Thursday, March 5, 2009

The American Dream is a nightmare

A major part of the American Dream is home ownership and this dream is heavily supported by public policy through mortgage rate tax deductability, support for first time buyers, other tax advantages, and recent bailouts. So why do we have all this support for home owners? Does ownership make people happier? Does it make a better society? Yes in both cases according to popular belief, but is this actually true?

Grace Wong Bucchianeri addresses these questions using a survey conducted in Franklin County, Ohio. This survey has time use data, include various measures of happiness throughout a sample day for women in rented or owned single houses. Along with all sorts of other controls, the focus here is to determine whether home owners are different from renters. And the results are:

  • Happiness: home owners are not happier in any dimension. In fact, they appear to suffer more pain from house and home than renters.
  • Self-esteem: no difference between ownership categories.
  • Health: home owners are less satisfied about their health, and for a good reason: they a fatter, for an average of twelve pounds.
  • Time use: home owners have less leisure, spend less time friends, and like it less when they do.
  • Relationship: home owners are less happy with their partner, and with other people in general.
  • Participation in civic activities: no differences.
  • Neighborhood: home owners suffer less pain from their neighborhood. Finally a positive...

So why is the American Dream so heavily subsidized again?


Anonymous said...

One should add that home ownership is very poor diversification of risk. But everybody knew that already.

Anonymous said...

The number one problem of home ownership made obvious is underwater loans, so you throw money away anyways. Also, while buying a car gives mobility in case you have to chase a job half way across the country, a home is a ball and chain. You end up losing the house whether you stay or mail in the keys and blast off on the job chasing mission.

In fact, if you rent and have to blast off, you "merely" lose the security deposit but with the house you can owe thousands!