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How do housing wealth effects vary with age?

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  • Elwin Tobing

Abstract

This article investigates whether the housing wealth effect is constant across age. The data are drawn from the Panel Study of Income Dynamics (PSID) for the waves of 2001, 2003 and 2005. Using threshold estimation to endogenously split the sample by age group, we find three threshold age groups of 49, 55 and 65. Housing wealth has a significant and positive effect on the consumption for individuals aged 49 and 55 years, but a negative effect for individuals aged 65 years and older. If age is below 49 or between 55 and 65 years, the housing wealth effect is insignificant.

Suggested Citation

  • Elwin Tobing, 2012. "How do housing wealth effects vary with age?," Applied Economics Letters, Taylor & Francis Journals, vol. 19(7), pages 649-652, May.
  • Handle: RePEc:taf:apeclt:v:19:y:2012:i:7:p:649-652
    DOI: 10.1080/13504851.2011.593491
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    File URL: http://hdl.handle.net/10.1080/13504851.2011.593491
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    References listed on IDEAS

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    1. Hansen, Bruce E., 1999. "Threshold effects in non-dynamic panels: Estimation, testing, and inference," Journal of Econometrics, Elsevier, vol. 93(2), pages 345-368, December.
    2. Engelhardt, Gary V. & Mayer, Christopher J., 1998. "Intergenerational Transfers, Borrowing Constraints, and Saving Behavior: Evidence from the Housing Market," Journal of Urban Economics, Elsevier, vol. 44(1), pages 135-157, July.
    3. Campbell, John Y. & Cocco, Joao F., 2007. "How do house prices affect consumption? Evidence from micro data," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 591-621, April.
    4. Pierre-Olivier Gourinchas & Jonathan A. Parker, 2002. "Consumption Over the Life Cycle," Econometrica, Econometric Society, vol. 70(1), pages 47-89, January.
    5. Bullard, James & Feigenbaum, James, 2007. "A leisurely reading of the life-cycle consumption data," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2305-2320, November.
    6. Ioannides, Yannis M & Rosenthal, Stuart S, 1994. "Estimating the Consumption and Investment Demands for Housing and Their Effect on Housing Tenure Status," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 127-141, February.
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    Cited by:

    1. Andrew Hodge & Sriram Shankar, 2016. "Single-Variable Threshold Effects in Ordered Response Models With an Application to Estimating the Income-Happiness Gradient," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 34(1), pages 42-52, January.

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