House Price Shocks, Negative Equity, and Household Consumption in the United Kingdom

Disney, Richard; Gathergood, John; Henley, Andrew

doi:10.1162/jeea_a_00022

“…Indeed, estimating equation (5) While the BHPS has become the main survey used in studies on labour supply in the UK, it has been shown to be also a potentially valuable resource for analyses of consumption and savings (Guariglia and Rossi, 2002;Disney et al, 2010;Etheridge, 2012). The consumption items available in the BHPS are similar to the ones available in the US Panel Study of Income Dynamics (PSID), which has been widely used for studying consumption behaviour (Mankiw and Zeldes, 1991;Dynan, 2000;Alan et al, 2009).…”

Section: A Model Of "Keeping Up With the 'Rich' Joneses"mentioning

confidence: 99%

“Relative concerns for consumption at the top”: An intertemporal analysis for the UK

Quintana‐Domeque

¹

,

Wohlfart

²

2016

Journal of Economic Behavior & Organization

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu According to both our OLS and GMM estimates, for the population of non-rich individuals as a whole, there is no evidence of such relative concerns. These results are robust to alternative definitions of the reference group, the presence of exogenous effects and liquidity constraints, and the interval censoring nature of our food consumption data. However, we find some (correlational) evidence of heterogeneous effects across county and household characteristics, which is robust to simultaneous estimation. In particular, there are relative concerns (for consumption at the top) in counties with relatively low income inequality or relatively high population density. Households whose head has relatively low educational attainment are also subject to relative concerns for consumption at the top. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SJEL Classification: D12, D91

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“…Bhatia, 1987;Engelhardt, 1996;Skinner, 1996;Disney, et al, 2003;Belsky and Prakken, 2004;Lehnart, 2004;Case, et al, 2005;Juster, et al, 2006;Morris, 2006;Campbell and Cocco, 2007;andBostic, et al, 2009, Mian andSufi, 2010). While findings vary, these papers tend to find a marginal propensity to consume out of housing wealth in the neighborhood of 0.06.…”

Section: A Housing Wealth Effectsmentioning

confidence: 99%

House Prices and Marital Stability

Farnham

¹

,

Schmidt

²

,

Sevak

³

2011

American Economic Review

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We investigate the effect of house price changes on MSA-level divorce rates using data for 1991-2010 from the Current Population Survey and the Federal Housing Finance Agency. Our findings suggest that changing house prices significantly affect divorce rates, and that these effects are asymmetric with respect to housing gains versus losses. In addition, we find differential effects for groups that are more likely to be homeowners versus renters. Some of this evidence is consistent with homeowners being locked into their homes by increased transactions costs in down markets.3

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“…For example, it is a key variable in decisions such as retirement (Moore and Mitchell 2000;Engen, Gale, andUccelo 1999 and2005;Gustman and Steinmeier 1999;and Lusardi and Mitchell 2007), consumption (Skinner 1989;Case, Quigley, and Shiller 2005;Tang 2006;Agarwal 2007;Campbell and Cocco 2007;and Disney, Gathergood, and Henley 2007), savings (Hoynes and McFadden 1997;Disney, Henley, and Stears 2002;Klyev and Mills 2006;and Juster et al 2005), and the debt composition of the household (Disney, Bridges, and Gathergood 2006). However, since in household surveys 1 See Bucks, Kennickell, and Moore (2006).…”

mentioning

confidence: 99%

How well do individuals predict the selling prices of their homes?

Benı́tez-Silva

¹

,

Eren

²

,

Heiland

³

et al. 2015

Journal of Housing Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in August 2009Hugo Benítez-Silva acknowledges the financial support of the National Institute on Aging through grant number 5 P01 AG022481-04 for a related project; and, along with Frank Heiland, thanks the Michigan Retirement Research Center for its support on a related project. Sergi Jiménez-Martín acknowledges the financial support of the Spanish Ministry of Education through project number SEJ2005-08783-C04-01. Any remaining errors are the authors'.The Levy Economics Institute Working Paper Collection presents research in progress by Levy Institute scholars and conference participants. The purpose of the series is to disseminate ideas to and elicit comments from academics and professionals.The Levy Economics Institute of Bard College, founded in 1986, is a nonprofit, nonpartisan, independently funded research organization devoted to public service. Through scholarship and economic research it generates viable, effective public policy responses to important economic problems that profoundly affect the quality of life in the United States and abroad. More importantly, we are the first to establish a strong correlation between accuracy and the economic conditions at the time of the property's purchase. While most individuals overestimate the value of their property, those who buy during more difficult economic times tend to be more accurate, in some cases even underestimating the value of their house. We find a surprisingly strong, likely permanent, and in many cases long-lived effect of the initial conditions surrounding the purchase of properties, and on how individuals value them. This cyclicality of the overestimation of house prices provides some explanation for the difficulties currently faced by many homeowners, who were expecting large appreciations in home value to rescue them in case of increases in interest rates, which could jeopardize their ability to live up to their financial commitments.

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House Price Shocks, Negative Equity, and Household Consumption in the United Kingdom

Cited by 116 publications

References 37 publications

“Relative concerns for consumption at the top”: An intertemporal analysis for the UK

“Relative concerns for consumption at the top”: An intertemporal analysis for the UK

House Prices and Marital Stability

How well do individuals predict the selling prices of their homes?

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