Abstract/Summary

This thesis empirically examines the relationship between housing and happiness, and in particular, how this relationship is affected by adaptation and social status. Standard economic theory assumes housing preferences are constructed independently of past experience and social context. Using fixed effect regressions on the British Household Panel Study (BHPS) and the German Socio Economic Panel Study (GSOEP), this thesis challenges this assumption. Chapter 2 outlines why happiness is important. Chapter 3 traces the role of happiness in economics over time, showing the limitations of choice behaviour as a measure of happiness. Chapter 4 advances an alternative way of measuring happiness adopted in this thesis; subjective judgements. Chapter 5 reviews the literature on housing and happiness, adaptation and social status. The next three empirical chapters represent the main contribution of this thesis. In terms of adaptation, Chapter 6 shows that moving to “larger accommodation” increases housing satisfaction, but this uplift diminishes post-move. Chapter 7 demonstrates that current space preferences are affected by the level of living space experienced in the previous year. In terms of social comparisons, Chapter 7 also demonstrates that space preferences are affected by regional and national levels of living space, implying house size is a positional good. Chapter 8 conceptualises home-ownership (in the UK) as a social norm and positional good, and demonstrates that, consistent with this hypothesis, a strengthening of relevant others’ home-ownership values is associated with increases (decreases) in the happiness of home-owners (renters), while an increase in relevant others’ home-ownership rates decreases the life satisfaction of owners. Chapter 9 discusses the main empirical findings and concludes by operationalising Sen’s capabilities approach as a means to translating the empirical finding into some housing policy recommendations.