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The consequences of housing attitudes go beyond homeownership rates. They also affect household wealth.

Devastating housing experiences, such as exposure to wartime destruction, lead to a reduced likelihood of homeownership even decades later, finds new research from Frankfurt School of Finance & Management.

Jonas Happel, Prof. Yigitcan Karabulut, and Prof. Larissa Schäfer, from Frankfurt School, and Prof. Selale Tüzel from USC Marshall School of Business, used the residential destruction of Germany during World War II (WWII) to study the impact of negative housing experiences on household attitudes and preferences toward housing and homeownership.

Individuals were divided into cohorts based on whether they were directly exposed to WWII (i.e., born before 1940) or born after 1951 and only experienced the consequences of the war.

By examining household-level data from 1985 to 2017, the researchers studied the degree of variation in destruction across cities and its long-term impact on households' homeownership decisions. The researchers found that those exposed to war in highly destructive areas were significantly less likely to be homeowners decades later.

They find that this variation in housing market participation is driven by people's negative attitudes toward housing and homeownership. The researchers show that war-exposed households tend to occupy smaller homes and value non-housing consumption goods and services, such as travel, more than homeownership.

"The consequences of housing attitudes go beyond homeownership rates. They also affect household wealth. We find that, on average, the financial wealth of destruction-exposed households is similar to that of other households, but these households have lower total wealth due to lower homeownership rates," explains Prof. Karabulut.

This research contributes to literature investigating the long-term effects of warfare on economic outcomes and the role of past experiences in household economic and financial behaviour.

The working paper was first published in the CEPR Discussion Paper Series (DP17420) and is currently being revised for a resubmission for the Journal of Financial Economics.


For more information, a copy of the research, or to speak with the researchers for more information, please contact Kyle Grizzell from BlueSky Education on +44 (0) 1582 790709 or

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