Identifying the Benefits from Homeownership: A Swedish Experiment

123 Pages Posted: 5 Dec 2016 Last revised: 19 Jul 2021

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: December 2016

Abstract

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.

Suggested Citation

Sodini, Paolo and Van Nieuwerburgh, Stijn and Vestman, Roine and Lilienfeld-Toal, Ulf von, Identifying the Benefits from Homeownership: A Swedish Experiment (December 2016). NBER Working Paper No. w22882, Available at SSRN: https://ssrn.com/abstract=2880321

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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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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