Working Paper: NBER ID: w13496
Authors: James Banks; Richard Blundell; Zo Oldfield; James P. Smith
Abstract: In this paper, we modeled several types of housing transitions of the elderly in two countries -- Britain and the United States. One important form of these transitions involves downsizing of housing consumption, the importance of which among older households is still debated. This downsizing takes multiple forms, including reductions in the number of rooms per dwelling and the value of the home. There is also evidence that this downsizing is greater when house price volatility is greater and that American households try to escape housing price volatility by moving to places that are experience significantly less housing price volatility. Our comparative evidence in suggests that there is less evidence of downsizing in Britain. Our results indicate that housing consumption appears to decline with age in the US, even after controlling for the other demographic and work transitions associated with age that would normally produce such a decline. No such fall in housing consumption is found in Britain, largely because British households are much more likely to stay in their original residence.
Keywords: Housing; Elderly; Downsizing; Price Volatility
JEL Codes: D12; D91
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| housing price volatility (R31) | downsizing (L25) |
| aging (J14) | housing consumption (R21) |
| housing price volatility (R31) | housing consumption (R21) |
| demographic factors (J11) | downsizing (L25) |
| American households moving (R20) | housing price volatility (R31) |