IDEAS home Printed from https://ideas.repec.org/a/ifs/fistud/v19y1998i3p249-272.html
   My bibliography  Save this article

Can housing wealth alleviate poverty among Britain's older population?

Author

Listed:
  • Ruth Hancock

Abstract

This paper investigates the scope for housing wealth to alleviate poverty among Britain’s older population by modelling the potential effect of equity-release schemes on the net incomes of older homeowners using data from the 1993-94 and 1994-95 Family Expenditure Surveys. We find that, for the older population in general, the potential impact of equity release on poverty is limited by the positive association between homeownership and income in later life. The scope for equity release to enhance incomes is restricted mainly to the oldest age-groups where life expectancy is short. However, it is at these oldest ages that incomes are lowest and although we estimate that equity release cannot provide much benefit to those in the greatest poverty, the additions to income that equity release could bring to some of the oldest homeowners are not insignificant.

Suggested Citation

  • Ruth Hancock, 1998. "Can housing wealth alleviate poverty among Britain's older population?," Fiscal Studies, Institute for Fiscal Studies, vol. 19(3), pages 249-272, August.
    • Handle: RePEc:ifs:fistud:v:19:y:1998:i:3:p:249-272
    as

    Download full text from publisher

    File URL: http://www.ifs.org.uk/fs/articles/hancock_aug98.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Venti, Steven F. & Wise, David A., 1991. "Aging and the income value of housing wealth," Journal of Public Economics, Elsevier, vol. 44(3), pages 371-397, April.
    2. Sally R. Merrill & Meryl Finkel & Nandinee K. Kutty, 1994. "Potential Beneficiaries from Reverse Mortgage Products for Elderly Homeowners: An Analysis of American Housing Survey Data," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 22(2), pages 257-299, June.
    3. Christopher Giles & Julian McCrae, 1995. "TAXBEN: the IFS microsimulation tax and benefit model," IFS Working Papers W95/19, Institute for Fiscal Studies.
    4. Bradford Case & Ann B. Schnare, 1994. "Preliminary Evaluation of the HECM Reverse Mortgage Program," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 22(2), pages 301-346, June.
    5. Christopher J. Mayer & Katerina V. Simons, 1994. "Reverse Mortgages and the Liquidity of Housing Wealth," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 22(2), pages 235-255, June.
    6. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Equivalence Scale Relativities and the Extent of Inequality and Poverty," Economic Journal, Royal Economic Society, vol. 102(414), pages 1067-1082, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tyson Lamarra & Aaron Bruhn & Michael Miller, 2023. "Stochastic modelling of the home equity access scheme," Australian Journal of Management, Australian School of Business, vol. 48(3), pages 652-677, August.
    2. Knaack,Peter & Miller,Margaret J. & Stewart,Fiona Elizabeth, 2020. "Reverse Mortgages, Financial Inclusion, and Economic Development : Potential Benefit and Risks," Policy Research Working Paper Series 9134, The World Bank.
    3. Disney, Richard & Henley, Andrew & Stears, Gary, 2002. "Housing costs, house price shocks and savings behaviour among older households in Britain," Regional Science and Urban Economics, Elsevier, vol. 32(5), pages 607-625, September.
    4. Lee, Yung-Tsung & Wang, Chou-Wen & Huang, Hong-Chih, 2012. "On the valuation of reverse mortgages with regular tenure payments," Insurance: Mathematics and Economics, Elsevier, vol. 51(2), pages 430-441.
    5. Tippet, Benjamin & Onaran, Özlem & Wildauer, Rafael, 2021. "The determinants of wealth inequality in the UK, USA and France," Greenwich Papers in Political Economy 31260, University of Greenwich, Greenwich Political Economy Research Centre.
    6. Edward Whitehouse & Richard Disney, 2002. "The Economic Well-Being of Older People in International Perspective: A Critical Review," LIS Working papers 306, LIS Cross-National Data Center in Luxembourg.
    7. Ngee-Choon Chia & Albert K C Tsui, 2005. "Reverse Mortgages as Retirement Financing Instrument : An Option for “Asset-rich and Cash-poor†Singaporeans," Finance Working Papers 22566, East Asian Bureau of Economic Research.
    8. Ngee-Choon Chia & Albert K C Tsui, 2005. "Reverse Mortgages as Retirement Financing Instrument: An Option for “Asset-rich and Cash-poor” Singaporeans," SCAPE Policy Research Working Paper Series 0503, National University of Singapore, Department of Economics, SCAPE.
    9. Joan Costa i Font & Joan Gil & Oscar Mascarilla Miró, "undated". "Preferencias de la población ante la financiación de la dependéncia: La hipoteca inversa en Espana," Studies on the Spanish Economy 230, FEDEA.
