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Homeowners vs renters: Who's the happiest?
June 29, 2009, Monday
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FOR generations, owning a home has been viewed as the cornerstone of the American Dream, the foundation for a happy family life and long-term financial security.
Now, a new research paper challenges that conventional wisdom. Wharton's Grace Wong Bucchianeri, a professor of real estate, says her research shows that while homeowners do experience significant joy, they face more aggravation, spend less time with friends and are even weigh more than renters living in comparable homes.
Past research into the mood of homeowners showed that people felt a sense of pride and comfort in having their name on a deed.
Bucchianeri argues that once the data are controlled for a range of variables, owning a home appears to deliver no more happiness than signing a monthly rent check.
In a working paper titled, "The American Dream or The American Delusion? The Private and External Benefits of Homeownership," Bucchianeri examines survey data from some 600 women in Ohio and weighs it across tax records and census data to study how home ownership affects the moods and feelings of individuals as well as their social interactions.
"Homeowners report more positive results, but if you control for basic characteristics such as income, how nice the home is and health status, those results go away," explains Bucchianeri.
"This suggests that our perception that homeowners are better off than renters might be fueled only by casual observations."
Bucchianeri's research seems particularly relevant today because the bursting of the housing bubble has led to a good deal of stress - both financial and psychological.
Renters may lack some freedom and flexibility in their lives and there are some financial risks to long-term renting. "Still, there are financial risks we are now seeing connected with homeownership," she adds.
Interestingly, Bucchianeri's research is based on 2005 data collected before the housing crash.
Even in a period of optimism about housing as a financial investment, she found that homeownership does not necessarily represent the fulfillment of a dream.
The basis of much of her research is a survey of well-being, demographics and time use reported by women in Franklin County, Ohio, which includes Columbus, the state's largest city.
The survey respondents logged their activities in various time periods, or episodes, each day.
They then reported the intensity of feelings during each time segment:
Impatient, competent/confident, tense/stressed, happy, depressed/blue, interested/focused, affectionate/friendly, calm/relaxed, irritated/angry.
Bucchianeri ran that data against other survey data and objective measures such as property tax records to gauge the quality of the home to control for differences in the quality of the housing.
In her analysis Bucchianeri focused on the individual responses and general satisfaction questions, particularly those most relative to her inquiry into homeownership, such as the amount of joy or pain derived from house and home.
Bucchianeri's research indicates that even after controls are applied for financial insecurity - which is often cited in prior research as the main negative of home ownership - homeowners report more pain associated with their home.
The average homeowner tends to spend less time on active leisure or with friends, experiences more negative feelings during time spent with friends, derives less joy from love and relationships and is also less likely to enjoy being with people, according to the research paper.
Bucchianeri notes that these results do not support the perception that home owners are "gregarious" but they also do not paint homeowners as being overly burdened with housework.
The average homeowner spends less time on leisure - around three percentage points - compared to the average respondent in the sample who spends 13.4 percent of her time awake on active leisure.
On top of all else, the average homeowner tended to be 12 pounds heavier, according to the research.
In addition to investigating these private, or individual, benefits, Bucchianeri also examined civic aspects of homeownership.
The paper states that the most striking finding in regard to social interaction is that average homeowners spend 4 percent to 6 percent less time interacting with friends and neighbors and experience more negative feelings when they are with other people.
Bucchianeri cautions that her research should not be used as an argument against homeownership, just as the abstract notion of the American Dream should not be used as an across-the-board endorsement for buying a home.
(Reproduced with permission from Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. Trustees of the University of Pennsylvania. All rights reserved. Shanghai Daily condensed the article.)
Now, a new research paper challenges that conventional wisdom. Wharton's Grace Wong Bucchianeri, a professor of real estate, says her research shows that while homeowners do experience significant joy, they face more aggravation, spend less time with friends and are even weigh more than renters living in comparable homes.
Past research into the mood of homeowners showed that people felt a sense of pride and comfort in having their name on a deed.
Bucchianeri argues that once the data are controlled for a range of variables, owning a home appears to deliver no more happiness than signing a monthly rent check.
In a working paper titled, "The American Dream or The American Delusion? The Private and External Benefits of Homeownership," Bucchianeri examines survey data from some 600 women in Ohio and weighs it across tax records and census data to study how home ownership affects the moods and feelings of individuals as well as their social interactions.
"Homeowners report more positive results, but if you control for basic characteristics such as income, how nice the home is and health status, those results go away," explains Bucchianeri.
"This suggests that our perception that homeowners are better off than renters might be fueled only by casual observations."
Bucchianeri's research seems particularly relevant today because the bursting of the housing bubble has led to a good deal of stress - both financial and psychological.
Renters may lack some freedom and flexibility in their lives and there are some financial risks to long-term renting. "Still, there are financial risks we are now seeing connected with homeownership," she adds.
Interestingly, Bucchianeri's research is based on 2005 data collected before the housing crash.
Even in a period of optimism about housing as a financial investment, she found that homeownership does not necessarily represent the fulfillment of a dream.
The basis of much of her research is a survey of well-being, demographics and time use reported by women in Franklin County, Ohio, which includes Columbus, the state's largest city.
The survey respondents logged their activities in various time periods, or episodes, each day.
They then reported the intensity of feelings during each time segment:
Impatient, competent/confident, tense/stressed, happy, depressed/blue, interested/focused, affectionate/friendly, calm/relaxed, irritated/angry.
Bucchianeri ran that data against other survey data and objective measures such as property tax records to gauge the quality of the home to control for differences in the quality of the housing.
In her analysis Bucchianeri focused on the individual responses and general satisfaction questions, particularly those most relative to her inquiry into homeownership, such as the amount of joy or pain derived from house and home.
Bucchianeri's research indicates that even after controls are applied for financial insecurity - which is often cited in prior research as the main negative of home ownership - homeowners report more pain associated with their home.
The average homeowner tends to spend less time on active leisure or with friends, experiences more negative feelings during time spent with friends, derives less joy from love and relationships and is also less likely to enjoy being with people, according to the research paper.
Bucchianeri notes that these results do not support the perception that home owners are "gregarious" but they also do not paint homeowners as being overly burdened with housework.
The average homeowner spends less time on leisure - around three percentage points - compared to the average respondent in the sample who spends 13.4 percent of her time awake on active leisure.
On top of all else, the average homeowner tended to be 12 pounds heavier, according to the research.
In addition to investigating these private, or individual, benefits, Bucchianeri also examined civic aspects of homeownership.
The paper states that the most striking finding in regard to social interaction is that average homeowners spend 4 percent to 6 percent less time interacting with friends and neighbors and experience more negative feelings when they are with other people.
Bucchianeri cautions that her research should not be used as an argument against homeownership, just as the abstract notion of the American Dream should not be used as an across-the-board endorsement for buying a home.
(Reproduced with permission from Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. Trustees of the University of Pennsylvania. All rights reserved. Shanghai Daily condensed the article.)
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