TY  - JOUR
AU  - Glaeser,Edward L.
AU  - Shapiro,Jesse M.
TI  - The Benefits of the Home Mortgage Interest Deduction
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9284
PY  - 2002
Y2  - October 2002
UR  - http://www.nber.org/papers/w9284
L1  - http://www.nber.org/papers/w9284.pdf
N1  - Author contact info:
Edward L. Glaeser
Department of Economics
315A Littauer Center
Harvard University
Cambridge, MA 02138
Tel: 617/495-0575
Fax: 617/495-7730
E-Mail: eglaeser@harvard.edu

Jesse M. Shapiro
University of Chicago
Booth School of Business
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-2688
Fax: 773-753-0563
E-Mail: jmshapir@uchicago.edu
M1  - published as Edward L. Glaeser, Jesse M. Shapiro. "The Benefits of the Home Mortgage Interest Deduction," in James M. Poterba, editor, "Tax Policy and the Economy, Volume 17" MIT Press (2003)

AB  - 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.
ER  -