Tilburg University
The two sides of homeownership: security and insecurity
André, Stéfanie
Publication date: 2017
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André, S. (2017). The two sides of homeownership: security and insecurity: A comparative approach to the effects of housing tenure and housing wealth on political attitudes, political behavior and subjective wellbeing. GVO drukkers & vormgevers B.V. | Ponsen & Looijen.
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Take down policy
security and insecurity
A comparative approach to the eff ects of housing tenure
and housing wealth on political attitudes, political
behavior and subjective wellbeing
Stéfanie André
security and insecurity
St
éf
anie
Andr
A comparative approach to the effects of housing tenure and housing wealth on political attitudes, political behavior and subjective wellbeing
Stéfanie André
Cover and Lay out by Ferdinand van Nispen tot Pannerden, my-thesis.nl Printed by GVO drukkers & vormgevers, Ede, The Netherlands
homeownership:
security and insecurity
A comparative approach to the effects of housing
tenure and housing wealth on political attitudes,
political behavior and subjective wellbeing
Proefschrift
ter verkrijging van de graad van doctor aan Tilburg University op gezag van de rector magnificus, prof. dr. E.H.L. Aarts, in het openbaar te verdedigen
ten overstaan van een door het college voor promoties aangewezen commissie in de aula van de Universiteit op
vrijdag 10 november 2017 om 10.00 uur
door
Stéfanie Cathérine Hana André,
Overige commissieleden: Prof. Dr. P. Achterberg Prof. Dr. M. Elsinga Prof. Dr. I. Helbrecht
Prof. Dr. R. Ronald
List of tables X
List of figures XII
Chapter 1 Introduction 15
1.1 Housing and welfare provision 17 1.2 Homeownership and social risks 21 1.3 Mechanisms: micro-level consequences of
homeownership
30 1.4 Improved questions, methods, and data 35
1.5 Outline of the book 37
Chapter 2 Homeownership and Support for Government Redistribution
43
2.1 Introduction 45
2.2 Homeownership, the missing link? 48 2.3 Welfare state attitudes and support for redistribution 50
2.4 Data and methods 57
2.5 Results 60
2.6 Conclusion 72
2.7 Appendix 75
Chapter 3 The tenure gap in electoral participation: instrumental motivation or selection bias?
77 3.1 Introduction: background and research questions 79 3.2 Why would homeowners have a higher likelihood to
vote than tenants?
82 3.3 Housing regimes and the tenure gap in voter turnout 86
3.4 Data and methods 92
3.5 Results 97
3.6 Conclusion and discussion 102
3.7 Appendix 105
Chapter 4 Housing wealth and party choice (change) 113
4.1 Introduction 115
4.2 Setting the scene: the Dutch housing market and political context
117 4.3 Theoretical background 119
Chapter 5: What’s housing wealth got to do with it? 147
5.1 Introduction 149
5.2 The Australian housing system 152
5.3 Theory 153
5.4 Data and methods 158
5.5 Results 160
5.6 Conclusion and discussion 176
Chapter 6 Conclusion 179
6.1 Do housing tenure and housing wealth influence political attitudes, political behavior, and subjective wellbeing?
181
6.2 The homeownership coin: security and insecurity 187
6.3 Policy implications 192
6.4 Limitations and suggestions for future research 193 6.5 The future of homeownership as an incentive for better
citizenship
196 Data and research acknowledgements 199
Supplementary Material 203
S1.1 Macro indicators chapters 2 and 3 204 S1.2 Information on the National Mortgage Guarantee
(1995-2015)
208 S1.3 Party classification: homeownership policy and welfare
state policy
212
Samenvatting (Dutch summary) 225
References 241
Dankwoord 255
Curriculum Vitae 263
Table 1.1 Overview of countries, variables, time, period and analysis 40 Table 2.1 Descriptive statistics of the variables 59 Table 2.2 Linear regression of homeownership on support for
redistribution in each country
61 Table 2.3 Multilevel analyses support for redistribution at the
individual level
63 Table 2.4 Multilevel analyses support for redistribution relationships
at the country level
64 Table 2.5 Multilevel analyses of support for redistribution at the
country level
68 Table A2.1 Multilevel analyses support for redistribution at the
individual level
75 Table 3.1 Overview of the housing regimes and descriptive statistics of
country indicators
89 Table 3.2 Descriptive statistics of individual level variables 96 Table 3.3 Linear probability model on electoral participation 99 Table 3.4 Linear probability model on electoral participation 101 Table 3.5 Tenure gap and decrease in tenure gap per regime 102 Table A3.1 Length of residence per country 105 Table A3.2 Variables used for Coarsened Exact Matching (CEM) 106 Table A3.3 Linear probability models on electoral participation with
country fixed effects.
106 Table A3.4 Linear probability models on electoral participation with
country fixed effects.
108 Table A3.5 Table to accompany Figure 3.1 110 Table A3.6 Linear probability models on electoral participation per
regime.
111 Table 4.1 Classification of parties based on housing and welfare state
policies
118 Table 4.2 Descriptive statistics for 2006, 2010 and 2012 128 Table 4.3 Multinomial regression of party choice in 2006, 2010 and
2012
132 Table 4.4 Multinomial regression of party choice in the 2012 Dutch
national elections
Table 5.1a Fixed-effects panel regression analysis of divorce on happiness for Australia
163 Table 5.1b Fixed-effects panel regression analysis of divorce on life
satisfaction for Australia
164 Table 5.1c Fixed-effects panel regression analysis of divorce on life
satisfaction for Australia
165 Table 5.2 Tenure-divorce situations 166 Table 5.3a Fixed-effects panel regression model of divorce on happiness
in Australia
168 Table 5.3b Fixed-effects panel regression model of divorce on life
satisfaction in Australia
170 Table 5.3c Fixed-effects panel regression model of divorce on financial
satisfaction in Australia
172 Table 5.4 Fixed-effects panel regression model with housing wealth
interactions in Australia
174 Table S1.1 Macro-level indicators for each country 206 Table S1.2 Correlations between our macro-indicators 207 Table S1.3 Scores on housing policy 214 Table S1.4 Scores on welfare position / public services. 216 Table S1.5 Party classification on welfare state position in three groups 217 Table S1.6 Double classification of welfare state position and housing
policy position
218 Table S1.7 Combined classification of welfare state policy and housing
policy position
Figure 2.1 Interaction of age and tenure 65 Figure 2.2 Interaction of income and tenure 65 Figure 2.3 Cross-level interaction of mortgage debt to GDP and
tenure
70 Figure 2.4 Relationship between uncontrolled homeownership
effect and mortgage debt ratio
71 Figure 2.5 Relationship between controlled homeownership effect
and mortgage debt ratio
71 Figure 3.1 The tenure gap in voting in four housing regimes 98 Figure 4.1 Importance of housing in Dutch national newspapers
(1998-2015).
