IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/11589.html
   My bibliography  Save this paper

Housing, Mortgages, and Self Control

Author

Listed:
  • Schlafmann, Kathrin

Abstract

Using a quantitative theoretical framework this paper analyzes how problems of self control influence housing and mortgage decisions. The results show that people with stronger problems of self control are less likely to become home owners, even though houses serve as commitment for saving. The paper then investigates the welfare effects of regulating mortgage products if people differ in their degree of self control. Higher down payment requirements and restrictions on prepayment turn out to be beneficial to people with sufficiently strong problems of self control, even though these policies further restrict access to the commitment device.

Suggested Citation

  • Schlafmann, Kathrin, 2016. "Housing, Mortgages, and Self Control," CEPR Discussion Papers 11589, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:11589
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP11589
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. David Laibson & Andrea Repetto & Jeremy Tobacman, 2005. "Estimating Discount Functions with Consumption Choices over the Lifecycle," Levine's Bibliography 784828000000000643, UCLA Department of Economics.
    2. Chang-Tai Hsieh & Enrico Moretti, 2003. "Can Free Entry Be Inefficient? Fixed Commissions and Social Waste in the Real Estate Industry," Journal of Political Economy, University of Chicago Press, vol. 111(5), pages 1076-1122, October.
    3. Nakajima, Makoto, 2017. "Assessing bankruptcy reform in a model with temptation and equilibrium default," Journal of Public Economics, Elsevier, vol. 145(C), pages 42-64.
    4. Andra Ghent, 2015. "Home Ownership, Household Leverage and Hyperbolic Discounting," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(3), pages 750-781, September.
    5. Iacoviello, Matteo & Pavan, Marina, 2013. "Housing and debt over the life cycle and over the business cycle," Journal of Monetary Economics, Elsevier, vol. 60(2), pages 221-238.
    6. Matt Chambers & Carlos Garriga & Don Schlagenhauf, 2009. "The Loan Structure and Housing Tenure Decisions in an Equilibrium Model of Mortgage Choice," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(3), pages 444-468, July.
    7. Jonathan Heathcote & Fabrizio Perri & Giovanni L. Violante, 2010. "Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States: 1967-2006," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 15-51, January.
    8. Per Krusell & Burhanettin Kuruşçu & Anthony A. Smith Jr., 2010. "Temptation and Taxation," Econometrica, Econometric Society, vol. 78(6), pages 2063-2084, November.
    9. Alessandro Bucciol, 2012. "Measuring Self-Control Problems: A Structural Estimation," Journal of the European Economic Association, European Economic Association, vol. 10(5), pages 1084-1115, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Molloy, Raven & Nathanson, Charles G. & Paciorek, Andrew, 2022. "Housing supply and affordability: Evidence from rents, housing consumption and household location," Journal of Urban Economics, Elsevier, vol. 129(C).
    2. Raven S. Molloy & Charles G. Nathanson & Andrew D. Paciorek, 2020. "Housing Supply and Affordability: Evidence from Rents, Housing Consumption and Household Location," Finance and Economics Discussion Series 2020-044, Board of Governors of the Federal Reserve System (U.S.).
    3. Daniel Gottlieb & Xingtan Zhang, 2021. "Long‐Term Contracting With Time‐Inconsistent Agents," Econometrica, Econometric Society, vol. 89(2), pages 793-824, March.
    4. Malmendier, Ulrike M. & Botsch, Matthew J., 2020. "The Long Shadows of the Great Inflation: Evidence from Residential Mortgages," CEPR Discussion Papers 14934, C.E.P.R. Discussion Papers.
    5. Agnes Kovacs & Patrick Moran, 2019. "Temptation and commitment: understanding the demand for illiquidity," IFS Working Papers W19/18, Institute for Fiscal Studies.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andra Ghent, 2015. "Home Ownership, Household Leverage and Hyperbolic Discounting," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(3), pages 750-781, September.
