Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top
Social Indicators Research
Published in: Social Indicators Research 3/2017

18-07-2016

Tenure and Spending Within UK Households at the End of the Recent Recession

Author: Jacinta C. Nwachukwu

Published in: Social Indicators Research | Issue 3/2017

Log in

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

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.
previous article Assessing Changes in Household Socioeconomic Status in Rural South Africa, 2001–2013: A Distributional Analysis Using Household Asset Indicators
next article Students Mobility: Assessing the Determinants of Attractiveness Across Competing Territorial Areas

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

inform now
Footnotes
1
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.
 
Literature
Abel, A. B. (1985). Precautionary saving and accidental bequests. American Economic Review, 75, 777–791.
Abel, A. B. (1986). The failure of Ricardian equivalence under progressive wealth taxation. NBER working paper no. 1983. Cambridge, MA: National Bureau of Economic Research.
Aitchison, J., & Brown, J. A. C. (1954). A synthesis of Engel curve theory. The Review of Economic Studies, 22(1), 35–46.CrossRef
Anderson, M., Bechhofer, F., & Gershuny, J. (1994). The social and political economy of the household. Oxford: Oxford University Press.
Asteriou, D., & Hall, S. G. (2007). Applied econometrics: A modern approach using Eviews and Microfit (Revised ed.). London: Palgrave Macmillan.
Atkinson, A. B., Gomulka, J., & Stern, N. H. (1990). Spending on alcohol: Evidence from the family expenditure survey 1970–1983. Economic Journal, 100(402), 808–827.CrossRef
Attanasio, O., & Weber, G. (1994). The UK consumption boom of the late 1980’s: Aggregate implications of microeconomic evidence. Economic Journal, 104(427), 1269–1302.CrossRef
Attanasio, O. P., & Weber, G. (2010). Consumption and saving: Models of intertemporal allocation and their implications for public policy. Journal of Economic Literature, 48, 693–751.CrossRef
Barro, R. (1974). Are government bonds net wealth? Journal of Political Economy, 81, 1095–1117.CrossRef
Belsky, E., & Prakken, J. (2004). Housing wealth effects: Housing’s impact on wealth accumulation, wealth distribution and consumer spending. National Centre for real estate research report W04-13, Harvard University, Boston.
Benito, A., Thompson, J., Waldron, M., & Wood, R. (2006). House prices and consumer spending. Bank of England Quarterly Bulletin, Summer, 142–154.
Bernheim, B., & Bagwell, K. (1986). Is everything neutral? Journal of Political Economics, 96(2), 308–338.CrossRef
Blanchard, O. J. (1985). Debt, deficits and finite horizons. Journal of Political Economy, 93(2), 223–247.CrossRef
Blundell, R. (1988). Consumer behaviour: Theory and empirical evidence—A survey. The Economic Journal, 98(389), 16–65.CrossRef
Blundell, R., Pashardes, P., & Weber, G. (1993). What do we learn about consumer demand patterns from micro data? American Economic Review, 83(3), 570–597.
Bostic, R., Gabriel, S., & Painter, G. (2009). Housing Wealth, Financial Wealth, and Consumption: New Evidence from Micro data. Regional Science and Urban Economics, 39, 79–89.CrossRef
Bosworth, B., Burtless, G., & Sabelhaus, J. (1991). The decline in saving: Some microeconomic evidence. Brookings Paper on Economic Activity, 26, 313–336.
Brooks, C. (2008). Introductory econometrics for finance (2nd ed.). Cambridge: Cambridge University Press.CrossRef
Brumberg, R. E. (1956). An approximation to the aggregate saving function. Economic Journal, 46, 66–72.CrossRef
Buchinsky, M. (1998). Recent advances in quantile regression—A practical guide for empirical research. Journal of Human Resources, 33(1), 88–126.CrossRef
Caglayn, E., & Astar, M. (2012). A microeconometric analysis of household consumption expenditure determinants for rural and urban areas in Turkey. American International Journal of Contemporary Research, 2(2), 27–34.