118 Figure 4.2 Predictive probability of party choice according to
housing wealth in 2012
140 Figure 4.3a Predicted probability of voting for a welfare or
pro-ownership party in 2012
137 Figure 4.3b Predictive probability of voting for a welfare or
pro-ownership party
137 Figure 4.3c Predictive probability of voting for a welfare or
pro-ownership party
138 Figure 5.1 The effect of divorce and repartnering on wellbeing in
Australia
Chapter 1
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1.1 Housing and welfare provision
The Beveridge report named housing one of the five welfare pillars along with education, social security, employment, and health care, which together fight the five “Giant Evils”: squalor, ignorance, want, idleness, and disease (Beveridge, 1942). The basis for the post-war expansion of the welfare state in the United Kingdom, this report also performed a pioneering role in the expansion of the welfare state across Europe (Hudson, Kühner, & Lowe, 2008). In the last decades of the 20th century, housing became increasingly important for individual welfare provision. While governments intervened in the housing market throughout the entire 20th century, the 1980s saw a change in focus from providing shelter to providing an investment opportunity for households in several western countries. This has been a political decision in which governments preferred one form of housing tenure over the other, often homeownership over renting. Providing perceived financial and societal benefits to individuals and society, homeownership was seen as the better option (Ronald, 2008). This thesis investigates how housing tenure and housing wealth impact security and insecurity for households, which in turn can influence political attitudes, political behavior, and subjective wellbeing.
Housing can be separated into a material and an immaterial dimension: the first includes the costs of housing, the physical location, and the wealth stored in the house, the latter encompasses social status, (ontological) security, and control. This dual nature gives housing a special character compared to other goods and services provided by governments and the market (Conley & Gifford, 2006; Dunn, 2002; Horsewood & Doling, 2004). Furthermore, the most important sociological role is that of providing a home (Mallett, 2004). From the material and immaterial dimensions the six main roles of housing are derived: 1) shelter, 2) home, 3) (tenure) security, 4) social status, 5) investment, and 6) housing wealth-based welfare provision.
The first and most important thing that every house provides is shelter, some protection against heat and cold, sun and rain. This is the case for both the one-family detached house in suburban Sydney and the self-built shack in a Brazil slum.
Bech-Danielsen, 2004; Mallett, 2004). The emotional function attached to the home can differ between housing tenures and can influence political preferences and subjective wellbeing.
The third role, the amount of security the house offers, depends on the existing regulation regarding housing tenure. In general, homeowners have more tenure security than tenants, depending on their outstanding mortgage and limited by possible foreclosures. As long as the homeowner pays the mortgage, the bank has no grounds to recall the ownership rights of the property. Compared to homeowners, tenants are not the only ones that can enter the house, as their landlords will also have the keys. Tenants also do not enjoy total freedom in redecorating and remodeling their home, although in most countries homeowners are also subject to building regulations. Depending on the country’s rules and regulations, tenants are more or less subject to the wishes of the landlords in the private rental sector or housing associations in the social rental sector. In the Netherlands, for example, tenants in the public and private sector are very well protected by law, rent increases are regulated, and tenants enjoy lease protection, while in Australia households in the private sector see the conditions for their lease change every 12 months. Not everywhere does homeownership entail more rights, however. Though the self-built housing in slums, for instance, may be “owned”, their inhabitants do not have property rights to the land and are thus not provided with the same security or quality (Aldrich & Sandhu, 1995). The fourth role is social status. Homeownership is in many countries seen as the ‘better’, more profitable, or ‘natural’ form of tenure (Gurney, 1999; Ronald, 2008), communicating social status to others. Individuals may thus feel different because they are homeowners instead of tenants, or are perceived as having a higher social standing by others.
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The sixth and final role is welfare provision based on the housing wealth stored in the house. For most households, housing wealth is the primary source of household and family wealth (Ronald & Dewilde, 2017). Generally, homeowners save wealth in their house, at least when their mortgage product obligates them to pay off their loan and/or when house prices increase. Homeownership can thus be seen as a form of enforced savings which can, for example, be used to live rent-free in the outright-owned house in later life or to release equity from the house by trading it in for a smaller and cheaper property and using the profits to finance living expenses (Lowe, Searle, & Smith, 2012; Ong, Parkinson, Searle, Smith, & Wood, 2013). The importance of these functions of housing vary across countries. In some countries, housing has always had implicit welfare functions, especially in old age, when it would provide a pension in stone (Castles, 1998; De Decker & Dewilde, 2010). In other countries, this started with the financialization of housing markets, when the capital-gains potential of homeownership rose in importance relative to the housing-service function, and homeownership became increasingly important for a household’s economic wellbeing. This has been a geographically uneven process and did not affect all countries to the same extent (Wind, Lersch, & Dewilde, 2016).
The downside of this increased economic investment in housing became evident in the economic and concomitant housing crisis that started in 2007-2008, which showed both how vulnerable households have become to global economic shocks and what key role housing plays in the economy (Schwartz, 2012). Making credit more accessible opened the doors to homeownership for new groups in society, moving people from tenancy to mortgaged homeownership and tying them to the global economy, as well as the local housing and labor market. As long as house prices kept rising and initial (mortgage) investments were quickly surpassed, both households and policymakers celebrated this change. Some argued that it would make citizens “cheaper” for governments, because it would encourage people to avoid welfare dependency (Jacobs & Manzi, 2013). Furthermore, homeownership would empower citizens and actually enhance their political activity, because having assets (or aspiring to them) makes people pursue long-term goals (Rohe, van Zandt, & McCarthy, 2002; Sherraden, 1991). As Schreiner et al. state: “People who own assets expect better future outcomes and
Meanwhile, higher house prices made homeownership and living in the private rental sector less affordable (Dewilde, 2016), and in places where assets appreciated more rapidly than incomes (intergenerational) economic inequality increased. In other words, the difference between the haves and have-nots became larger. With the onset of the economic and housing crisis house prices decreased, and homeowners in the European countries where housing markets were the most financialized got into trouble (Schwartz, 2012). Negative equity increased, and some of the homeowners in negative equity felt trapped in their homes, not being able to move. Others got into arrears when their monthly mortgage payments increased because of refinancing or unemployment (Bricker & Bucks, 2016).
