Thursday, 30 March 2017

Home-ownership as a social norm and positional good: subjective well-being evidence from panel data

Watching TV the other night, the advert below came on. It reminded me of Craig Gurney’s (1999) paper on how the UK state (and society) has acted to normalise home-ownership in the UK through imbuing home-owners’ dwellings with warmth and security, associating home-ownership with a set of values that constitute a ‘good citizen’, and portraying home ownership as meeting a deep and natural desire for independent control. Almost two decades later, and despite declining rates of home-ownership, these discourses are still evident in the advert below: in the mother, happy at ‘being able to say “this is mine” as she paints her front door; and in the father, nodding proudly to his children, and to “their future”. One of the main purposes of our study was to quantitatively examine what this normalisation of home-ownership means for the subjective well-being of home-owners, and renters.

If home-ownership is a social norm, then being a home-owner will carry social status. Furthermore, the extent of this social status will depend on the strength of the home-ownership norm among one’s relevant others (which we defined as people of a similar age, education, and geographic region): if one’s friends/family attach a high value to home-ownership, then being a home-owner will bring more pride, self-esteem, praise or respect than if one’s relevant others were bohemian aesthetes who attach a low value to home-ownership. Using the British Household Panel Study (BHPS), we found that as relevant others’ home-ownership values strengthen over time, the subjective well-being (in terms of mental health and life satisfaction) of owners increases, while the subjective well-being of renters decreases. Similarly, the graph below shows that as the social norm of home-ownership strengthens among one’s relevant others, so the uplift in subjective well-being associated with becoming a home-owner – i.e. moving from renting (dark line) to owning (grey line) -  increases. All of the above suggests that home-ownership is a social norm, and that the normalisation process benefits owners at the expense of renters.

As well as ‘being/acting normal’, an individual’s social status is also likely to be affected by their relative wealth. Being able to purchase one’s own home requires a greater level of wealth than renting. Thus, becoming a home-owner signals an increase in relative wealth. However, as the proportion of the population who can access home-ownership increases, the relative wealth that home-ownership signals will decrease, and so will the social status that home-ownership carries. Consistent with this logic, we found that as home-ownership rates among one’s relevant others increase, the life satisfaction of existing home-owners decreases. Therefore, as well as being a social norm, our findings also suggest that home-ownership is a positional good’; a good whose subjective well-being (or ‘utility’) depends strongly on the consumption others.

In sum, our findings suggest that being a home-owner carries social status. This social status (as opposed to autonomy or security) may partly explain why some studies have found home-owners to have higher subjective well-being (e.g. Zumbro, 2014), ontological security (Saunders, 1990) and better educational outcomes (see Dietz and Haurin, 2003) than renters. It may also partly explain why home-ownership aspirations are so strong in the UK. Policymakers and researchers should explore (or at least account for) this social status pathway. Otherwise, they risk overlooking the possibility that some of the apparent benefits of home-ownership may in fact depend on the stigmatisation of others.