Skip to main content

The Political Economy of Ownership: Housing Markets and the Welfare State

  • BEN ANSELL (a1)

The major economic story of the last decade has been the surge and collapse of house prices worldwide. Yet political economists have had little to say about how this critical phenomenon affects citizens’ welfare and their demands from government. This article develops a novel theoretical argument linking housing prices to social policy preferences and policy outcomes. I argue that homeowners experiencing house price appreciation will become less supportive of redistribution and social insurance policies since increased house prices both increase individuals’ permanent income and the value of housing as self-supplied insurance against income loss. Political parties of the right will, responding to these preferences, cut social spending substantially during housing booms. I test these propositions using both microdata on social preferences from panel surveys in the USA, the UK, and a cross-country survey of 29 countries, and macrodata of national social spending for 18 countries between 1975 and 2001.

Corresponding author
Ben Ansell is Professor of Comparative Democratic Institutions, Department of Politics and International Relations and Professorial Fellow, Nuffield College, University of Oxford, New Road, Oxford, OX1 1NF, United Kingdom (
Hide All
Armingeon Klaus, Gerber Marlène, Leimgruber Philipp, and Beyeler Michelle. 2008. “Codebook: Comparative Political Data Set I, 1960–2005.” Institute of Political Science, University of Berne.
Atterhög Mikael. 2005. “Importance of Government Policies for Home Ownership Rates: An International Survey and Analysis.” Swedish Royal Institute of Technology.
Bartels Larry. 2002. “Beyond the Running Tally: Partisan Bias in Political Perceptions.” Political Behavior 24 (2): 117–50.
Busemeyer Marius. 2009. “From Myth to Reality: Globalisation and Public Spending in OECD Countries Revisited.” European Journal of Political Research 48 (4): 455–82.
Cardarelli Roberto, Igan Deniz, and Rebucci Alessandro. 2008. “The Changing Housing Cycle and the Implications for Monetary Policy.” IMF World Economic Outlook.
Carroll Christopher. 1997. “Buffer-Stock Saving and the Life Cycle/Permanent Income Hypothesis.” The Quarterly Journal of Economics 112 (1): 155.
Carsey Thomas, and Layman Geoffrey. 2006. “Changing Sides or Changing Minds? Party Identification and Policy Preferences in the American Electorate.” American Journal of Political Science 50: 464–77.
Case Karl E., Shiller Robert J., and Thompson Anne K.. 2012. “What Have They Been Thinking?: Homebuyer Behavior in Hot and Cold Markets.” Brookings Papers on Economic Activity 2012 (2): 265315.
Castles Francis. 1998. “The Really Big Trade-Off: Home Ownership and the Welfare State in the New World and the Old.” Acta Politica 33: 519.
Conley Dalton, and Gifford Brian. 2006. “Home Ownership, Social Insurance, and the Welfare State.” Sociological Forum 21 (1): 5582.
Cusack Thomas, and Engelhardt Lutz. 2002. “The PGL File Collection: File Structures and Procedures.” Wissenschaftszentrum Berlin für Sozialforschung.
Esping-Andersen Gøsta. 1990. The Three Worlds of Welfare Capitalism. Cambridge, UK: Polity Press.
Estevez-Abe Margarita, Iversen Torben, and Soskice David. 2001. “Social Protection and the Formation of Skills.” In Varieties of Capitalism, eds. Hall Peter and Soskice David. 145–83.
Friedman Milton. 1957. A Theory of the Consumption Function. Princeton, NJ: Princeton University Press.
Goldthorpe John, Lockwood David, Bechhofer Frank, and Platt Jennifer. 1969. The Affluent Worker in the Class Structure. New York: Cambridge University Press.
Hacker Jacob. 2006. The Great Risk Shift: The Assault on American Jobs, Families, Health Care, and Retirement and How You can Fight Back. New York: Oxford University Press.
Hall Peter, and Soskice David. 2001. Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. New York: Oxford University Press.