This thesis studies the importance of housing tenure, broadly defined as being a homeowner versus being a tenant, and of housing wealth, defined as the difference between the outstanding mortgage and the value of the house, with regards to their connection to political attitudes, political behavior, and subjective wellbeing. Political decisions made within housing regimes influence the importance and effects of homeownership. Housing regimes are here defined as the social, political, and economic organization of the provision, allocation, and consumption of housing (Kemeny, 1981). Housing has always been a bit of a wobbly pillar in the welfare-state literature (Malpass, 2008; Torgersen, 1987). The main reason for this is that governments cannot entirely take housing into their own hands. As it is capital-intensive, housing has to be constructed in collaboration with the private sector: building companies, credit institutions and project developers (Barlow & Duncan, 1994). Housing is a commodity that can be sold on the market, creating confusion as to where to place the house in the state-market-family constellation of the welfare state (Lowe et al., 2012). This mix between the market, the family and the state differs both between European countries and within welfare regimes. In some countries, the state is much more involved in regulating the housing market and providing (social) housing than in others. These cross-national differences can (partly) be attributed to differences in housing policies, housing-finance regulations, building traditions, and different ideologies concerning the role of renting and homeownership in society (Kemeny, 1981; Ronald, 2008), i.e. housing regimes. In turn, these housing regimes influence the (in)security of homeownership for various groups of households.
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turnout, 3) party choice and party-choice change, and 4) subjective wellbeing. Comparisons are made between homeowners and tenants, and between those with different levels of housing wealth. Institutional differences are exploited to research the effect the different roles housing tenure and housing wealth have in diverse national contexts.
The next, second section of this chapter places housing in the welfare-provision literature, exploring housing as a social cleavage, the emergence of new social risks, and the ideas behind asset-based welfare. The third section then introduces mechanisms based on economics, residential stability, home-making, and psychology arguments that link tenure status to political attitudes, political behavior, and subjective wellbeing. The fourth section presents the thesis’ research questions, followed by a general outline.
1.2 Homeownership and social risks
This section traces the development of ideas about housing as a social cleavage, also exploring how housing can be understood as a financial household buffer and a complementary strategy within the welfare state. The latter is key, as housing is not only important for individuals; it has become increasingly important within welfare state provision.
Housing as a social cleavage
Homeownership is a highly desirable and culturally prescribed good that reflects achievement of middle-class status (Edwards, 2001; Elsinga, Jones, Quilgars, & Toussaint, 2010; Gurney, 1999). As early as the 19th century, Engels (1872 [1975]) stated that homeownership affects class consciousness, and he assumed it could be used to ease social unrest among workers. Providing workers with a house of their own gives them a stake in politics and the economy, cutting through class lines. It would therefore diminish class consciousness, lower the possibility of strikes, and pacify discontent among the working class.
chances. Saunders (1984; 1990) saw consumption as the distinguishing factor in society’s social inequalities. In each economic class, the people who rely on private assets to satisfy their consumption needs and who derive wealth from homeownership were better off. Yet not everyone agreed that housing would generally cut across class lines. Kemeny (1992) believed that making a division between homeownership and renting is a too simplistic description of reality. Homeownership, public renting, and private renting have different costs and benefits that differ between countries. With Kemeny, many (Marxist) scholars argued homeownership has political consequences. Not only does homeownership stimulates dependence on wage labor and promotes political conservatism (Ball, 1986; Ball, Harloe, & Martens, 1988), housing consumption also reinforces existing social inequalities (Hamnett, 1999; Malpass, 2006). And while homeownership has been the most important means of capital accumulation in the 20th-century Western world, it has also been the primary mechanism through which households have accumulated debts and faced economic risks (Doling & Ford, 2007; Horsewood & Doling, 2004; Ronald, 2008). These housing-related economic risks are partly associated with the socio-economic risks from which the welfare state protects its households.
From old to new social risks
After WWII, the welfare state expanded and primarily addressed the lower classes’ (old) social and economic risks of income loss, focusing on income replacement and poverty prevention in old age, or in case of disability or unemployment (Bonoli & Natali, 2012). Increased welfare-state spending, budgetary stress, and high taxation caused political challenges for social programs and a turn from welfare-state expansion to welfare-state retrenchment (Pierson, 1996; 2001) or redirection (Taylor-Gooby, 2008).
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policies, for example regarding child care (Fahey & Norris, 2010; Yerkes, Peper, & Baxter, 2013). Globalization changed labor markets and therefore social risks, which saw changing family structures emerge along with newly vulnerable groups and this led to a renewed social-policy focus on the so-called new social
risks (Crouch & Keune, 2012; Taylor-Gooby, 2008).
When these new social risks such as single parenthood, working-poor families, and skills-based unemployment emerged, they were not absorbed by the family or the labor market. This development caused states to reinvent themselves, redirecting social spending to other groups (Bonoli & Natali, 2012; Taylor-Gooby, 2008). In their new social-policy agenda, the Organisation for
Economic Co-operation and Development (OECD) encouraged governments to
maximize the return to social expenditures in terms of social cohesion and active participation in society and the labor market (Jenson, 2012). This redirection of social spending is called the social investment strategy. It was claimed to focus on investing in economic development and high-quality employment, providing people with skills and human capital that can be productively used in the labor market. One of the new groups this social investment strategy focused on were women. By providing them with affordable childcare women would be motivated to maximize their employment and minimize their dependency on the welfare state (Bonoli & Natali, 2012; Taylor-Gooby, 2008).
As political compromises were made to change policy, insiders remained protected and outsiders, among which the young were overrepresented, faced the consequences (Bonoli & Natali, 2012). Since every social policy has its own mobilization basis it is difficult to introduce new policies and cutbacks without someone or something being blamed for any negative effects (Pierson, 1996). As no politician wants to be blamed for unpopular decisions that could affect their time in government, politicians try to redirect spending by affecting the smallest possible portion of the electorate, through so-called veiled cutbacks, instead of making direct cutbacks (Mau, 2015). The mechanism behind this is called
negativity bias. It means that voters react differently to gains and losses, and will
From (new) social risks to asset-based welfare
Together with the introduction of the social investment strategy, a credit-based economy emerged in which the labor-market income of individuals and households is separated from consumption through extensive credit (Crouch & Keune, 2012). In countries where people are able and willing to invest in property and use this as a private safety net, governments seemed to be able to redirect public resources to other welfare dimensions to address the emergence of the new social risks (Lennartz, 2017).
The idea behind asset-based welfare is that wealth stored in assets like a house can be used throughout one’s life course to finance the difference between income and expenses, for example because of educational costs, old age, or unemployment (Lennartz & Ronald, 2017; Lowe et al., 2012). In the process, the responsibility for welfare provision has been placed more on the individual and less on the state. Individuals are told they can purchase services through the market by drawing on the wealth stored in their houses (Groves, Murie, & Watson, 2007; Ronald, 2008). Asset-based welfare would encourage people to save up “independently” and thus prevent dependence on welfare transfers. Crouch (2009) named this new policy regime privatized Keynesianism, as low- and medium-income households get access to, and make use of, mortgages and other debts linked to unregulated markets to reconcile mass consumption with the market economy.
