Working Paper: CEPR ID: DP17420
Authors: Jonas Happel; Yigitcan Karabulut; Larissa Schfer; Selale Tzel
Abstract: Do negative housing shocks lead to persistent changes in household attitudes toward housing and homeownership? We use the residential destruction of Germany during World War II (WWII) as a quasi-experiment and exploit the reasonably exogenous region-by-cohort variation in destruction exposure. We find that WWII-experiencing cohorts from high destruction regions are significantly less likely to be homeowners decades later, controlling for regional differences and household characteristics. Underlying this effect are changes in household attitudes toward homeownership that also extend to preferences for housing consumption, with little or no support for risk preferences, income and wealth effects, or supply-side factors.
Keywords: housing; homeownership; household finance; experience effects; war destruction
JEL Codes: G11; G41; G51; R21; R31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| WWII destruction (N44) | risk preferences (D81) |
| WWII destruction (N44) | wealth effects (E21) |
| WWII destruction (N44) | homeownership (R21) |
| WWII destruction (N44) | household attitudes (D10) |
| household attitudes (D10) | homeownership (R21) |