Table Of ContentWEALTH AND
HOMEOWNERSHIP
Women, Men and Families
Mariacristina Rossi
Eva M. Sierminska
Wealth and Homeownership
Mariacristina Rossi • Eva M. Sierminska
Wealth and
Homeownership
Women, Men and Families
Mariacristina Rossi Eva M. Sierminska
Department of Management, School of LISER - Luxembourg Institute of
Management and Economics Socio-Economic Research
University of Torino Esch-Belval, Luxembourg
Torino, Italy
ISBN 978-3-319-92557-8 ISBN 978-3-319-92558-5 (eBook)
https://doi.org/10.1007/978-3-319-92558-5
Library of Congress Control Number: 2018943399
© The Editor(s) (if applicable) and The Author(s) 2018
This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether
the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of
illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and trans-
mission or information storage and retrieval, electronic adaptation, computer software, or by similar or
dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
The publisher, the authors, and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or
the editors give a warranty, express or implied, with respect to the material contained herein or for any
errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional
claims in published maps and institutional affiliations.
Cover illustration: Abstract Bricks and Shadows © Stephen Bonk/Fotolia.co.uk
This Palgrave Pivot imprint is published by the registered company Springer Nature Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
The journey of a thousand miles begins with one step.
—Lao Tzu
To Our Dads
Foreword
Interest in household finances amongst both academics and policymakers
has been steadily growing over the past two to three decades. Furthermore,
the global financial crisis highlighted the financial vulnerability faced by
many households holding high levels of debt yet low, or even no, financial
assets to draw upon in times of economic adversity. This book makes a
valuable contribution to knowledge related to one of the key financial
assets held by households, namely, their house—a financial asset, which
provides shelter as well as serves as an important long-term financial
investment. This timely book provides a comprehensive analysis of this
complex dual characteristic of housing as both a consumption and an
investment good. Furthermore, the detailed cross-country comparisons
presented highlight the importance of the institutional context faced by
households, as well as the implications of the changing welfare state. Such
changes are related to the repeated warnings of a future pension crisis
likely to be faced by many households who are not saving enough to safe-
guard their financial future in retirement. This book thus, provides a
timely reminder of the role of homeownership as a means to provide
financial security later on in life, as well as the complex interaction between
decisions regarding the holding of liquid and illiquid financial assets.
Indeed, the nature of the portfolio of assets held at the household level has
important implications for financial security in the face of potential shocks
to health and employment, as well as for long-term financial planning.
ix
x Foreword
The focus on gender and the changing nature of families provides a
crucial context relating to the financial decision-making processes at play.
Whilst issues related to the gender pay gap are rightly raised by the media,
academia and policymakers, the gender wealth gap has attracted much
less attention. This book places such issues related to wealth at the center
of the analysis and debate. There are many reasons why such issues are
important from a gender perspective including single families and the
longer life expectancy of women relative to men. Indeed, the discussion
on the changing nature of families presented in this book sheds light on
this crucial, yet often overlooked, aspect of household finances. Thus,
understanding the decision processes that lie behind wealth accumula-
tion and homeownership are fundamentally important in understanding
the gender wealth gap. Indeed, a related area covered by the book relates
to the role played by financial knowledge and literacy, which in turn
influence attitudes toward risk and risk aversion, thereby having impor-
tant implications for financial decision making and inequalities in wealth.
At a time when young people are struggling to get a foot on the hous-
ing ladder in many countries and important decisions are made by young
people regarding both financial and human capital investments, this
book fills a crucial gap in our knowledge related to an asset, which some
members of the older generations may take for granted, yet for some
members of the younger generations, ownership of this asset appears
somewhat aspirational and out of reach. This book is essential reading for
anyone interested in household finances, an area which I have been
researching since 2005. It provides insightful analysis of past research and
important topical issues, as well as, highlights avenues to focus on in the
future, and, in my opinion, will serve to stimulate further research and
interest in the ever-growing literature on household finance.
Sheffield, UK Sarah Brown
Preface
The importance of wealth has become more and more central in shaping
households’ welfare. Particularly nowadays with the shrinking of welfare
states and public pension provisions, private wealth can represent an
important resource to draw upon in order to maintain the standards of
living at the desired level after retirement. When looking at wealth and its
composition, housing (principal residence, in particular) stands out as
the biggest portion of wealth. In almost every country, wealth is predomi-
nantly constituted by housing equity. Thus, looking at wealth while
ignoring housing would be seen as a contradiction.
Many books have been written on wealth; we ourselves have taken part
in some research projects on wealth accumulation and its impact on
household welfare and economic decisions. What has not been written
yet is a book that sets the conceptual stage on these topics (wealth and
housing) and provides a cross-national picture of wealth outcomes in this
dimension for families (using newly available data) to be used by schol-
ars, students and policymakers. The differences between women and men
in wealth accumulation have been even more seldomly discussed.
The idea of this book was to merge together what both of us have been
working on for many years: the rationale behind wealth accumulation
and the empirical outcomes. In other words, our goal has been to empha-
size our expertise on wealth empirical analysis, with sound conceptual
background to interpret the results.
xi
xii Preface
In this book, we investigate the link between wealth and housing, the
latter being a quite complicated decision per se. We begin the book by
providing a conceptual framework within which the process of wealth
accumulation and homeownership can be examined. We use this frame-
work throughout the book.
Next, we discuss the importance of studying wealth and housing
wealth more generally and focus on the variation across countries. We
also discuss why families and women and men in particular may differ in
the way they accumulate wealth. Some methodological issues that accom-
pany wealth studies are also pointed out.
Chapter 3 follows homeownership trends in the developed world with
a regional focus across families and elaborates on the determinants of
homeownership.
The final chapter investigates whether homeownership is associated
with higher wealth levels, using regression analysis along with descriptive
statistics. Despite not claiming causality, homeownership is associated
with higher wealth. We conclude the chapter by pointing to possible
drawbacks of wealth accumulation especially via housing equity. An
excessively illiquid portfolio can act as a vulnerability effect, especially at
old age.
The book finishes by highlighting some of the potential drawbacks for
families of having excessive levels of housing wealth.
Creating this book was a lengthy process and we are grateful to every-
one who helped us along the way, either directly or indirectly via inspira-
tion. We would also like to thank the institutions LISER for supporting
our work and the LIS datacenter for providing invaluable access and
insights to the data.
Torino, Italy Mariacristina Rossi
Esch-Belval, Luxembourg Eva M. Sierminska
