Identifying the Benefits from Homeownership: A Swedish Experiment
123 Pages Posted: 5 Dec 2016 Last revised: 19 Jul 2021
Date Written: December 2016
Homeownership is widely stimulated by policy yet its economic effects are poorly understood. We exploit quasi-random variation in homeownership generated by privatization decisions of municipally-owned buildings, and use granular data on demographics, income, housing, financial wealth, and debt that allow us to construct high-quality measures of spending. Homeownership causes wealth building via house price appreciation, increases consumption, and improves consumption smoothing across time and states of the world through a collateral effect. It increases mobility for young households, who move up the property ladder, and amplifies wealth accumulation for older households, who take more risk in their financial portfolio.
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