The idea of a connection between housing and the welfare state is not new. Kemeny (1981) was the first to connect the structure of the welfare state and changes therein to private-asset ownership in the form of housing. Since, the role of housing in the economy has expanded and become a more central part of welfare provision (Malpass, 2008), providing some form of private insurance for households that is sponsored and partly provisioned by the state. The extent to which housing has the ability to add to welfare provision depends on, among other things, the extent to which housing is financialized and/or to which it is a family asset.
income-1
poor, but housing-asset rich (Castles, 1998; Elsinga et al., 2010; Kemeny, 1981, 2005). Traditionally, living in rent-free accommodation is considered a passive use of housing, but the use of this type of housing has changed from passive to active, and even to pro-active when it is used to add to spending power, mainly in countries with liberalized housing markets. For example, in the United Kingdom houses are bought to rent out again (pro-active use of housing), while in Australia it is possible to use housing wealth for direct spending through equity-release products (active use of housing). Households borrow money against their house to finance direct spending needs like college fees, remodeling costs, down payments for their children’s houses, or as a supplement to their income. It has become normalized to extract equity from one’s house in these Anglo-Saxon countries (Ong et al., 2013; Ronald, Kadi, & Lennartz, 2015; Wood, Parkinson, Searle, & Smith, 2013). However, although homeownership rates have been rising and people who are outright owners live cost-free in their house, not everyone is able or willing to extract equity from their house to replenish pensions (Ong, Wood, & Colic-Peisker, 2015; Wallace, 2017; Wood et al., 2013).
In countries where housing markets are financialized, housing should be conceptualized not only as a form of welfare in old age, but throughout the life course. It can act as a financial buffer and has a strong income-maintenance and consumption-smoothing function (Köppe & Searle, 2017; Wood et al., 2013). Yet it also has a downside, as asset-based welfare has no equalizing or redistributive function across generations (Köppe & Searle, 2017). Instead, housing (wealth) inequalities are strengthened across generations through the intergenerational transmission of housing wealth (Searle & McCollum, 2014), thereby counteracting welfare aims of reducing income inequality or poverty. Furthermore, relying on housing not only helps protect individuals from risk, it may also create newer socio-economic risks.
From asset-based welfare to newer socio-economic risks
Although everyone needs a home, not everyone is a homeowner, for reasons of affordability, access, and the risks that are associated with homeownership. With governments focusing more on homeownership and the private rental market to solve their nation’s housing issues, households in these countries are exposed to
Access and affordability
The financialization of housing markets has been a process in which a larger share of households made the transition from renting to mortgaged homeownership. This process was influenced by the fact that governments were making homeownership more profitable compared to renting and that prices had been rising since the late 1980s, which made households think of homeownership as a good investment strategy. These rising house prices also increased the societal division between housing-market insiders and outsiders, as increasing house prices are good for homeowners while making homeownership less affordable for housing-market outsiders.
This process influences both access and affordability. Firstly, some households cannot access homeownership, as one needs to be eligible for a mortgage and/or have enough savings for a deposit or to buy a house outright. Flexible contracts have also made it harder (though not impossible) to obtain a mortgage. For growing groups of young people this means it has become harder to enter homeownership (Coulter, 2016; Lersch & Dewilde, 2015). Moreover, these younger cohorts enter the housing market at a more unfavorable time, as house prices are higher. Younger cohorts are thus negatively affected by pro-employment policy twice: they enjoy less economic certainty due to their often temporary jobs and fewer opportunities to enter the housing market because of the costs involved. If they do enter that market, they are more exposed to the socio-economic risks associated with homeownership than earlier generations. These harsh housing-market conditions have further consequences: young people are living with their parents longer, delaying family formation and decreasing overall fertility rates (Mulder & Billari, 2010), which adds further stress on public spending in general and on pensions in particular. In countries with liberalized housing markets, the risk associated with not being able to enter homeownership leads to less opportunities to build housing assets as a private welfare provision.
low-1
income groups in the early 2000s who were no longer able to pay the mortgage when interest rates changed after a year or because they lacked financial resources for their house’s associated taxes and maintenance (Bratt, 2012b; McCarthy, Van Zandt, & Rohe, 2001).
Newer socio-economic risks
Besides enjoying the benefits of homeownership, households are also exposed to its risks (Delfani, De Deken, & Dewilde, 2014; Fahey & Norris, 2010). These newer social or socio-economic risks and their societal consequences can be categorized around five themes: people cannot access homeownership; people do not have housing wealth; people cannot spend housing wealth; people are negatively affected by spending housing wealth; and people are exposed to house-price risks. The sudden rise in these house-price risks, due to increasing and decreasing house prices, affected the first four themes both directly and indirectly. Since the financialization of housing markets, homeownership has become more important for financial wellbeing (Lennartz, 2017), which increased the risks of not being a homeowner, of low-income homeownership (McCarthy et al., 2001; Rohe et al., 2002), and of not being able to spend housing wealth.
their own place, resulting in people living together while divorced, moving in with their parents, or relying on shared housing (Dirks, 2016). The group of people at risk of never obtaining any housing assets, whether through losing it in a divorce or by renting their entire life, or obtaining a much lower level of assets because of late entry or interrupted homeownership is thus growing (Wind & Dewilde, 2016). Secondly, and relatedly, some homeowners do not have housing wealth. Especially when houses are bought with either mortgages with high loan-to-value and loan-to-income ratios or with interest-only mortgages. As these households did (or could) not pay off their debt, they had to rely on house-price increases to obtain housing wealth. During the GFC, house prices were shown to be volatile and a substantial number of households got into a situation called negative equity (Schwartz, 2012), which occurs when the outstanding mortgage is higher than the current market value of the house. Negative equity is mainly pressing when a household wants to move. This increases insecurity for households, even for those who do not (yet) have any intention to move (Nettleton & Burrows, 1998). Not having housing wealth can also spill over into not having a house when households get into arrears, in the most serious cases leading to homelessness. Foreclosures rose considerably in Europe during the economic crisis (European Commission, 2011), with households moving to the rental sector with remaining debts.
Third, there are various reasons some people cannot spend housing wealth even when they do have housing wealth, for example because the house is an (extended) family asset and can be used for shelter but not easily be traded on the market. Another example is that in most countries there are no, or very limited, possibilities to extract equity from a house to spend on consumption through so-called mortgage equity withdrawal (MEW) products. The only option left is what is then called housing equity withdrawal (HEW), in which the house is sold on the market (Ong et al., 2013), though in most countries this involves considerable transaction costs. In these countries only rent-free living becomes an option to ‘enjoy’ housing wealth in old age, and the elderly in these countries are at risk of being asset-rich but income-poor, leaving them unable to maintain their house or their consumption level.