Campbell, J. (1987). Does saving anticipate declining labour income? An alternative test of the permanent income hypothesis. Econometrica, 55(6), 1249–1273.CrossRef
Campbell, Y., & Cocco, F. (2007). How do house prices affect consumption? Evidence from micro data. Journal of Monetary Economics, 54, 591–621.CrossRef
Capps, O., & Love, L. (1983). Determinants of household expenditure on fresh vegetables. Southern Journal of Agricultural Economics, 15, 127–132.CrossRef
Carmichael, J. (1982). On Barro’s theorem of debt neutrality: The irrelevance of net wealth. American Economic Review, 72(1), 202–213.
Carroll, C. (2001). A theory of the consumption function, with and without liquidity constraints. Journal of Economic Perspectives, 15(3), 23–45.CrossRef
Carroll, C. (2004). Housing wealth and consumption expenditure. Paper prepared for the Academic Consultants meeting of the Board of Governors of the Federal Reserve System.
Carruth, A., & Henley, A. (1990). The housing market and consumer spending. Fiscal Studies, 11(3), 27–38.CrossRef
Case, K. E., Quigley, J. M., & Shiller, R. J. (2005). Comparing wealth effects: The stock market versus the housing market. Advances in Macroeconomics, 5(1), 1534–6013.CrossRef
Chen, J. (2006). Re-evaluating the association between housing wealth and aggregate consumption: New evidence from Sweden. Journal of Housing Economics, 15, 321–348.CrossRef
Collis, J., Grayson, A., & Joha, S. (2010). Econometric analysis of alcohol consumption in the UK, HMRC working paper 10.
Crossley, T. F., Low, H., & O’Dea, C. (2012). Household consumption through recent recessions. Institute of Fiscal Studies, working paper 11/18.
Crossley, T. F., & O’Dea, C. (2010). The wealth and saving of UK families on the eve of the crisis. Institute for Fiscal Studies report no. 71.
Danziger, S., Van Der Gaag, J., Smolensky, E., & Taussig, M. (1982). The life-cycle hypothesis and the consumption behavior of the elderly. Journal of Post Keynesian Economics, 5(2), 208–227.CrossRef
Deaton, A. (1986). Life-cycle models of consumption: Is the evidence consistent with the theory? NBER working paper no. 1910.
Deaton, A. (2000). The analysis of household surveys: A microeconomic approach to development policy. Baltimore, MD: The John Hopkins University Press.
Deaton, A., & Paxson, C. (1998). Economies of scale, household size, and the demand for food. Journal of Political Economy, 106, 897–930.CrossRef
Diamond, P. A. (1965). National debt and neoclassical economic growth. American Economic Review, 55, 1125–1150.
Disney, R., Henley, A., & Jevons, D. (2002). House price shocks, negative equity and household consumption in the UK in the 1990s. Wales: Manuscript, School of Management and Business, University of Wales Aberystwyth.
Duesenberry, J. S. (1949). Income, saving and the theory of consumer behaviour. Cambridge: Harvard University Press.
Dvornak, N., & Kohler, M. (2003). Housing wealth, stock market wealth and consumption: A panel analysis for Australia. Reserve Bank of Australia research discussion paper, RDP2003-07.
Dynan, K., & Maki, D., (2001). Does the Stock Market Wealth Matter for Consumption? Working paper, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, DC, 2001–2023.
Edison, H., & Slok, T. (2001). Wealth effects and the new economy. Working paper, international monetary fund.
Elliot, J. W. (1980). Wealth and wealth proxies in a permanent income model. Quarterly Journal of Economics, 95, 509–535.CrossRef
Engel, J., & Kneip, A. (1996). Recent approaches to estimating Engel curves. Journal of Economics, 63(2), 187–212.CrossRef
Engelhardt, G. V. (1996). House prices and home owner saving behaviour. Regional Science and Urban Economics, 26(3/4), 313–336.CrossRef
Feldstein, M. (1986). The effects of fiscal policies when incomes are uncertain: A contradiction to Ricardian equivalence. Working paper no. 2062, NBER, Cambridge, MA.
Friedman, M. (1957). A theory of the consumption function. Princeton: Princeton University Press.
Gale, W. G., & Sabelhaus, J. (1999). The savings crisis: In the eye of the beholder?. Washington, DC: The Milken Institute.
