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

Abundance and scarcity: classical theories of money, bank balance sheets and business models, and the British restriction of 1797‐1818.

The thesis looks through the lens of bank balance sheet accounting to investigate the structural change in the British banking system between 1780 and 1832, and how classical quantity theorists of money attempted to respond to the ensuing financialisation of the wartime economy with its growing reliance on credit funded with paper-based instruments (the ‘Vansittart system’ of war finance). The thesis combines contributions to three separate fields to construct a holistic historical example of the challenges faced by monetary economists when ‘modelling’ financial innovation, credit growth, ‘fringe’ banking, and agent incentives – at a time of radical experimentation: the suspension of the 80-year-old gold standard (“the Restriction”). First, critical text analysis of the history of economics argues that the 1809-10 debate between Ricardo and Bosanquet at the peak of the credit boom, bifurcated classical theory into two timeless competing policy paradigms advocating the ‘Scarcity’ or ‘Abundance’ of money relative to exchange transactions. The competing hypotheses regarding the role of money and credit are identified and the rest of the thesis examines the archival evidence for each. Second, the core of the thesis contributes to the historical literature on banking in relation to money by reconstructing a taxonomy of bank business models, their relationships with the London inter-bank settlement system, and their responses to the Restriction - drawing on some 17,000 mostly new data points collected from the financial records of London and Country banks. The final section contributes to the economic history of money by constructing aggregated views of total bank liabilities from the firm-level data, scaled to recently available British GDP estimates. These are examined to establish (with hindsight) the relative merits and lacuna of the competing theoretical hypotheses postulated by political economists. It was the period of deleveraging after 1810 that revealed the lacuna of both paradigms

Keep calm and consume? Subjective uncertainty and precautionary savings

This paper estimates the effect of income uncertainty on assets held in accounts and cash, and finds substantial empirical evidence for precautionary savings. Using household-level panel data, it explicitly distinguishes between ‘real’ income uncertainty the household is actually exposed to, and ‘perceived’ income uncertainty. It finds that the latter substantially increases precautionary savings above and beyond the effect of ‘real’ income uncertainty. The effect of subjective economic uncertainty on behaviour has only begun to show up after the Great Recession. The economic crisis appears to have shifted households’ willingness to forgo current consumption for insurance pruposes. Our results imply that households save above their optimal level especially after and during a crisis, potentially exacerbating the economic downturn

You're Fired! The Causal Negative Effect of Entry Unemployment on Life Satisfaction

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