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wealth thus diminishes feelings of ontological and economic security. Research shows people who do spend housing wealth feel their security has decreased, and this has a negative effect on their subjective wellbeing (Colic-Peisker, Ong, & Wood, 2015). Another reason not to spend housing wealth is because it is an asset to be transferred to the next generation (Kurz, 2004; Poggio, 2013). If people do not want to spend their housing wealth, they do have the benefit of the security of tenure, but spending-wise they are in the same position as those who do not have housing wealth or cannot spend it.
Fifth, home-owning households are exposed to house-price risks. For housing to serve as a source of asset-based welfare or as secure investment in stable monthly housing costs, house prices need to keep rising or at least not fall. When house prices decrease, this puts people in negative equity. In countries with interest-only mortgages and loan-to-value ratios of up to 120, such as the Netherlands, house prices needed to increase to get out of negative equity. It should be noted that negative equity is mostly a problem or risk in countries where the housing market is financialized.
In conclusion, although homeownership brings benefits in the form of shelter and a pension in stone, the benefit of housing wealth is not accessible for all. Homeownership, compared to renting, also comes with new risks that are not covered by the welfare state and can actually worsen the outcomes of “old” social risks.
Like a coin, homeownership can flip two ways
The main focus of this thesis is the two-sidedness of homeownership: It can provide both security and insecurity. The security that homeownership provides consists of a physical shelter (which only the owner has the right to enter or to alter its structure and appearance), a source of wealth, and an insurance function, in which housing substitutes for state-funded provisions. However, homeownership also comes with risks and insecurities. A house cannot always act as a nest egg; price volatility, reduced labor mobility, and payment problems in the case of income losses can all make one’s house a liability (Ansell, 2014; Doling & Ford, 2007; Elsinga, De Decker, Teller, & Toussaint, 2007; Nettleton & Burrows, 1998).
households are more likely to enjoy its security and which suffer its insecurity, and how these groups of households vary across countries with different housing histories and policy. Some groups of people are more likely to fall victims to the increased freedoms of this so-called new ‘risk society’ than others (Beck, 1992). Homeownership is one of these risks.
As the consequences of not being a homeowner and not having housing wealth have become a major concern, housing has gained importance as a critical resource for the welfare position of households (Seeberg, Slothuus, & Stubager, 2017). The influence of housing (wealth) on individuals’ socio-economic position can affect their attitudes towards the welfare state and thus have political consequences like electoral participation and party choice. The economic consequences of this are that residential property and housing markets have become central to macro-economics, also affecting (un)employment (Schwartz & Seabrooke, 2008). Most importantly, it can impact individuals’ subjective wellbeing. As the causes and consequences of homeownership and housing wealth differ between countries, which have all had their own housing pathways and trajectories (Beer & Faulkner, 2011), the effect of homeownership and housing wealth on the researched outcomes is expected to differ between countries.
1.3 Mechanisms: micro-level consequences of
homeownership
Governments and policymakers have promoted homeownership for its supposedly beneficial effects on citizens and neighborhoods, using it to achieve their own economic, social, and political goals (Bratt, 2012a; Dietz & Haurin, 2003) such as, for example, improving subjective wellbeing (Danemann, 2014), offering additional pension provision (Malpass, 2008), stabilizing and stimulating the economy (Sherraden & McBride, 2010), rejuvenating deteriorated neighborhoods (Ronald & Elsinga, 2012), or quelling social and racial tensions (Geurts & Goossens, 2004; Rohe, Van Zandt, & McCarthy, 2013).
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to tie people to the country and encourage them to develop the land (Bratt, 2012a). Sombart (1906 [1976]) argued that the country’s nigh endless available land was the reason why socialism never really developed in the United States. By giving out land they could tie people to the country and not make them vulnerable for socialism.
At the end of the 20th century, scholars also speculated on the political effects of homeownership. Kingston, Thompson, and Eichar (1984) found homeownership to contribute to people’s attachment to the prevailing political order. Homeowners were found to be more conservative (Saunders, 1990) and against taxation and welfare spending (Kemeny, 1981). This was explained as follows: for homeowners, housing costs are front-loaded; they start off with high housing costs while they are paying off their mortgage and enjoy low housing costs later in life, when their mortgage is paid off. They would therefore rather spend their money on their mortgage than on taxes that could be used for welfare spending (Kemeny, 1981). Homeowners were found to politically react to decreasing house prices, punishing the government for not managing the housing crisis and being more likely to vote when they are dissatisfied (Hamnett, 1999; Holian, 2011). Fischels (2001) home-voter thesis similarly states that if homeowners are dissatisfied with government service, they have a stronger incentive to make their voice heard than tenants. Homeownership would thus encourage political participation, at least when citizens are dissatisfied.
The question that remains is which mechanisms underlie the relationship between homeownership and political attitudes and behavior. Several mechanisms that link tenure status to political attitudes, political behavior, and subjective wellbeing are reviewed below. They can be broadly placed in four categories: economic, residential-stability, home-making, and social and psychological mechanisms. Where applicable, the security as well as the insecurity side of homeownership is discussed to demonstrate the two-sidedness of homeownership.
Economic mechanism
(Grinstein-Weiss et al., 2009; Manturuk, Lindblad, & Quercia, 2012; Verba et al., 1993), facilitating social and political participation such as volunteering or voting in elections (Verba, Schlozman, Brady, & Nie, 1993). Secondly, homeownership leads to an “investment effect”, as homeowners realize that the quality of governmental services impacts house-price appreciation and they want to ‘protect’ their investment in the house they become more politically active (Holian, 2011). Homeowners would also have more incentives to improve the neighborhood through political action because of their concern over property prices and thus have larger financial stake in the neighborhood (Green & White, 1997). This investment effect can thus lead to more political activity (Dietz & Haurin, 2003).
The economic crisis showed homeownership is not a source of wealth for all households; especially for low-income households the capital gains are limited. Many households found themselves in trouble when they entered negative equity through decreasing house prices or over-financed houses. Some households got into mortgage arrears, and foreclosures increased both in Europe and the United States (Bricker & Bucks, 2016; Manturuk, Riley, & Ratcliffe, 2012; Rohe & Lindblad, 2013). Housing maintenance can also be a large burden, especially for low-income households, and can intensify insecurity (Rohe & Stegman, 1994b). Losing the safety and security of one’s owned home or worrying about the (supposed) wealth in the owned house can lead to higher stress and consequently to a lower subjective wellbeing (Nettleton & Burrows, 1998), dissatisfaction with politics (Hamnett, 1999), and changes in political preferences.
Residential-stability mechanism
Homeownership decreases residential mobility for several reasons. Moving costs are higher for homeowners than for tenants, because of transaction costs. On average homeowners also enjoy better quality housing (Rohe & Lindblad, 2013), and the likelihood of moving away from a house that already fits your housing preferences is lower. However, it is important to realize that there is a high degree of selection at play here. That is, the relationship between homeownership and residential stability is partly spurious. Households that want to start a family and settle down in a neighborhood are more likely to buy a house and to stay in the house or neighborhood.
