When:
Thursday, February 6, 2025
11:00 AM - 12:00 PM CT
Where: Kellogg Global Hub, 3301, 2211 Campus Drive, Evanston, IL 60208 map it
Audience: Faculty/Staff - Graduate Students
Contact:
Maggie Hendrix
(847) 467-7263
Group: Department of Economics: HELP Workshop
Category: Academic
Speaker: Seung Hyeong Lee
Title: "Giving Up": The Impact of Decreasing Housing Affordability on Consumption, Employment, and Investment
Abstract: Homeownership is becoming out of reach for younger generations. Using a life-cycle structural model, we show that when individuals give up homeownership, they increase consumption by depleting savings originally earmarked for home purchases and increasing marginal propensity to consume. They also reduce employment, as the loss of the goal of homeownership diminishes their need to save and lowers their willingness to endure the disutility of work. These findings align with global trends, where younger cohorts who abandon homeownership aspirations redirect savings toward luxury consumption and reduce work effort. Moreover, under conditions of high variance in risky asset returns and/or robust social safety nets that guarantee a minimum quality of life, these individuals exhibit extreme risk-seeking behaviors as a potential path to homeownership. This also aligns with the observed rise in retail investor participation in high-risk assets. Together, these trends highlight the economic implications of the "giving up" phenomenon. Using transaction-level data from U.S. bank and card account usage, we identify a subsample of individuals whose regional housing markets rendered homeownership unaffordable. We provide empirical evidence that aligns with simulation results.