DPA Research and Policy Virtual Seminar Series – Sarah Cordes
October 7, 2020
12:00 PM - 1:00 PM
Does Homeownership Matter for Childhood Academic and Health Outcomes? Evidence from New York City
Sarah Cordes - Temple University
The view that owning a home is integral to the American dream is enshrined in numerous policies designed to promote homeownership like the mortgage interest deduction and first-time homebuyer programs. Such policies are expensive, with the mortgage interest deduction costing an estimated $30 billion in forgone tax revenue, yet they may be worth the cost if homeownership produces positive externalities, such as higher earnings, better health, and improved academic outcomes. Indeed, there are several theoretical reasons to believe that homeownership could be beneficial for both adults and children--it provides a means for wealth accumulation, could lead to greater residential stability, and may promote neighborhood investment and cohesion. Yet identifying the effects of homeownership is complicated, not only due to standard concerns about household selection into homeownership, but also because owner-occupied housing tends to be located in neighborhoods with better amenities (including schools) and is often synonymous with living in a single-family home. Thus, it is difficult to determine whether differences in the outcomes of homeowners are driven by ownership per se, or differences in these other factors.
Prior work has generally been unable to disentangle the effects of homeownership from housing characteristics and neighborhoods and also tends to focus on adult outcomes, with less known about the effects of homeownership on children. In this paper, we fill this gap by examining the effects of homeownership on children’s academic and health outcomes in New York City (NYC). NYC is an ideal context to study this question due to the wide variation in its housing stock, such that micro-neighborhoods are characterized by a mixture of owner occupants and renters, single and multi-family buildings, etc. This allows us to disentangle the effects of homeownership from other factors such as neighborhoods and building characteristics. Rich, longitudinal student-level data also allow us to address selection in multiple ways, including with student fixed effects. In this paper, explore the following questions:
- Do students living in owner occupied housing (OOH) have better academic and health outcomes than those in rental housing?
- How much of this disparity is explained by differences in students who select into OOH, the neighborhoods in which OOH is located, and characteristics of OOH?
- What is the effect of homeownership for students in single-family homes?
To answer these questions, we use detailed longitudinal student-level demographic and outcome data from 2007-2012 provided by the NYC Department of Education (NYCDOE), which we link with data on building characteristics from the NYC Department of Finance (NYCDOF), and property-level School Credit Tax Relief (STAR) data from the Department of Taxation. The STAR credit is available for properties that serve as the owner’s primary residence and is used to identify owner-occupied housing.
Briefly, we find that there are substantial gaps in outcomes between students in OOH and rental housing. Students in OOH have zbmi that is 0.16 SDs lower, are 4-6 percentage points less likely to be obese or overweight, have higher scores in both reading and math on the order of 0.4 SDs, and higher attendance. Almost three-quarters of this disparity is explained by differences in the students who live in OOH, and another 10 percent by neighborhoods, although all differences remain statistically significant. Once individual and neighborhood differences are accounted for, building characteristics do not explain additional variation in outcomes. When we focus on our sample of students who ever live in owner-occupied single-family housing, we find that moving into owner-occupied SFH has small positive effects on academic outcomes with no effects on health.
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Date posted
Aug 27, 2020
Date updated
Oct 5, 2020