Low-Income Homeownership: Examining the Unexamined Goal

Chapter 15. Impact of Homeownership on Child Outcomes

There are many claims that homeownership yields significant benefits for the owners, the owners’ local community, and the nation, but there are relatively few studies of this assertion that fully address the complex modeling, data, and estimation issues that the claim implies. Recently, there has been substantial interest in measuring the impact of homeowning on the children of homeowners. We add to this literature by focusing on measuring the impact of homeownership on the cognitive and behavioral outcomes of young children. Our child outcome measures include normed achievement test scores in mathematics and reading and an indicator of behavioral adjustment. Our measures of cognitive achievement have good predictive validity and are associated with contemporaneous and subsequent measures of school achievement (Baker and others, 1993), an important precursor of occupational and earnings attainment . Regarding behavioral adjustment, researchers have documented continuities between aggressive, antisocial behavior in childhood and subsequent analogous adult behaviors (see Caspi, Elder, and Bem, 1987; Forgatch, Patterson, and Skinner, 1988; Kohlberg, LaCrosse, and Ricks, 1972; Mechanic, 1980). Overcontrolled , inhibited, or fearful behaviors are associated with later learning diffi427 Impact of Homeownership on Child Outcomes donald r. haurin, toby l. parcel, and r. jean haurin 15 The authors thank the National Association of Home Builders for funding assistance. We also thank David Brasington, Nam-yll Kim, Donghui Qiu, Mikaela Dufur, and Robert Dietz for their assistance. We thank the participants of the Harvard Joint Center for Housing Studies LowIncome Homeownership Symposium for comments. file06 ch13-16 pp375-478.qxd 7/5/2002 2:26 PM Page 427 culties (Kohn, 1977). Our measure of behavior, discussed in more detail below, draws on indicators of both overly aggressive and inhibited behaviors. We expect our findings will be important in the discussion of public subsidies for homeownership. Examples of current topics related to public intervention in the homeownership decision include the conversion of public rental housing to owned units, government subsidies to reduce down payments, and enforcement measures related to illegal discrimination in the housing market. Economists have found that one impact of a public subsidy for homeownership is to quicken the conversion from renting to owning (Bourassa and others, 1994). Finding that homeownership positively affects child outcomes strengthens the argument for early homeownership. Public subsidies of homeownership are supported if ownership reduces child behavior problems, because these behaviors are precursors of later and more significant deviant behavior. Improved child cognition not only yields increased future earnings for the child but also generates the externalities associated with a higher-achieving population. Literature There are few published studies about the relationship of homeownership to child outcomes. Green and White (1997) use three national data sets (Panel Study of Income Dynamics [PSID], 1980 Census PUMS, and High School and Beyond) to investigate the effect of parental homeownership on the probability that a 17-year-old will remain in school and that a 17-year-old female will give birth to a child. They find that parental homeownership reduces the probability that resident 17-year-old children will drop out or give birth. Aaronson (2000) notes that empirical studies in the economics of education literature support the hypothesis that greater temporal stability of a household increases a child’s cognitive performance (Hanushek, Kain, and Rivkin, 1999). Using the PSID, Aaronson retests Green and White’s hypothesis, but he separates the mobility effect from other homeownership effects. He finds that mobility is disruptive and that the stability associated with homeownership increases the likelihood that a 19-year-old will graduate from high school. Homeownership also has a positive impact on the graduation rate other than through increased stability, but the size of the impact varies across empirical specifications. Our approach differs from the studies by Aaronson and Green and White in many ways. We focus on cognitive and behavioral outcomes of young children, not older teenage youths; thus our approach better links the timing of homeownership with the observation of a child’s outcomes. We also use multiple observations of each child’s outcomes, allowing us to control for unobserved child-specific factors such as innate cognitive ability. The breadth of our control variables is much greater, including measures of household wealth and attributes 428 socioeconomic impacts of homeownership file06 ch13-16 pp375-478.qxd 7/5/2002 2:26 PM Page 428 of the locality. Finally, our model tests for impacts of homeownership both directly on child outcomes and through an intervening variable measuring...