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MPCs of ABCs: The housing wealth effect for affluent boomers with credit

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  • Niloy Bose
  • Antu Panini Murshid

Abstract

This paper combines exogenous variation in house prices with anonymized individual‐level expenditures data to identify a causal channel from housing wealth to consumption. We show that the Sandy Hook school shooting provided a large negative exogenous shock to local housing which lowered credit card spending by about 4.2 cents for each $1 fall in house prices: rescaled this translates to an annual marginal propensity to consume (MPC) of about 9 cents on the dollar. These consumption sensitivities are driven entirely by creditworthy middle‐aged consumers, with those closest to the retirement threshold reacting the strongest.

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  • Niloy Bose & Antu Panini Murshid, 2025. "MPCs of ABCs: The housing wealth effect for affluent boomers with credit," Economic Inquiry, Western Economic Association International, vol. 63(3), pages 945-960, July.
    • Handle: RePEc:bla:ecinqu:v:63:y:2025:i:3:p:945-960
    DOI: 10.1111/ecin.13282
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