Hall, R. E. (1978). Stochastic implication of the life cycle-permanent income hypothesis: Theory and evidence. Journal of Political Economy, 86, 971–988.CrossRef
Hall, R. E. (1981). Intertemporal substitution in consumption. National Bureau of Economic Research, Working paper no. 720. NBER Cambridge, MA.
Härdle, W., Hildenbrand, W., & Jerison, M. (1991). Empirical evidence on the law of demand. Econometrica, 59, 1525–1549.CrossRef
Hirsch, F. (1976). Social limits to growth. New York: The Twentieth Century Fund.CrossRef
Houthakker, H. S. (1952). The econometrics of family budgets. Journal of the Royal Statistical Society, Series A, 115(1), 1–28.CrossRef
Houthakker, H. S. (1957). An international comparison of household expenditure patterns, commemorating the century of Engel’s law. Econometrica, 25, 532–551.CrossRef
Jacobson, D., Mavrikiou, P. M., & Minas, C. (2010). Household size, income and expenditure on food: The case of Cyprus. The Journal of Socio-Economics, 39, 319–328.CrossRef
Khoman, E., & Weale, M. (2008). Are we living beyond our means? A comparison of France, Italy, Spain and the United Kingdom. National Institute discussion paper no. 311.
Koenker, R., & Bassett, G. (1978). Regression quantiles. Econometrica, 46(1), 33–50.CrossRef
Koenker, R., & Hallock, K. F. (2001). Quantile regression. Journal of Economic Perspectives, 15(4), 143–156.CrossRef
Kotlikoff, L. J. (1988). Intergenerational transfers and savings. Journal of Economic Perspectives, 2(2), 41–58.CrossRef
Kotlikoff, L., & Spivak, A. (1981). The family as an incomplete annuities market. Journal of Political Economy, 89(2), 372–391.CrossRef
Leland, H. (1968). Saving and uncertainty: The precautionary demand for saving. The Quarterly Journal of Economics, 82(3), 465–473.CrossRef
Lettau, M., & Ludvigson, S. (2004). Understanding trend and cycle in asset values: Re-evaluating the wealth effect on consumption. American Economic Review, 94, 276–299.CrossRef
Lise, J., & Seitz, S. (2011). Consumption inequality and intra-household allocations. Review of Economic Studies, 78(1), 328–355.CrossRef
Mankiw, N. G. (1981). The permanent income hypothesis and the real interest rate. Economics Letters, 7, 307–311.CrossRef
Mankiw, N. G., & Shapiro, N. D. (1985). Trends, random walks and tests of the permanent income hypothesis. Journal of Monetary Economics, 16, 165–174.CrossRef
Manning, W. G., Blumberg, L., & Moulton, L. H. (1995). The demand for alcohol: The differential response to price. Journal of Health Economics, 14, 123–148.CrossRef
Mayer, T. (1972). Permanent income, wealth and consumption. Berkeley: University of California Press.
Meng, Y., Brennana, A., Purshouseb, R., Hill-McManusa, D., Angusa, C., Holmesa, J., et al. (2014). Estimation of own and cross price elasticities of alcohol demand in the UK—A pseudo-panel approach using the living costs and food survey 2001–2009. Journal of Health Economics, 34(2014), 96–103.CrossRef
Miles, D. (1992). Housing markets, consumption and financial liberalisation in the major economies. European Economic Review, 36, 1093–1136.CrossRef
Miles, D. (1993). House prices, personal sector wealth and consumption: some conceptual and empirical issues. The Manchester School, 61, 35–59.CrossRef
Miles, D. (1997). A household level survey of the determinants of incomes and consumption. The Economic Journal, 107(440), 1–25.CrossRef
Millard, S., & Power, J. (2004). The effects of stock market movements on consumption and investment: Does the shock matter? Bank of England working paper no. 236.
Miller, D. (1998). A theory of shopping. London: Polity Press.
Modigliani, F. (1961). Long-run implications of alternative fiscal policies and the burden of the national debt. Economic Journal, 71, 730–755.CrossRef
Modigliani, F. (1963). The life-cycle hypothesis of savings: Aggregate implications tests. American Economic Review, 53, 53–84.
Modigliani, F. (1964). The life-cycle hypothesis of savings: A correction. American Economic Review, 54(2), 111–113.
