The Dynamics of Housing Demand by the Elderly: Wealth, Cash Flow, and Demographic Effects
AbstractUsing Waves one through fifteen of the PSID data set, we investigate the pattern of housing mobility amongst the elderly. We focus especially on two issues: (1) Determining which household characteristics tend to increase the probability of a move; and (2) Whether elderly households systematically move to smaller, less expensive dwellings when they do move, and, if so, which characteristics make such "downsizing" particularly likely. We find that wealthier households are less likely to move and to downsize, and that changes in family composition or retirement status significantly increase the likelihood of a move. We do not find much evidence of imperfections in the housing market, or of pervasive liquidity constraints. Finally, we develop a Lagrange Multiplier test for unobserved heterogeneity amongst elderly households, and strongly reject the null hypothesis of homogeneity.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2471.
Date of creation: Dec 1987
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Publication status: published as Jonathan Feinstein, Daniel McFadden. "The Dynamics of Housing Demand by the Elderly: Wealth, Cash Flow, and Demographic Effects," in David A. Wise, editor, "The Economics of Aging" University of Chicago Press (1989)
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Other versions of this item:
- Jonathan Feinstein & Daniel McFadden, 1989. "The Dynamics of Housing Demand by the Elderly: Wealth, Cash Flow, and Demographic Effects," NBER Chapters, in: The Economics of Aging, pages 55-92 National Bureau of Economic Research, Inc.
- NEP-ALL-1999-02-08 (All new papers)
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- Artle, Roland & Varaiya, Pravin, 1978. "Life cycle consumption and homeownership," Journal of Economic Theory, Elsevier, vol. 18(1), pages 38-58, June.
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"The Lagrange Multiplier Test and Its Applications to Model Specification in Econometrics,"
Review of Economic Studies,
Wiley Blackwell, vol. 47(1), pages 239-53, January.
- Breusch, T.S. & Pagan, A.R., . "The Lagrange multiplier test and its applications to model specification in econometrics," CORE Discussion Papers RP -412, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Lee, Lung-Fei & Chesher, Andrew, 1986. "Specification testing when score test statistics are identically zero," Journal of Econometrics, Elsevier, vol. 31(2), pages 121-149, March.
- Henderson, J. Vernon & Ioannides, Yannis M., 1989. "Dynamic aspects of consumer decisions in housing markets," Journal of Urban Economics, Elsevier, vol. 26(2), pages 212-230, September.
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