We use individual life history data from 12 European countries, and duration analysis that controls for unobserved heterogeneity, to investigate whether observed patterns of investment in illiquid assets and housing are consistent with predictions based on “temptation preferences”. A motivating model takes into account the standard motives for saving, but also recognises that illiquid financial assets and housing may be used by individuals who find it hard to control the temptation linked to abundant cash on hand. Even controlling for many possible motives for purchasing housing, and for unobserved heterogeneity, a large fraction of individuals become significantly more likely to buy housing after investing in illiquid assets; this finding is consistent with the predictions of the model.

Can temptation explain housing choices over the life cycle?

Angelini V.;Bucciol A.;Weber G.
2020

Abstract

We use individual life history data from 12 European countries, and duration analysis that controls for unobserved heterogeneity, to investigate whether observed patterns of investment in illiquid assets and housing are consistent with predictions based on “temptation preferences”. A motivating model takes into account the standard motives for saving, but also recognises that illiquid financial assets and housing may be used by individuals who find it hard to control the temptation linked to abundant cash on hand. Even controlling for many possible motives for purchasing housing, and for unobserved heterogeneity, a large fraction of individuals become significantly more likely to buy housing after investing in illiquid assets; this finding is consistent with the predictions of the model.
2020
File in questo prodotto:
Non ci sono file associati a questo prodotto.
Pubblicazioni consigliate

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11577/3351678
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 2
  • ???jsp.display-item.citation.isi??? 2
  • OpenAlex ND
social impact