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Disentangling the Housing Satisfaction Puzzle: Does Homeownership Really Matter?

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  • Díaz Serrano, Luis
  • Ferrer Carbonell, Ada
  • Hartog, Joop

Abstract

There is a general consensus that homeownership has beneficial effects for both individuals and society in many outcomes. However, research regarding the effect of homeownership on individuals' subjective well-being remains inconclusive. In this paper, for the first time, we provide empirical evidence for the link between homeownership and housing satisfaction using panel data. We use the eight waves of the European Community Household Panel (ECHP) covering the period 1994-2001. We observe that renters who become homeowners not only experience a significant increase in housing satisfaction, but also after changing their tenure status, they obtain a different utility from the same housing context. This evidence might provide support to the hypothesis that a share of the differences in the perceived utility derived from housing can be attributed to (un)fulfilled expectations or aspirations regarding homeownership. Keywords: Housing satisfaction, subjective well-being, homeownership, fixed-effects, housing aspirations JEL classification: D1, R2.

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Bibliographic Info

Paper provided by Universitat Rovira i Virgili, Department of Economics in its series Working Papers with number 2072/42898.

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Date of creation: 2009
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Handle: RePEc:urv:wpaper:2072/42898

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Related research

Keywords: Habitatge; Satisfacció; Benestar; Béns immobles; 332 - Economia regional i territorial. Economia del sòl i de la vivenda;

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References

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  1. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  2. Easterlin, Richard A., 2006. "Life cycle happiness and its sources: Intersections of psychology, economics, and demography," Journal of Economic Psychology, Elsevier, vol. 27(4), pages 463-482, August.
  3. Bernard M. S. van Praag & P. Frijters & Ada Ferrer-i-Carbonell, 2001. "The Anatomy of Subjective Well-Being," Discussion Papers of DIW Berlin 265, DIW Berlin, German Institute for Economic Research.
  4. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  5. Luis Diaz-Serrano & Alexandrina P. Stoyanova, 2008. "The Causal Relationship between Individual’s Choice Behavior and Self-Reported Satisfaction: the Case of Residential Mobility in the EU," Working Papers XREAP2008-02, Xarxa de Referència en Economia Aplicada (XREAP), revised Mar 2008.
  6. Butler, J S & Moffitt, Robert, 1982. "A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model," Econometrica, Econometric Society, vol. 50(3), pages 761-64, May.
  7. Ada Ferrer-i-Carbonell & Paul Frijters, 2002. "How important is Methodology for the Estimates of the Determinants of Happiness?," Tinbergen Institute Discussion Papers 02-024/3, Tinbergen Institute.
  8. Frijters, Paul, 2000. "Do individuals try to maximize general satisfaction?," Journal of Economic Psychology, Elsevier, vol. 21(3), pages 281-304, June.
  9. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
  10. Dietz, Robert D. & Haurin, Donald R., 2003. "The social and private micro-level consequences of homeownership," Journal of Urban Economics, Elsevier, vol. 54(3), pages 401-450, November.
  11. Guillaume R. Frechette, 2001. "Update to random-effects ordered probit," Stata Technical Bulletin, StataCorp LP, vol. 10(61).
  12. Guillaume R. Frechette, 2001. "Random-effects ordered probit," Stata Technical Bulletin, StataCorp LP, vol. 10(59).
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Cited by:
  1. Luis Diaz-Serrano & Andrés Rodríguez-Pose, 2011. "Decentralization, happiness and the perception of institutions," Working Papers 2011-07, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  2. Almudena Sevilla-Sanz & Jose Ignacio Gimenez-Nadal, 2010. "The Time-crunch Paradox," Economics Series Working Papers 483, University of Oxford, Department of Economics.
  3. Luis Diaz-Serrano & Andrés Rodríguez-Pose, 2012. "Decentralization, Subjective Well-Being And The Perception Of Institutions," ERSA conference papers ersa12p586, European Regional Science Association.
  4. Wojtek Tomaszewski & Francisco Perales, 2014. "Who Settles for Less? Subjective Dispositions, Objective Circumstances, and Housing Satisfaction," Social Indicators Research, Springer, vol. 118(1), pages 181-203, August.
  5. Feng Hu, 2013. "Homeownership and Subjective Wellbeing in Urban China: Does Owning a House Make You Happier?," Social Indicators Research, Springer, vol. 110(3), pages 951-971, February.
  6. Bloze, Gintautas & Skak, Morten, 2011. "Homeownership and ill-being," Discussion Papers of Business and Economics 5/2011, Department of Business and Economics, University of Southern Denmark.

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