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increase their social and political participation (Clark, 2012; Dietz & Haurin, 2003; Engelhardt, Eriksen, Gale, & Mills, 2010; McCabe, 2012; Putnam, 1995). Moreover, residential stability encourages investment in the house and neighborhood just by living there longer, which could foster people’s political participation as well as subjective wellbeing. Homeowners could also enjoy their investments in the community longer because of their stronger residential stability (DiPasquale & Glaeser, 1999). Yet this does not always have to have positive effects. Investments in the house and neighborhood can also foster a more privatized outlook on life (Kemeny, 1981). Furthermore, people with the same social, racial, and economic background flocking together in neighborhoods might create a sociological mosaic (Putnam, 2000) in which people do not know people significantly different from themselves, eroding support for collective arrangements.
Looking specifically at the insecurity side of this supposed residential stability, we can see forced residential mobility. The economic crisis has shown that, especially in the United States, many homeowners had to leave their home (Rohe & Lindblad, 2013). The risks of homeownership can thus lead to lower residential stability and possible to lower social and political participation. This means that the role homeownership can play as a resource and as a place of security varies according to social, economic, and political circumstances, and the effect of political attitudes and behavior can therefore vary as well.
Homemaking mechanisms
Part of the difference between homeownership and renting comes from the psychological meaning people attach to their home: “What these families do is not only to maintain and decorate a house, it is also or primarily to build a home and a family” (Gram-Hanssen & Bech-Danielsen, 2004, p. 18). The home is a permanent basis for unity and family, providing feelings of stability and security (Poppe, Collard, & Jakobsen, 2016). A house means more to people when they have lived there longer, as argued above, but also when they have put more time and effort into the house. Although tenants also go home at the end of the day, they rent a house while others own a home. In combination with the “adult” or “economic maturity” status an owned house provides, it also communicates to the surroundings how important the place is to the owners. The boundaries of the home thus also extend outside the walls of the actual house and to “the
neighborhood, even the suburb, town or city” (Mallett, 2004, p. 63). In turn it is
surroundings. This responsibility stands apart from the economic concerns about house prices or investment considerations; the concerns are about where to best raise one’s family. This might make homeowners more politically active because they want to exert their influence on the decisions concerning what they feel is important in their surroundings.
An owned home provides security and is a place that people can make it their own, but it can also be a source of insecurity. Especially in the case of divorce, when at least one of the partners leaves the marital home, losing one’s owned home can have severe psychological consequences besides the more apparent economic consequences (Grinstein-Weiss, Manturuk, Guo, Charles, & Key, 2014). Effects on subjective wellbeing can thus be expected.
Social and psychological mechanisms
Several psychological mechanisms link homeownership to more active social and political behavior. Homeowners are in control of their home, which increases their sense of control over life. It has been found this increases life satisfaction and self-esteem (Rohe & Stegman, 1994a). Homeowners also have a heightened sense of accomplishment (Rapoport, 2000). If homeowners also feel more politically efficacious this might foster political behavior. Another mechanism would be norm following based on social status. Homeowners enjoy a higher social status, and the owned home can communicate this higher social status (Rohe & Lindblad, 2013). Both the higher social and ‘adult’ status attached to homeownership as well as the concomitant stronger social network might enhance the moral duty felt by homeowners to participate. They feel a moral obligation in line with group-based models of voting (Feddersen, 2004). A last psychological argument that has been made is based on the learning-by-doing model. This entails that the cumulative experience of maintaining a house makes homeowners better managers of their lives, and these skills might be transferable to other life domains such as child rearing (Green & White, 1997) or the political domain.
At the same time, homeowners can feel trapped in their home or neighborhood (South & Crowder, 1997) and experience psychological stress because of mortgage arrears or negative equity (Nettleton & Burrows, 1998). This lowers their subjective wellbeing and can also decrease feelings of accomplishment and self-esteem, all of which could translate to less social and political involvement.
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between homeownership and political attitudes and behavior. It is therefore important to test which underlying mechanisms explain the relationships found between tenure status and political attitudes and behavior.
1.4 Improved questions, methods, and data
This study improves on earlier ones that posed questions on the social and political consequences of housing by answering them using methodological meticulousness and newer (and, where possible, cross-national) data. The most general assumption this thesis makes is that homeownership does not have universal or intrinsic positive consequences. Yet the costs and benefits associated with homeownership do mediate the relationship between tenure and political attitudes, political behavior, and subjective wellbeing. Furthermore, there is a
security and an insecurity side to homeownership. Whatever policy advisors might
believe, homeownership does not make you a better citizen; it changes your socio-economic interests and therefore changes your attitudes and behavior. Since the costs and benefits of tenure are influenced by national policies, regulations, and ideology, the effect will vary across countries.
The main research questions this thesis therefore wants to answer is: Do
homeowners and tenants differ in their political attitudes, behavior, and subjective wellbeing across and within countries, and can these differences be explained by the different countries’ specific costs and benefits of homeownership, as well as the security and insecurity homeownership entails which varies between countries?
(Chapter 4) and Australia (Chapter 5) – for the Netherlands the Long-term Internet Study for the Social Sciences (LISS panel) and for Australia the Household Income and Labor Dynamics Australia data (HILDA). These datasets make it possible to analyze the relationship between homeownership and housing wealth with political behavior and subjective wellbeing in greater depth and over time.
This thesis also makes some theoretical improvements compared to earlier research. It does this in the first place by integrating the literature on housing studies into literature from sociology and political science. This makes it possible to enrich theories on the influence of socio-economic position on political attitudes and behavior with the characteristics of tenure and housing wealth found in other studies. Furthermore, though the relationship between homeownership and political outcomes and subjective wellbeing was assumed to be positive and universal, this thesis assumes that the effect of homeownership will differ depending on the roles, costs, and benefits the different tenures have in various countries. It will therefore test the various mechanisms explaining the relationship between homeownership and political attitudes, political behavior, and subjective wellbeing are tested. The cross-national studies use macro-indicators to inform the hypotheses on how the relationship between homeownership and the outcome under research would vary across countries depending on the costs, benefits, and roles of homeownership in these countries. Secondly, by using panel data it is possible to follow people over time, specifying and testing the mechanisms leading to the supposed effects and benefits of homeownership in a better way.
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covariates, a method mainly effective in controlling for observed characteristics. However, to the extent that the observables are correlated with unobserved characteristics, there is a higher likelihood that the latter are ‘balanced out’ as well. The fourth chapter uses multinomial regression analysis and the fourth and fifth chapters use panel regression fixed-effects analysis, which means that time-invariant unobservables are controlled for, and omitted variable bias is reduced. Furthermore, the panel data provide us with high-quality housing-wealth data to test the housing-wealth mechanism of homeownership.
