This paper analyzes the propensity to use home equity to fund current consumption using a legit analysis of homeowners. The results support earlier criticism of the life cycle hypothesis in finding that older households do not rely on dissaving from assets. Older homeowners are less likely to use home equity to fund current consumption than others. Both sociodemographic determinants of life cycle changes as well as income variables are significant determinants of willingness to use home equity. Liquidity considerations appear to be less important.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 11234.
Date of creation: 01 Jul 1985
Date of revision:
Publication status: Published in Journal of Consumer Affairs, Summer 1985, vol. 19, pp. 37-57
Contact details of provider:
Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Shubhasis Dey, 2005. "Lines of Credit and Consumption Smoothing: The Choice between Credit Cards and Home Equity Lines of Credit," Working Papers 05-18, Bank of Canada.
- Lucia Dunn & Shubhasis Dey, 2004. "An Empirical Investigation of Collateral and Sorting in the HELOC Market," Working Papers 04-07, Ohio State University, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stephanie Bridges) The email address of this maintainer does not seem to be valid anymore. Please ask Stephanie Bridges to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.