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Are Homeowners Happier than Tenants? Empirical Evidence for Switzerland

Part of the Social Indicators Research Series book series (SINS,volume 76)

Abstract

Many people have a strong preference to own the house or apartment they are living in. Among other factors, homeownership is expected to affect the subjective well-being of individuals. Our paper analyzes the impact of homeownership on subjective well-being in Switzerland. Based on the data from the Swiss Houshehold Panel (SHP) over the time period from 2000 to 2016, we use a generalized ordered logit model to explain life satisfaction by a set of relevant factors including homeownership. Our results, which have been tested for robustness within several specifications, provide strong empirical evidence for the fact that homeowners are happier than tenants. This effect seems to be robust over the years considered as well as for different specifications of our model. In order to control for a potential reverse causality effect, we separately analyze the subsample of households that had a change in the homeownership but no changes with respect to other characteristics. The generated odds ratios confirm the positive impact of homeownership on people’s happiness and the absence of a reverse causality effect.

Keywords

  • Homeownership
  • Subjective Well-being
  • Generalized ordered logit models
  • Reverse causality

JEL Classification

  • R21
  • I31
  • C25

We would like to thank participants at SHP Conference 2013 in Lausanne for valuable comments. In addition, we are grateful for financial support from the Lucerne University of Applied Sciences. All errors are our sole responsibility.

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Fig. 14.1

Notes

  1. 1.

    http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=hlth_dhc010&lang=en

  2. 2.

    According to a representative survey in 2016, two thirds of the tenants in Switzerland would like to become homeowners. https://umzugstipps.com/schweizer-mieter-und-der-wunsch-nach-wohneigentum/

  3. 3.

    There is no limit imposed on the age of children, who may be older than 16 years.

  4. 4.

    Housing costs include for tenants the rent plus additional charges for water, electricity, heating, etc. paid to the landlord, and for owners mortgage interest rates, amortizations, charges for water, electricity, heating, etc., house-related insurance premia, regular housing related repair- and maintenance costs.

  5. 5.

    According to common practice, total housing costs should not exceed one third of the household income. https://www.ktipp.ch/artikel/d/umzugsplaene-wie-hoch-darf-die-miete-sein/

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Correspondence to Gabrielle Wanzenried .

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Seiler Zimmermann, Y., Wanzenried, G. (2019). Are Homeowners Happier than Tenants? Empirical Evidence for Switzerland. In: Brulé, G., Suter, C. (eds) Wealth(s) and Subjective Well-Being. Social Indicators Research Series, vol 76. Springer, Cham. https://doi.org/10.1007/978-3-030-05535-6_14

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  • DOI: https://doi.org/10.1007/978-3-030-05535-6_14

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