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

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

Abstract

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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  • Engelhardt, Gary V. & Eriksen, Michael D. & Gale, William G. & Mills, Gregory B., 2010. "What are the social benefits of homeownership? Experimental evidence for low-income households," Journal of Urban Economics, Elsevier, vol. 67(3), pages 249-258, May.
  • Handle: RePEc:eee:juecon:v:67:y:2010:i:3:p:249-258
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    Cited by:

    1. Andrea Morescalchi, 2016. "The Puzzle Of Job Search And Housing Tenure: A Reconciliation Of Theory And Empirical Evidence," Journal of Regional Science, Wiley Blackwell, vol. 56(2), pages 288-312, March.
    2. Jonathan Gruber & Amalie Jensen & Henrik Kleven, 2017. "Do People Respond to the Mortage Interest Deduction? Quasi-Experimental Evidence from Denmark," NBER Working Papers 23600, National Bureau of Economic Research, Inc.
    3. Andrew F. Haughwout & Richard Peach & Joseph Tracy, 2010. "The homeownership gap," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 16(May).
    4. Michal Grinstein-Weiss & Michael Sherraden & William G. Gale & William M. Rohe & Mark Schreiner & Clinton Key, 2013. "Long-Term Impacts of Individual Development Accounts on Homeownership among Baseline Renters: Follow-Up Evidence from a Randomized Experiment," American Economic Journal: Economic Policy, American Economic Association, vol. 5(1), pages 122-145, February.
    5. Coulson, N. Edward & Li, Herman, 2013. "Measuring the external benefits of homeownership," Journal of Urban Economics, Elsevier, vol. 77(C), pages 57-67.
    6. Tuukka Saarimaa & Mika Kortelainen, 2012. "Do Homeowners Benefit the Neighborhood? Evidence from Semiparametric Hedonic Regressions," ERSA conference papers ersa12p472, European Regional Science Association.
    7. Zorlu, Aslan & Mulder, Clara H. & van Gaalen, Ruben, 2014. "Ethnic disparities in the transition to home ownership," Journal of Housing Economics, Elsevier, vol. 26(C), pages 151-163.
    8. W. Scott Frame & Larry D. Wall & Lawrence J. White, 2012. "The devil's in the tail: residential mortgage finance and the U.S. Treasury," FRB Atlanta Working Paper 2012-12, Federal Reserve Bank of Atlanta.
    9. Jean-Marie Dufour & Joachim Wilde, 2013. "Weak Identification in Probit Models with Endogenous Covariates," Working Papers 95, Institute of Empirical Economic Research, Osnabrueck University, revised 28 Feb 2013.
    10. Greenberg, David H., 2013. "A cost-benefit analysis of Tulsa’s IDA program," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 4(03), pages 263-300, December.
    11. Daan Isebaert & Freddy Heylen & Carine Smolders, 2015. "Houses and/or Jobs: Ownership and the Labour Market in Belgian Districts," Regional Studies, Taylor & Francis Journals, vol. 49(8), pages 1387-1406, August.
    12. Eriksen, Michael D., 2010. "Homeownership subsidies and the marriage decisions of low-income households," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 490-497, November.
    13. Stuart A. Gabriel & Stuart S. Rosenthal, 2015. "The Boom, the Bust and the Future of Homeownership," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(2), pages 334-374, June.
    14. Mika Kortelainen & Tuukka Saarimaa, 2012. "Do Homeowners Benefit Urban Neighborhoods? Evidence from Housing Prices," SERC Discussion Papers 0110, Spatial Economics Research Centre, LSE.
    15. repec:eee:jhouse:v:39:y:2018:i:c:p:17-24 is not listed on IDEAS
    16. Eric Fesselmeyer & Kiat Ying Seah, 2017. "Individual Payoffs and the Effect of Homeownership on Social Capital Investment," ERES eres2017_287, European Real Estate Society (ERES).
    17. John Gathergood & Joerg Weber, 2015. "Is Poor Financial Literacy a Barrier to Home Ownership?," Discussion Papers 2015/16, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    18. Arthur Grimes & Steven Stillman & Chris Young, 2011. "Homeownership, Social Capital and Parental Voice in Schooling," Working Papers 11_11, Motu Economic and Public Policy Research.
    19. repec:eee:juecon:v:99:y:2017:i:c:p:62-78 is not listed on IDEAS
    20. Petr Huber & Josef Montag, 2018. "Homeownership, Political Participation, and Social Capital in Post- Communist Countries and Western Europe," MENDELU Working Papers in Business and Economics 2018-74, Mendel University in Brno, Faculty of Business and Economics.
    21. Agustin Redonda, 2016. "Tax Expenditures and Sustainability. An Overview," Discussion Notes 1603, Council on Economic Policies.
    22. Ambrose, Brent W. & Diop, Moussa, 2014. "Spillover effects of subprime mortgage originations: The effects of single-family mortgage credit expansion on the multifamily rental market," Journal of Urban Economics, Elsevier, vol. 81(C), pages 114-135.
    23. John Gibson & Bonggeun Kim, 2018. "Home Ownership and Political Participation: Longitudinal Evidence Suggests There is No Causal Relationship," Working Papers in Economics 18/02, University of Waikato.

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    Homeownership Social benefits;

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