Reconciling User Costs and Rental Equivalence: Evidence from the U.S. Consumer Expenditure Survey

摘要

Previous research demonstrated that housing rents and ex ante user costs diverge markedly for extended periods of time, a finding with profound implications for income and inflation measurement. But the primary data sources in that study were various indexes, based upon largely disjoint data sources, constructed using different aggregation techniques, and each subject to various criticisms. This raised doubts about the quality of the comparison. The relationship between user costs and rents might well be much tighter at the micro level; after all, house prices and rents (and their growth rates) can vary dramatically within cities, and rents are notoriously sticky. Furthermore, the use of indexes precludes both cross-sectional and dollar cost comparisons. In this study, we use Consumer Expenditure Interview Survey (CE) data to examine the relationship between user costs and rents at the individual unit level, in dollars, using unit-level information on house value, rent, taxes, and the like. This allows us to accurately estimate unit-specific user costs and to control for unobservables like structure and neighborhood quality.