Master's thesis in economics by Thomas Mejlhede Jensen
Copenhagen University
Supervisor: Johannes Wohlfart
Submitted on 31/05/2023
Script Data & Figures.R
This (R script) uses the raw data from the DHS and the SCE to create the panel datafiles that are used for regressions. Furthermore, it creates all figures presented in the thesis.
Script Tables.do
This (STATA dofile) uses the panels datafiles created with the R script to perform all regressions and create all tables presented in the thesis.
Not available for public download. Can be requested for reserach purposes from https://www.centerdata.nl/
FRBNY-SCE-Housing-Survey-Public-Microdata-Complete.xlsx
frbny-sce-public-microdata-latest.rar (.xlsx file)
FRBNY-SCE-Public-Microdata-Complete-17-19.rar (saved as .xlb due to large size, convert to .xlsx to replicate analysis)
FRBNY-SCE-Public-Microdata-Complete-13-16.rar (saved as .xlb due to large size, convert to .xlsx to replicate analysis)
Source: https://www.newyorkfed.org/microeconomics/sce#/
Data Figures.rar
Sources:
CBS https://opendata.cbs.nl/#/CBS/en/dataset/83906ENG/table
Zillow https://www.zillow.com/research/data/
FED https://fred.stlouisfed.org/series/MORTGAGE30US
Contains:
Existing_own_homes__purchase_prices__price_indices_2015_100__12032023_204925.xlsx
Metro_zhvi_uc_sfrcondo_tier_0.33_0.67_sm_sa_month.xlsx
MORTGAGE30US.xlsx
This thesis investigates the relationship between homeowners' expectations regarding future home prices and their decision to transition from owning to renting. Using data from the DNB Household Survey, I do not find a significant relationship between these variables. This result is surprising, as it contradicts standard economic theory. Therefore, I investigate if the insignificant relationship can be explained by households' family composition, financial confidence, or their level of education, but find no such evidence. Next, I reduce the impact of measurement error by conducting instrumental variable regressions using data from the New York Fed Survey of Consumer Expectations, but this also cannot explain the insignificance. Finally, I explore whether rational inattention can account for the insignificant relationship and find some evidence supporting this hypothesis. These findings leave room for future research studying rational inattention on the housing market and for using large-scale surveys combined with administrative data.
JEL Classification: A22, C36, C83, D14, D84.
Keywords: Homeownership Choice, Expectations, Household Survey.