Identifying the Benefits from Home Ownership: A Swedish Experiment

85 Pages Posted: 29 Nov 2016

See all articles by Paolo Sodini

Paolo Sodini

Stockholm School of Economics - Department of Finance; Swedish House of Finance

Stijn Van Nieuwerburgh

Columbia University Graduate School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); ABFER

Roine Vestman

Stockholm University - Department of Economics; Swedish House of Finance

Ulf von Lilienfeld-Toal

Luxembourg School of Finance

Multiple version iconThere are 3 versions of this paper

Date Written: November 2016

Abstract

This paper studies the economic benefits of home ownership. Exploiting a quasi-experiment surrounding privatization decisions of municipally-owned apartment buildings, we obtain random variation in home ownership for otherwise similar buildings with similar tenants. We link the tenants to their tax records to obtain information on demographics, income, mobility patterns, housing wealth, financial wealth, and debt. These data allow us to construct high-quality measures of consumption expenditures. Home ownership causes households to move up the housing ladder, work harder, and save more. Consumption increases out of housing wealth are concentrated among the home owners who sell subsequent to privatization and among those who receive negative income shocks, evidencing a collateral effect.

Keywords: collateral effect, home ownership, housing wealth, mobility, MPC

JEL Classification: D12, D31, E21, G11, H31, J22, R21, R23, R51

Suggested Citation

Sodini, Paolo and Van Nieuwerburgh, Stijn and Vestman, Roine and Lilienfeld-Toal, Ulf von, Identifying the Benefits from Home Ownership: A Swedish Experiment (November 2016). CEPR Discussion Paper No. DP11656, Available at SSRN: https://ssrn.com/abstract=2877261

Paolo Sodini (Contact Author)

Stockholm School of Economics - Department of Finance ( email )

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Stijn Van Nieuwerburgh

Columbia University Graduate School of Business ( email )

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Roine Vestman

Stockholm University - Department of Economics ( email )

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Sweden

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Swedish House of Finance ( email )

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Ulf von Lilienfeld-Toal

Luxembourg School of Finance ( email )

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Luxembourg

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