Asset maintenance as hidden investment among the poor and rich: Application to housing
Substituting maintenance of existing fixed assets for investment in new assets, and thus affecting their depreciation, can play a major role in the economic decisions of low-income agents. We develop a theoretical framework that shows that poorer households, which generally face relatively higher ad...
| Autores principales: | , |
|---|---|
| Formato: | Journal Article |
| Lenguaje: | Inglés |
| Publicado: |
Elsevier
2021
|
| Materias: | |
| Acceso en línea: | https://hdl.handle.net/10568/142886 |
| _version_ | 1855541972256686080 |
|---|---|
| author | Hernandez, Manuel A. Trupkin, Danilo R. |
| author_browse | Hernandez, Manuel A. Trupkin, Danilo R. |
| author_facet | Hernandez, Manuel A. Trupkin, Danilo R. |
| author_sort | Hernandez, Manuel A. |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | Substituting maintenance of existing fixed assets for investment in new assets, and thus affecting their depreciation, can play a major role in the economic decisions of low-income agents. We develop a theoretical framework that shows that poorer households, which generally face relatively higher adjustment (moving) costs and more credit constraints, will adjust their home maintenance decisions to a higher degree than richer households after an income change. We test our predictions using a panel of homeowners from the American Housing Survey for 1997-2011. We find that the income elasticity of maintenance is higher among low- versus high-income households and that the adjustment differences are more acute for permanent than for transitory income changes. For every dollar increase in the estimated permanent and transitory income, home maintenance expenses will increase by 5.2 and 2.9 cents in the lower income tertile and by zero and 0.5 cents in the upper tertile. |
| format | Journal Article |
| id | CGSpace142886 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2021 |
| publishDateRange | 2021 |
| publishDateSort | 2021 |
| publisher | Elsevier |
| publisherStr | Elsevier |
| record_format | dspace |
| spelling | CGSpace1428862025-02-24T06:49:32Z Asset maintenance as hidden investment among the poor and rich: Application to housing Hernandez, Manuel A. Trupkin, Danilo R. income housing elasticity investment households assets household consumption depreciation Substituting maintenance of existing fixed assets for investment in new assets, and thus affecting their depreciation, can play a major role in the economic decisions of low-income agents. We develop a theoretical framework that shows that poorer households, which generally face relatively higher adjustment (moving) costs and more credit constraints, will adjust their home maintenance decisions to a higher degree than richer households after an income change. We test our predictions using a panel of homeowners from the American Housing Survey for 1997-2011. We find that the income elasticity of maintenance is higher among low- versus high-income households and that the adjustment differences are more acute for permanent than for transitory income changes. For every dollar increase in the estimated permanent and transitory income, home maintenance expenses will increase by 5.2 and 2.9 cents in the lower income tertile and by zero and 0.5 cents in the upper tertile. 2021-04-01 2024-05-22T12:11:15Z 2024-05-22T12:11:15Z Journal Article https://hdl.handle.net/10568/142886 en https://doi.org/10.2139/ssrn.2615603 Open Access Elsevier Hernandez, Manuel A.; and Trupkin, Danilo R. 2021. Asset maintenance as hidden investment among the poor and rich: Application to housing. Review of Economic Dynamics 40(April 2021): 128-145. https://doi.org/10.1016/j.red.2020.09.004 |
| spellingShingle | income housing elasticity investment households assets household consumption depreciation Hernandez, Manuel A. Trupkin, Danilo R. Asset maintenance as hidden investment among the poor and rich: Application to housing |
| title | Asset maintenance as hidden investment among the poor and rich: Application to housing |
| title_full | Asset maintenance as hidden investment among the poor and rich: Application to housing |
| title_fullStr | Asset maintenance as hidden investment among the poor and rich: Application to housing |
| title_full_unstemmed | Asset maintenance as hidden investment among the poor and rich: Application to housing |
| title_short | Asset maintenance as hidden investment among the poor and rich: Application to housing |
| title_sort | asset maintenance as hidden investment among the poor and rich application to housing |
| topic | income housing elasticity investment households assets household consumption depreciation |
| url | https://hdl.handle.net/10568/142886 |
| work_keys_str_mv | AT hernandezmanuela assetmaintenanceashiddeninvestmentamongthepoorandrichapplicationtohousing AT trupkindanilor assetmaintenanceashiddeninvestmentamongthepoorandrichapplicationtohousing |