Size of home,homeownership, and the mortgage interest deduction |
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| Authors: | Andrew Hanson |
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| Affiliation: | 1. NOVA, Oslo and Akershus University College of Applied Sciences, Stensberggt 26, 0170 Oslo, Norway;2. Western Norway University of Applied Sciences, Bjørnsonsgt, 45, 5528 Haugesund, Norway;1. Department of Public Policy, University of Connecticut, 1800 Asylum Ave., 4th Floor, West Hartford, CT 06117, United States;2. Urban Institute, 2100 M Street, NW, Washington, DC 20037, United States;3. Department of Economics, University of Connecticut, 341 Mansfield Road, Unit 1063, Storrs, CT 06269-1063, United States;1. Center for Chinese Public Administration Research, School of Government, Sun Yat-sen University, Guangzhou, Guangdong, China;2. Department of Management, Macquarie Business School, Macquarie University, Sydney, New South Wales, Australia;3. Social Policy Research Centre, The University of New South Wales, Sydney, New South Wales, Australia;4. Department of Economics, Monash Business School, Monash University, Melbourne, Victoria, Australia;5. The Business School, Changshu Institute of Technology, Suzhou, Jiangsu, China;6. International Business School Suzhou, Xi''an Jiaotong-Liverpool University, Suzhou, Jiangsu, China |
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| Abstract: | This paper offers an empirical test of the effect of the mortgage interest deduction (MID) on both the extensive (own vs. rent) and intensive (size of home) housing purchase margins. Using state level differences in MID availability to identify, I examine this relationship using standard ordinary least squares, instrumental variables, regression discontinuity, and sample selection estimation techniques. I find the MID to be responsible for a 10.9–18.4% increase in the size of home purchased, but that no relationship exists between the MID and home ownership. These results imply an elasticity of home size with respect to changes in user cost between ?1 and ?1.4. |
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