    2. Goodness C. Aye & Rangan Gupta, 2019. "Macroeconomic Uncertainty And The Comovement In Buying Versus Renting In The Usa," Advances in Decision Sciences, Asia University, Taiwan, vol. 23(3), pages 93-121, September.
    3. Charles Ka Yui Leung & Joe Cho Yiu Ng, 2018. "Macro Aspects of Housing," GRU Working Paper Series GRU_2018_016, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    4. Giovanni L. Violante & Greg Kaplan, 2022. "The Marginal Propensity to Consume in Heterogeneous Agent Models," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 747-775, August.
    5. Pier-André Bouchard St-Amant & Jean-Denis Garon, 2015. "Optimal redistributive pensions and the cost of self-control," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(5), pages 723-740, October.
    6. Mavropoulos, Antonios & Xiong, Qizhou, 2019. "Housing consumption and macroprudential policies in Europe: An ex ante evaluation," IWH Discussion Papers 17/2018, Halle Institute for Economic Research (IWH), revised 2019.
    7. Patrick Bajari & Phoebe Chan & Dirk Krueger & Daniel Miller, 2013. "A Dynamic Model Of Housing Demand: Estimation And Policy Implications," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(2), pages 409-442, May.
    8. Bossi, Luca & Calcott, Paul & Petkov, Vladimir, 2013. "Optimal tax rules and addictive consumption," Journal of Economic Dynamics and Control, Elsevier, vol. 37(5), pages 984-1000.
    9. Corina Boar & Denis Gorea & Virgiliu Midrigan, 2022. "Liquidity Constraints in the U.S. Housing Market," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(3), pages 1120-1154.
    10. repec:esx:essedp:717 is not listed on IDEAS
    11. Fernández-Villaverde, Jesús & Krueger, Dirk, 2011. "Consumption And Saving Over The Life Cycle: How Important Are Consumer Durables?," Macroeconomic Dynamics, Cambridge University Press, vol. 15(5), pages 725-770, November.
    12. Malmendier, Ulrike M. & Botsch, Matthew J., 2020. "The Long Shadows of the Great Inflation: Evidence from Residential Mortgages," CEPR Discussion Papers 14934, C.E.P.R. Discussion Papers.
    13. Nakajima, Makoto, 2017. "Assessing bankruptcy reform in a model with temptation and equilibrium default," Journal of Public Economics, Elsevier, vol. 145(C), pages 42-64.
    14. Orazio P. Attanasio & Guglielmo Weber, 2010. "Consumption and Saving: Models of Intertemporal Allocation and Their Implications for Public Policy," Journal of Economic Literature, American Economic Association, vol. 48(3), pages 693-751, September.
    15. Maria Ferrara & Patrizio Tirelli, 2014. "Fiscal Consolidations: Can We Reap the Gain and Escape the Pain?," Working Papers 283, University of Milano-Bicocca, Department of Economics, revised Oct 2014.
    16. Halket, Jonathan R & Pignatti, Matteo, 2012. "Housing tenure choices with private information," Economics Discussion Papers 8961, University of Essex, Department of Economics.
    17. Scott L. Fulford & Scott Schuh, 2017. "Credit card utilization and consumption over the life cycle and business cycle," Working Papers 17-14, Federal Reserve Bank of Boston.
    18. Strulik, Holger, 2016. "Limited self-control and long-run growth," Mathematical Social Sciences, Elsevier, vol. 83(C), pages 1-8.
    19. Makoto Nakajima, 2012. "Rising indebtedness and temptation: A welfare analysis," Quantitative Economics, Econometric Society, vol. 3(2), pages 257-288, July.
    20. Cagri S. Kumru & Athanasios C. Thanopoulos, 2011. "Self-control Preferences and Taxation: A Quantitative Analysis in a Life Cycle Model," ANU Working Papers in Economics and Econometrics 2011-546, Australian National University, College of Business and Economics, School of Economics.
    21. Mathias Klein & Christopher Krause, 2020. "Income Redistribution, Consumer Credit, and Keeping Up with the Riches," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(8), pages 1937-1971, December.

    More about this item

    Keywords

    Housing; Mortgages; Self control; Temptation; Commitment device;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:11589. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.