The Long-run Effects of Housing on Well-Being

Abstract

This paper provides one of the first tests of adaptation to a full set of residential transitions. We use long-run SOEP panel data and consider the impact of all housing transitions, whether or not they involve a change in housing tenure or geographical movement, on both life satisfaction and housing satisfaction. Controlling for individual characteristics and housing quality, some residential transitions affect life satisfaction only little, while all transitions have a significant effect on housing satisfaction. This latter is particularly large for renters who become homeowners and move geographically, and for renters who move without changing tenure status. Regarding housing satisfaction, we find very little evidence of adaptation even after five years. Losing homeowner status is the only transition that reduces housing satisfaction, and here the effect seems to become even more negative over time. Keywords: Housing, Adaptation, well-being, SOEP. JEL Classification Codes: D19, R21.