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What are the social benefits of homeownership? Experimental evidence for low-income households

  • Engelhardt, Gary V.
  • Eriksen, Michael D.
  • Gale, William G.
  • Mills, Gregory B.

We estimate the social benefits of homeownership using an exogenous instrument based on randomly assigned treatment status from a field experiment that subsidized saving for home purchase for low-income renters through Individual Development Accounts (IDAs). This approach attempts to eliminate the potential correlation present in previous analyses between unobserved individual characteristics leading to homeownership and traits leading to provision of social capital or local amenities. Consistent with previous work, we show that homeownership positively affects political engagement in simple probits. Instrumental variable probits, however, show no impact of homeownership on political involvement. IV results for other social outcomes are less conclusive. The analysis suggests that with the use of an exogenous instrument, it is possible to generate results that are different from the previous literature. Our results also suggest that being eligible to open an IDA did not spur households to provide more social capital or local amenities.

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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 67 (2010)
Issue (Month): 3 (May)
Pages: 249-258

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Handle: RePEc:eee:juecon:v:67:y:2010:i:3:p:249-258
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622905

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  9. Justine S. Hastings & Thomas J. Kane & Douglas O. Staiger & Jeffrey M. Weinstein, 2005. "The Effect of Randomized School Admissions on Voter Participation," NBER Working Papers 11794, National Bureau of Economic Research, Inc.
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  13. Rosen, Harvey S., 1985. "Housing subsidies: Effects on housing decisions, efficiency, and equity," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 1, chapter 7, pages 375-420 Elsevier.
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  17. Joshua Angrist & Alan Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," Working Papers 834, Princeton University, Department of Economics, Industrial Relations Section..
  18. Engelhardt, Gary V, 1996. "Tax Subsidies and Household Saving: Evidence from Canada," The Quarterly Journal of Economics, MIT Press, vol. 111(4), pages 1237-68, November.
  19. Mills, Gregory & Gale, William G. & Patterson, Rhiannon & Engelhardt, Gary V. & Eriksen, Michael D. & Apostolov, Emil, 2008. "Effects of individual development accounts on asset purchases and saving behavior: Evidence from a controlled experiment," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1509-1530, June.
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