1.5 Outline of the book
This introduction is followed by four empirical chapters on the four subjects concerning political attitudes, political behavior, and subjective wellbeing, which are elaborated upon below. The thesis ends with a conclusion, answering the main research questions outlined in the previous section.
Support for redistribution
does tenure influence support for redistribution in a cross-section of European countries in 2004? The second research question aims to tease out just how this
relationship differs between countries and how this variation can be explained:
How do housing-regime characteristics influence support for redistribution, and the relationship between tenure and support for redistribution? Multilevel regression
analysis is used to test this relationship in 24 European countries.
Electoral participation
Chapter 3 investigates the electoral participation of homeowners and tenants in 18 European countries and the United States. Though Chapter 2 shows that homeowners, on average, are less supportive of redistribution than tenants, this effect differs between countries and depends on the housing market’s level of financialization. Ansell (2014) found right-wing parties respond to changes in voter preferences regarding house prices by cutting down on redistributive spending during housing booms. Yet while electoral outcomes and policy change are influenced by the altered preferences of voters, they may also derive from changes in voter turnout. Such a tenure gap in electoral participation is particularly relevant when housing tenure is associated with political cleavages. When the difference in security between homeowners and tenants is larger, the incentives to vote may be affected, and thus the tenure gap as well. Chapter 3 therefore studies the electoral tenure gap, asking: Do homeowners and tenants differ in
their national electoral participation (i.e. tenure gap in turnout)? How does such a tenure gap vary by housing regime, and how can we explain such variation?
The data are pre-processed using coarsened exact matching and also matched to the imputed length of residence data from EU-SILC. The data are analyzed with multilevel linear probability regression analysis.
Party choice
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to change their vote away from a party at the political center to a pro-ownership or pro-welfare party. The main premise of this chapter is that housing insecurity can lead voters to change their vote. The research question of this chapter is:
How and under which conditions does housing wealth, particularly negative equity, influence party choice in the Netherlands in the national elections of 2006, 2010, and 2012? Where the focus in chapters 2 and 3 was on the security side of
homeownership (possible wealth storage, residential stability, social status), this chapter also explicitly includes the insecurity side. In this chapter party choice is analyzed cross-sectionally as well as longitudinally.
Subjective wellbeing
The empirical chapters thus far expected housing wealth to add to the socio-economic position of households and influence political attitudes and political behavior, finding that in some countries housing wealth can be used as a safety net. However, Chapter 4 found people’s housing wealth, and especially negative equity, influences their party choice. The insecurity of homeownership during the housing crisis made some voters in the Netherlands change their party choice based on their housing wealth. Chapter 5 studies the potential buffer effect of homeownership and housing wealth on the negative relationship between divorce and subjective wellbeing. The moderating effects of tenure status and housing wealth are researched on three domains of subjective wellbeing: life-satisfaction, financial life-satisfaction, and happiness. This is tested with longitudinal data for Australia (HILDA panel). A comparative panel analysis is used to answer the research question: Is the relationship between divorce and subjective wellbeing
Table 1. 1 Over view of c ountries, v ariables, time,
period and analysis
Chapt er Resear ch Ques tion Numb er of countries Dep endent variable (Y) Indep endent variables (X) Mo der ating / mediating variables (Z) Level of analysis Dat a-se t Perio d Studied Typ e of Analysis 2 1 24 (Eur ope) Suppor t f or redis tribution Homeownership Inc ome (mo)
Age (mo) Macr
o-char act eris tics of housing r egimes (mo) Macr o-Micr o ES S 2 2004-2005 Multilevel l inear regr ession analysis 3 2 19 (18 Eur opean countries + Unit ed Stat es) Elect or al par ticipation Homeownership Length of r esidenc e (me) Housing r egimes (mo) Macr o-Micr o ES S 2 GS S 2004 2004-2005 Multilevel l inear pr obabil ity regr ession analysis with CEM 4 3 1 (The Netherlands) Change in par ty choic e Housing wealth Micr o LIS S 2006-2012 (P anel) multinomial- regr ession analysis 5 4 1 (Aus tr al ia) Subjective wel lbeing Divor ce
Homeownership (mo) Housing wealth (mo)
Chapter 2
Homeownership and Support
for Government Redistribution
Abstract
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2.1 Introduction
In recent years, research has focused on the macro- and micro-level determinants of welfare attitudes in general, and of support for government redistribution in particular. While earlier research was inspired by concerns about welfare state legitimacy in times of austerity and retrenchment (e.g. Arts & Gelissen, 2001; Jæger, 2006), more recently, research has focused on the impact of inequality, risk and vulnerability (e.g. Burgoon & Dekker, 2010; Paskov & Dewilde, 2012). This shift in focus can be linked to the increasing inequality in earnings and income confronting many welfare states since the 1970s (Alderson & Nielsen, 2002).
The topic of this chapter, however, concerns the relationship between homeownership – both as a household-level characteristic and in terms of its prominence and social distribution – and support for government redistribution. Although there are good reasons to study the relationship between inequality, tenure, and welfare attitudes, so far these topics have been dealt with in relative isolation. The first reason concerns the abundance in both scientific literature on tenure and homeownership, as well as in policy circles, of assumptions about the different ‘characteristics’ of owners and tenants (Gurney, 1999; Saunders, 1990), and of the different ‘nature’ of societies promoting either ‘individualistic’ homeownership or rather more ‘solidaristic’ tenure-neutral systems of housing provision (Kemeny, 1981). Most of these assumptions are not properly tested: evidence is mixed and concerns single-country studies based on older Anglo-Saxon data. A first goal of this chapter is therefore to gain more insight into the relationship between homeownership and welfare attitudes, by means of a cross-country comparison of the micro- and macro-level ‘tenure-related’ determinants of support for redistribution.
