Home-ownership as a social norm and positional good: subjective well-being evidence from panel data

Much attention has been devoted to examining the absolute benefits of home-ownership (e.g. security and autonomy). This paper by contrast is concerned with conceptualising and testing the relative benefits of homeownership; those benefits that depend on an individual’s status in society. Home-ownership has previously been analysed as a social norm, implying that the relative benefits (costs) associated with being an owner (renter) are positively related to relevant others’ home-ownership values. The theoretical contribution of this paper is to additionally conceptualise home-ownership as a positional good, implying that the status of both home-owners and renters is negatively related to relevant others’ home-ownership consumption. The empirical contribution of this paper is to quantitatively test for these relative benefits in terms of subjective well-being. We run fixed effects regressions on three waves of the British Household Panel Study. We find that i) a strengthening of relevant others’ home-ownership values is associated with increases (decreases) in the subjective well-being of home-owners (renters), and ii) an increase in relevant others’ home-ownership consumption decreases the life satisfaction of owners but has no effect for renters. Overall our findings suggest that i) the relative benefit of home-ownership are both statistically significant and of a meaningful magnitude, and ii) homeownership is likely to be both a social norm and a positional good. Without explicitly recognising these relative benefits, policymakers risk overestimating the contribution of home-ownership to societal well-being

The effects of economic deprivation on psychological well-being among the working population of Switzerland

BACKGROUND: The association between poverty and mental health has been widely investigated. There is, however, limited evidence of mental health implications of working poverty, despite its representing a rapidly expanding segment of impoverished populations in many developed nations. In this study, we examined whether working poverty in Switzerland, a country with substantial recent growth among the working poor, was correlated with two dependent variables of interest: psychological health and unmet mental health need. METHODS: This cross-sectional study used data drawn from the first 3 waves (1999–2001) of the Swiss Household Panel, a nationally representative sample of the permanent resident population of Switzerland. The study sample comprised 5453 subjects aged 20–59 years. We used Generalized Estimating Equation models to investigate the association between working poverty and psychological well-being; we applied logistic regression models to analyze the link between working poverty and unmet mental health need. Working poverty was represented by dummy variables indicating financial deficiency, restricted standard of living, or both conditions. RESULTS: After controlling other factors, restricted standard of living was significantly (p < .001) negatively correlated with psychological well-being; it was also associated with approximately 50% increased risk of unmet mental health need (OR = 1.55; 95% CI 1.17 – 2.06). CONCLUSION: The findings of this study contribute to our understanding of the potential psychological impact of material deprivation on working Swiss citizens. Such knowledge may aid in the design of community intervention programs to help reduce the individual and societal burdens of poverty in Switzerland

Interdependent Utilities: How Social Ranking Affects Choice Behavior

Organization in hierarchical dominance structures is prevalent in animal societies, so a strong preference for higher positions in social ranking is likely to be an important motivation of human social and economic behavior. This preference is also likely to influence the way in which we evaluate our outcome and the outcome of others, and finally the way we choose. In our experiment participants choose among lotteries with different levels of risk, and can observe the choice that others have made. Results show that the relative weight of gains and losses is the opposite in the private and social domain. For private outcomes, experience and anticipation of losses loom larger than gains, whereas in the social domain, gains loom larger than losses, as indexed by subjective emotional evaluations and physiological responses. We propose a theoretical model (interdependent utilities), predicting the implication of this effect for choice behavior. The relatively larger weight assigned to social gains strongly affects choices, inducing complementary behavior: faced with a weaker competitor, participants adopt a more risky and dominant behavior

Happiness economics

There is enough evidence to be confident that individuals are able and willing to provide a meaningful answer when asked to value on a finite scale their satisfaction with their own lives, a question that psychologists have long and often posed to respondents of large questionnaires. Without taking its limitations and criticisms too lightly, some economists have been using thismeasure of self-reported satisfaction as a proxy for utility so as to contribute to a better understanding of individuals' tastes and hopefully behavior. By means of satisfaction questions we can elicit information on individual likes and dislikes over a large set of relevant issues, such as income, working status and job amenities, the risk of becoming unemployed, inflation, and health status. This information can be used to evaluate existing ideas from a new perspective, understand individual behavior, evaluate and design public policies, study poverty and inequality, and develop a preference based valuation method. In this article I first critically assess the pros and cons of using satisfaction variables, and then discuss its main applications

A confirmatory analysis of the unit root hypothesis for OECD consumption-income ratios

This article investigates the existence of a unit root in the consumption-income ratio for a sample of 23 OECD countries over the period 1960 to 2005. For that purpose, we first use recently developed unit root tests with good size and power. Second, we employ the more powerful panel unit root tests of Pesaran (2003) and Smith et al. (2004) that take the null of nonstationarity and a bootstrap version of the test of Hadri (2000) that takes stationarity as the null hypothesis. Overall, our confirmatory analysis renders clear-cut evidence that OECD consumption-income ratios contain a unit root.