Modigliani, F. (1966). The life cycle hypothesis of saving, the demand for wealth and the supply of capital. Social Research, 33(2), 160–217.
Modigliani, F., & Ando, A. (1957). Tests of the life-cycle hypothesis of saving. Bulletin of Oxford University Institute of Statistics, 19, 99–124.CrossRef
Modigliani, F., & Sterling, A. (1976). Government debt, government spending and private sector behaviour: A comment. American Economic Review, 76(5), 1168–1179.
Muellbauer, J., & Murphy, A. (1997). Booms and busts in the UK housing market. The Economic Journal, 107(445), 1701–1727.CrossRef
Nickell, S. (2004). Household debt, house prices and consumption growth. Bank of England Quarterly Bulletin, Autumn, 383–389.
O’Driscoll, G. P, Jr. (1977). The Ricardian non-equivalence theorem. Journal of Political Economy, 85, 207–210.CrossRef
Pahl, J. (1999). Invisible money: Family finances in the electronic economy. Bristol: Policy Press.
Pahl, J. (2000). The gendering of spending within households. Radical Statistics, 75, 38–48.
Poterba, J. M. (2000). Stock market wealth and consumption. The Journal of Economic Perspectives, 14(2), 99–118.CrossRef
Prais, S. J. (1952). Non-linear estimates of the Engel curves. The Review of Economic Studies, 20(2), 87–104.CrossRef
Purshouse, R. C., Meier, P. S., Brennan, A., Taylor, K. B., & Rafia, R. (2010). “Estimated effect of alcohol pricing policies on health and health economic outcomes in England: An epidemiological model. Lancet, 375, 1355–1364.CrossRef
Ronning, G., & Schulze, N. (2004). A microeconomic characterisation of household consumption using quantile regression. Applied Economics Quarterly, 50(2), 183–208.
Scholz, J. K., Seshadri, A., & Khitatrakun, S. (2006). Are Americans saving “optimally” for retirement? Journal of Political Economy, 114, 607–643.CrossRef
Scitovsky, T. (1976). The Joyless economy: An inquiry into human satisfaction and con-sumer dissatisfaction. Oxford: Oxford University Press.
Seater, J. J. (1993). Ricardian equivalence. Journal of Economic Literature, 31, 142–190.
Sheiner, L. (1995). Housing prices and the savings of renters. Journal of Urban Economics, 38, 94–125.CrossRef
Sinai, T., & Souleles, N. (2005). Owner-occupied housing as a hedge against rent risk. Quarterly Journal of Economics, 120, 763–789.
Skinner, J. (1989). Housing wealth and aggregate saving. Regional Science and Urban Economics, 19, 305–324.CrossRef
Stigler, G. J. (1954). The early history of empirical studies of consumer behaviour. Journal of Political Economy, 62(2), 95–113.CrossRef
Tanner, J. E. (1978). Fiscal policy and consumer behaviour. Review of Economics and Statistics, 61, 317–321.CrossRef
Thaler, R. (1990). Anomalies: Saving, fungibility, and mental accounts. The Journal of Economic Perspectives, 4(1), 193–205.CrossRef
Van de Ven, J. (2011). Expenditure and disposable income trends of UK households: Evidence from micro-data. National Institute Economic Review, No. 218.
Metadata
Title
Tenure and Spending Within UK Households at the End of the Recent Recession
Author
Jacinta C. Nwachukwu
Publication date
18-07-2016
Publisher
Springer Netherlands
Published in
Social Indicators Research / Issue 3/2017
Print ISSN: 0303-8300
Electronic ISSN: 1573-0921
DOI
https://doi.org/10.1007/s11205-016-1409-z

Other articles of this Issue 3/2017

Social Indicators Research 3/2017 Go to the issue

Erratum

Erratum to: The Potential of Direct Democracy: A Global Measure (1900–2014)

OriginalPaper

Quadrilateral Relationship Between Information and Communications Technology, Patent Applications, Research and Development Expenditures, and Growth Factors: Evidence from the Group of Seven (G-7) Countries

OriginalPaper

Using VPI to Measure Poverty-Stricken Villages in China

OriginalPaper

The Cost of Well-Being

OriginalPaper

Can We Trust Measures of Political Trust? Assessing Measurement Equivalence in Diverse Regime Types

OriginalPaper

Electoral Participation: How to Measure Voter Turnout?

Premium Partner

    Image Credits