The Benefits of the Home Mortgage Interest Deduction

Edward Glaeser and Jesse Shapiro

No 9284, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The home mortgage interest deduction creates incentives to buy more housing and to become a homeowner, and the case for the deduction rests on social benefits from housing consumption and homeownership. There is little evidence suggesting large externalities from the level of housing consumption, but there appear to be externalities from homeownership. Externalities from living around homeowners are far too small to justify the deduction. Externalities from homeownership are larger, but the home mortgage interest deduction is a particularly poor instrument for encouraging homeownership since it is targeted at the wealthy, who are almost always homeowners. The irrelevance of the deduction is supported by the time series which shows that the ownership subsidy moves with inflation and has changed significantly between 1960 and today, but the homeownership rate has been essentially constant.

Date: 2002-10
New Economics Papers: this item is included in nep-ure
Note: EFG PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (50)

Published as The Benefits of the Home Mortgage Interest Deduction , Edward L. Glaeser, Jesse M. Shapiro. in Tax Policy and the Economy, Volume 17 , Poterba. 2003

Downloads: (external link)
http://www.nber.org/papers/w9284.pdf (application/pdf)

Related works:
Chapter: The Benefits of the Home Mortgage Interest Deduction (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:9284

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w9284

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().