Second, by looking at homeownership and more broadly at housing regimes, we also contribute to research on welfare attitudes. Since housing is the largest cost in the household budget as well as the largest asset in most homeowners’ investment portfolio, we believe that tenure (in particular housing wealth) is an important micro-level determinant of welfare attitudes. It has, for example, been suggested that tenure and property rights influence political preferences for the level and nature of inflation and taxation (Schwartz & Seabrooke, 2008), and hence also for the level of public spending and redistribution. We therefore formulate our research question at the micro-level as follows: how does tenure influence support
Third, housing regimes – broadly defined as systems of housing provision, allocation and consumption (Kemeny, 1981) – differ across countries and have undergone significant changes in recent decades, in particular the growth of owner-occupation and the deregulation of housing finance. Government policies encouraging homeownership coincided with a stronger integration of housing markets into the wider economy, leading to a higher exposure to housing market risks (e.g. interest rates, house price booms and busts, overindebtness) across the Western world (e.g. OECD, 2011a; Stephens, 2007). In several countries, the ‘capital gains’-potential of homeownership gained in importance relative to the ‘housing service’-function, as homeownership became increasingly commodified and financialized (Aalbers & Christophers, 2014; Beer & Faulkner, 2011; Ronald, 2008; Shiller, 2007). Financial deregulation encouraged house price inflation, which allowed households in a number of countries to use their improved housing equity as collateral in order to raise credit for consumption or welfare needs (e.g. Lowe, 2011). We hence expect the financialization of homeownership also influences individual attitudes towards investments in homeownership and towards the welfare state in general and support for redistribution in particular. In fact, social contributions can be seen as an investment towards a collective risk pool, which then redistributes income vertically towards the needy and horizontally across the life-course (Esping-Andersen & Myles, 2009). It thus becomes an empirical question as to whether the financialization of homeownership has prompted people to reconsider their ‘life-course’ investment strategies away from more collective and institutionalized forms of welfare provision and towards more privatized forms of horizontal insurance. Similar ideas have also been put forward by Ansell (2012, 2014). Using individual-level panel data for the United States (US) and the United Kingdom (UK), Ansell (2014) showed higher levels of, and stronger increases in housing wealth are associated with less positive attitudes towards government intervention. He also showed, at the macro-level, house price increases are associated with decreasing social spending.
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across European countries since the 1990s, global financial deregulation is not the only or most important driver of this trend. In Eastern Europe for instance, house price increases followed from a lack of supply of affordable housing and the lack of access to housing finance, rather than from financial deregulation (Mandič, 2010; Palacin & Shelburne, 2005). Taking account of cross-country differences our second research question therefore reads: how do housing regime characteristics
influence support for redistribution, and the relationship between tenure and support for redistribution?
We research the relationship between tenure, homeownership and welfare attitudes with a multilevel-approach, using data from the European Social Survey (ESS) for 24 countries in 2004. We improve upon earlier research in at least three ways. First, we consider data on a wider range of European countries. Second, we recognize heterogeneity regarding the meaning of tenure and homeownership across countries. And third, we include interactions of age and income with tenure to account for the different role of homeownership over the life course.
2.2 Homeownership, the missing link?
Common wisdom often assumes owners are somehow ‘different’ from tenants. While tenants live in flats and houses, owners live in homes. Although several authors have shown how an ‘ideology of homeownership’ is actively constructed by policy-makers (e.g. Gurney, 1999; Ronald, 2008) and hence not necessarily reflects any real differences between owners and tenants, the assumption that homeownership generates social benefits is widespread. Homeowners are assumed to be better caretakers, more strongly involved in their neighborhoods, more socially and politically active, and are hence portrayed as ‘better’ citizens. Although these findings are only weakly supported (DiPasquale & Glaeser, 1999; McCarthy et al., 2001; Rossi & Weber, 1996), policy-makers nevertheless encourage homeownership in order to achieve positive outcomes such as neighborhood renewal and upward mobility (Gurney, 1999; VROM-raad, 2000).
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European housing regimes at a glance
In the late 19th century, most people in western countries lived in private rented dwellings of low quality, at high cost. Following pressures caused by industrialization and urbanization, housing provision moved into the realm of public policy, resulting in a gradual shrinkage of private renting (Fahey & Norris, 2010; Lowe, 2011). In some countries owner-occupation was stimulated early on, in others housing policy goals were realized through rent regulation and social housing. These choices were partly ideological, serving the beliefs and interests of the dominant elites. For instance, while in Belgium the main political parties (Christian-Democrats and Liberals) strived to encourage suburban homeownership among the working classes in order to promote family life, to discipline the workforce and to prevent socialist ghetto’s (Goossens, 1983), in the Netherlands the preference was for relatively independent social housing corporations, as homeownership was deemed ‘too much of a responsibility’ for the ‘uneducated’ working classes (Kullberg, 2012).
risks. Countries with high homeownership are often characterized by a strong divide between an unregulated private rental sector and an (often smaller) social rental sector, as the latter is mainly targeted at low-income groups (Kemeny, 1995).
In another group of advanced welfare states, housing provision, allocation and consumption is subject to more state regulation and intervention, affecting both public and private providers (Lowe, 2011). In countries such as Sweden, Denmark, Germany, Austria and the Netherlands, consumer choice is more tenure-neutral, resulting in good-quality and affordable housing for different income groups (Kemeny, 1981). Costs and benefits of different tenures are more similar, and housing-related segregation between social classes is blurred. Accordingly, homeownership rates in these countries tend to be lower, and people are more inclined to choose the type of housing which suits their particular life-course stage.
How do housing regimes influence welfare attitudes?
From the above overview, it becomes clear how tenure structures result from political choices influencing the relative costs and benefits of different tenures . Several authors have shown how an ‘ideology of homeownership’ – emphasizing the social and economic benefits of homeownership and housing wealth – is continuously reconstructed over time, e.g. in policy statements, the media and everyday discourse (Gurney, 1999; Ronald, 2008). We expect to find a socializing effect of these underlying ideological constructs and beliefs, as they underpin a sustained policy agenda aimed at promoting this more privatized form of tenure. Before we turn to the moderating influence of housing regimes on the relationship between tenure and welfare attitudes, we discuss the more general theoretical mechanisms pertaining to the relationship between tenure, homeownership and welfare state attitudes.
2.3 Welfare state attitudes and support for redistribution
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Many authors explain support for redistribution by means of the so-called ‘self-interest’-thesis: people prefer the amount of redistribution that benefits them most (Arts & Gelissen, 2001; Blekesaune & Quadagno, 2003; Meltzer & Richard, 1981). Besides respondents’ income or their position in the income distribution, self-interested support for redistribution is also spurred on by perceived risk or vulnerability, for instance when people are unemployed or in a flexible labor market position, or when unemployment or labor market flexibility is high in their society (Blekesaune & Quadagno, 2003; Burgoon & Dekker, 2010). Several authors argue that one’s economic position and perceived level of risk are also influenced by assets (Dallinger, 2010; Scheve & Slaughter, 2001). Traditionally, assets (including housing equity) provide a buffer against life-course risks, in particular those risks linked to old age. Homeownership forms part of the stock of wealth on which people can rely in later life: outright (non-mortgaged) homeownership provides older people with a housing service that is cheaper compared to renting a similar property on the private market. Homeownership also insures people against housing cost inflation and involuntary residential mobility. Outright ownership can moreover be used in order to supplement pension or care needs. As mortgage-based homeownership in a number of countries became more financialized, housing assets also act as a hedge against labor market risks – allowing access to additional credit in order to bridge a period of temporary income loss (Ansell, 2014). The impact of assets on support for redistribution has however remained largely untested.
Homeownership: self-interested behavior and crowding out of spending
