Abstract
Housing costs form a substantial share of aggregate demand in the UK. This study examines the distribution of total expenditure-to-income by homeownership status at the end of the recent recession in 2010. Multivariate quantile regressions uncover four important points. First, owner-occupiers in England have considerably higher mean spending ratios than their peers in other parts of the UK; an indication of their wealthier status. Second, the average spending ratio for residential-occupiers in all UK regions, with the exception of Northern Ireland, is significantly higher than the mean ratio for tenants in both private and public properties. In this last region, the spending rate for private tenants is more prominent. Third, the disparity in the expenditure ratio between owner-occupiers and tenants is significantly more pronounced in England. Fourth, renters in public housing in Scotland and Wales have much higher spending ratios than their counterparts in private properties, reflecting a greater overall social security provided by the devolved government there. Policy implications allied with heterogeneity in the consumption effect of housing wealth across the different homeownership cohorts is discussed.
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Notes
The figures from the ONS are weighted averages created using population data from the 1991-2001 Census. They are therefore not directly comparable to the equally weighted average spending ratios which underlie our analysis in this paper. Nevertheless, we have chosen to include the ONS figures in order to provide the reader with a benchmark on which to relate any discrepancy in the expenditure behaviour of our responding households in 2010.
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I am grateful for help with the data here to Augustine Nwachukwu and most particularly to a reviewer from this journal for their detailed comments and suggestions.
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Nwachukwu, J.C. Tenure and Spending Within UK Households at the End of the Recent Recession. Soc Indic Res 133, 1075–1104 (2017). https://doi.org/10.1007/s11205-016-1409-z
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DOI: https://doi.org/10.1007/s11205-016-1409-z