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The Journal of Real Estate Finance and Economics

, Volume 48, Issue 2, pp 221–243 | Cite as

Wealth, Composition, Housing, Income and Consumption

  • Sheng Guo
  • William G. HardinIII
Article

Abstract

The present research covering the latest residential boom and bust cycle highlights the lack of uniform or constant time invariant wealth, housing and income relations. More important, wealth composition is shown to be a significant determinant of consumption. The marginal effects of housing equity, financial wealth and income differ substantially based on the composition of household wealth. Households with the highest percentage of net worth in financial assets have much lower income effects, have substantially higher marginal effects associated with stock holdings and have housing equity effects that differ noticeably from other households. Income effects for groups with the smallest amounts of relative financial wealth are dramatically higher than for households with greater financial wealth. Wealth and its composition affect consumption.

Keywords

Consumption Income Wealth composition Wealth effect Housing effect 

JEL Classifications

G10 G11 G12 G14 E31 

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Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  1. 1.Department of Economics, College of Arts and SciencesFlorida International UniversityMiamiUSA
  2. 2.Jerome Bain Real Estate InstituteHollo School of Real Estate, College of Business Administration, Florida International UniversityMiamiUSA

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