Huber Evelyn, and Stephens John D.. 2001. Development and Crisis of the Welfare State: Parties and Policies in Global Markets. Chicago: University of Chicago Press.
Iversen Torben, and Soskice David. 2001. “An Asset Theory of Social Policy Preferences.” American Political Science Review 95 (4): 875–94.
Kemeny Jim. 1981. Myth of Home-ownership. London: Routledge.
Kingston Paul, Thompson John, and Eichar Douglas. 1984. “The Politics of Homeownership.” American Politics Research 12 (2): 131–50.
Laderman Elizabeth, and Reid Carolina. 2008. “Lending in Low-and Moderate-Income Neighborhoods in California: the Performance of CRA Lending during the Subprime Meltdown.” Federal Reserve Bank of San Francisco Working Paper, 2008–5.
Lindert Peter. 2004. Growing Public: Social Spending and Economic Growth since the Eighteenth Century, Vol. 1. New York: Cambridge University Press.
Mares Isabela. 2003. The Politics of Social Risk: Business and Welfare State Development. New York: Cambridge University Press.
Margalit Yotam. 2013. “Explaining Social Policy Preferences: Evidence from the Great Recession.” American Political Science Review 107 (1): 80103.
Meltzer A. H., and Richard S. F.. 1981. “A Rational Theory of the Size of Government.” The Journal of Political Economy 89 (5): 914–27.
Mian Atif, Sufi Amir, and Trebbi Francesco. 2010. “The Political Economy of the US Mortgage Default Crisis.” American Economic Review 100 (5): 1967–98.
Modigliani Franco, and Brumberg Richard. 1954. “Utility analysis and the consumption function: An interpretation of cross-section data.” In Post-Keynesian Economics. New Brunswick: Rutgers University Press.
Prasad Monica. 2012. The Land of Too Much: American Abundance and the Paradox of Poverty. Cambridge, MA: Harvard University Press.
Rajan Raghuram. 2010. Fault Lines. Princeton, NJ: Princeton University Press.
Rehm Philipp. 2011. “Social Policy by Popular Demand.” World Politics 63 (2): 271–99.
Rehm Philipp, Hacker Jacob, and Schlesinger Mark. 2012. “Insecure Alliances: Risk, Inequality, and Support for the Welfare State.” American Political Science Review 106 (2): 386406.
Rodrik Dani. 1998. “Why do More Open Economies Have Bigger Governments?Journal of Political Economy 106 (5): 9971032.
Scheve Kenneth, and Slaughter Matthew. 2001. “What Determines Individual Trade-Policy Preferences?Journal of International Economics 54: 267–92.
Schwartz Herman. 2009. Subprime Nation: American Power, Global Capital, and the Housing Bubble. Ithaca: Cornell University Press.
Schwartz Herman, and Seabrooke Leonard. 2008. “Varieties of Residential Capitalism in the International Political Economy.” Comparative European Politics 6 (3): 237–61.
Scruggs Lyle. 2004. “Welfare State Entitlements Data Set: A Comparative Institutional Analysis of Eighteen Welfare States.” Data set. Version 1: 1977–2002.
Shiller Robert. 2007. Irrational Exuberance. Princeton, NJ: Princeton University Press.
Stegmueller Daniel. 2013. “Modeling Dynamic Preferences: A Bayesian Robust Dynamic Latent Ordered Probit Model.” Political Analysis 21 (3): 314–33.
Teorell Jan, Samanni Marcus, Charron Nicholas, Holmberg Sören, and Rothstein Bo.. 2010. The Quality of Government Dataset. University of Gothenburg: The Quality of Government Institute.
Verberg Norine. 2000. “Homeownership and Politics: Testing the Political Incorporation Thesis.” Canadian Journal of Sociology 25 (2): 169–95.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

American Political Science Review
  • ISSN: 0003-0554
  • EISSN: 1537-5943
  • URL: /core/journals/american-political-science-review
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
Type Description Title
Supplementary materials

Ansell Supplementary Material
Supplementary Material

 PDF (137 KB)
137 KB


Altmetric attention score

Full text views

Total number of HTML views: 44
Total number of PDF views: 626 *
Loading metrics...

Abstract views

Total abstract views: 1622 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 18th February 2018. This data will be updated every 24 hours.