    10. Lee, Yung-Tsung & Kung, Ko-Lun & Liu, I-Chien, 2018. "Profitability and risk profile of reverse mortgages: A cross-system and cross-plan comparison," Insurance: Mathematics and Economics, Elsevier, vol. 78(C), pages 255-266.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hui Shan, 2011. "Reversing the Trend: The Recent Expansion of the Reverse Mortgage Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 39(4), pages 743-768, December.
    2. Joan Costa i Font & Joan Gil & Oscar Mascarilla Miró, "undated". "Preferencias de la población ante la financiación de la dependéncia: La hipoteca inversa en Espana," Studies on the Spanish Economy 230, FEDEA.
    3. Dillingh, Rik & Prast, Henriette & Rossi, Mariacristina & Urzì Brancati, Cesira, 2017. "Who wants to have their home and eat it too? Interest in reverse mortgages in the Netherlands," Journal of Housing Economics, Elsevier, vol. 38(C), pages 25-37.
    4. Nandinee K. Kutty, 1998. "The Scope for Poverty Alleviation among Elderly Home-owners in the United States through Reverse Mortgages," Urban Studies, Urban Studies Journal Limited, vol. 35(1), pages 113-129, January.
    5. Steven F. Venti & David A. Wise, 2004. "Aging and Housing Equity: Another Look," NBER Chapters, in: Perspectives on the Economics of Aging, pages 127-180, National Bureau of Economic Research, Inc.
    6. Disney, Richard & Whitehouse, Edward, 2001. "Cross-country comparisons of pensioners’ incomes," MPRA Paper 16345, University Library of Munich, Germany.
    7. Seungryul Ma & Yongheng Deng, 2006. "Insurance Premium Structure of Reverse Mortgage Loans in Korea," Working Paper 8568, USC Lusk Center for Real Estate.
    8. Wei Han & Ping Wang & Hao Xu & June-Sung Choi, 2017. "Evaluation of the Reverse Mortgage Option in Hong Kong," Asian Economic Journal, East Asian Economic Association, vol. 31(2), pages 187-210, June.
    9. Mitchell, Olivia S. & Piggott, John, 2004. "Unlocking housing equity in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 18(4), pages 466-505, December.
    10. Tyson Lamarra & Aaron Bruhn & Michael Miller, 2023. "Stochastic modelling of the home equity access scheme," Australian Journal of Management, Australian School of Business, vol. 48(3), pages 652-677, August.
    11. Sun Wei & Triest Robert K. & Webb Anthony, 2008. "Optimal Retirement Asset Decumulation Strategies: The Impact of Housing Wealth," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 3(1), pages 1-29, September.
    12. Hyung-Suk Choi, 2019. "A Numerical Analysis to Study Whether the Early Termination of Reverse Mortgages is Rational," Sustainability, MDPI, vol. 11(23), pages 1-10, December.
    13. Kilgarriff, Paul & Charlton, Martin & Foley, Ronan & O'Donoghue, Cathal, 2019. "The impact of housing consumption value on the spatial distribution of welfare," Journal of Housing Economics, Elsevier, vol. 43(C), pages 118-130.
    14. Hong-Ming Chen & Jing-Yi Chen, 2024. "Structural analysis of reverse mortgages in Taiwan," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-11, December.
    15. Gary V. Engelhardt & Nadia Greenhalgh-Stanley, 2008. "Public Long-Term Care Insurance and the Housing and Living Arrangements of the Elderly: Evidence from Medicare Home Health Benefits," Working Papers, Center for Retirement Research at Boston College wp2008-15, Center for Retirement Research, revised Dec 2008.
    16. Chiang, Shu Ling & Tsai, Ming Shann, 2016. "Analyzing an elder’s desire for a reverse mortgage using an economic model that considers house bequest motivation, random death time and stochastic house price," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 202-219.
    17. Todd Sinai & Nicholas S. Souleles, 2007. "Net Worth and Housing Equity in Retirement," NBER Working Papers 13693, National Bureau of Economic Research, Inc.
    18. Dillingh, Rik, 2016. "Empirical essays on behavioral economics and lifecycle decisions," Other publications TiSEM 0e2143e3-bd86-4302-90eb-e, Tilburg University, School of Economics and Management.
    19. Ngee-Choon Chia & Albert K C Tsui, 2005. "Reverse Mortgages as Retirement Financing Instrument: An Option for “Asset-rich and Cash-poor” Singaporeans," SCAPE Policy Research Working Paper Series 0503, National University of Singapore, Department of Economics, SCAPE.
    20. Dietz, Robert D. & Haurin, Donald R., 2003. "The social and private micro-level consequences of homeownership," Journal of Urban Economics, Elsevier, vol. 54(3), pages 401-450, November.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ifs:fistud:v:19:y:1998:i:3:p:249-272. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emma Hyman (email available below). General contact details of provider: https://edirc.repec.org/data/ifsssuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.