Housing Tenure, Uncertainty, and Taxation
Modern empirical work on the choice between renting and owning focuses on the concept of the "user cost" of housing, which integrates into a single measure the various components of housing costs. The standard approach implicitly assumes that households know the user cost of housing with certainty. However, the ex post user cost measure exhibits substantial variability over time, and it is highly unlikely that individuals believe themselves able to forecast these fluctuations with certainty. In this paper, we construct and estimate a model of the tenure choice that explicitly allows for the effects of uncertainty. The results suggest that previous work which ignored uncertainty may have overstated the effects of the income tax system upon the tenure choice.
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Volume (Year): 66 (1984)
Issue (Month): 3 (August)
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References listed on IDEAS
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- Patric H. Hendershott & Joel Slemrod, 1982.
"Taxes and the User Cost of Capital for Owner-Occupied Housing,"
NBER Working Papers
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- Martin Feldstein & Lawrence Summers, 1983.
"Inflation, Tax Rules, and the Long-term Interest Rate,"
in: Inflation, Tax Rules, and Capital Formation, pages 153-185
National Bureau of Economic Research, Inc.
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