Home Price Expectations and Spending: Evidence from a Field Experiment

Felix Chopra, Christopher Roth and Johannes Wohlfart
Additional contact information
Johannes Wohlfart: University of Copenhagen, CEBI

No 23-03, CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI)

Abstract: We conduct a field experiment with US households to study how expectations about long-run home price growth shape spending decisions. We exogenously vary survey respondents expectations by providing different expert forecasts. Homeowners spending, measured using rich home-scanner data, is inelastic to home price expectations. By contrast, renters reduce their spending when expecting higher home price growth. These patterns reflectpositive endowment effects for owners from higher future wealth and negative income effects for both groups due to higher future housing costs. Our study highlights consequences of asset price growth and long-term expectations about the economy for household behavior

Keywords: Consumption; Expectations; Home prices; Homeowner; Information; Renter (search for similar items in EconPapers)
JEL-codes: C93 D14 D83 D84 G51 (search for similar items in EconPapers)
Pages: 82
Date: 2023-06-07
New Economics Papers: this item is included in nep-exp and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (4)

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https://www.econ.ku.dk/cebi/publikationer/working-papers/CEBI_WP_03-23.rev.pdf (application/pdf)

Related works:
Working Paper: Home Price Expectations and Spending: Evidence from a Field Experiment (2023)
Working Paper: Home Price Expectations and Spending: Evidence from a Field Experiment (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:kud:kucebi:2303

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