Are Homeowners Happier than Tenants? Empirical Evidence for Switzerland

Abstract

Many people have a strong preference to own the house or apartment they are living in. Among other factors, homeownership is expected to affect the subjective well-being of individuals. Our paper analyzes the impact of homeownership on subjective well-being in Switzerland. Based on the data from the Swiss Houshehold Panel (SHP) over the time period from 2000 to 2016, we use a generalized ordered logit model to explain life satisfaction by a set of relevant factors including homeownership. Our results, which have been tested for robustness within several specifications, provide strong empirical evidence for the fact that homeowners are happier than tenants. This effect seems to be robust over the years considered as well as for different specifications of our model. In order to control for a potential reverse causality effect, we separately analyze the subsample of households that had a change in the homeownership but no changes with respect to other characteristics. The generated odds ratios confirm the positive impact of homeownership on people's happiness and the absence of a reverse causality effect.