Political Polarization Affects Households' Financial Decisions: Evidence from Home Sales

Political Polarization Affects Households' Financial Decisions: Evidence from Home Sales

ABSTRACT Political identity and partisanship are salient features of today's society. Using deeds records and voter rolls, we show that current residents are more likely to sell their homes when opposite‐party neighbors move in nearby than when unaffiliated or same‐party neighbors do. This is e...

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Bibliographic Details
Published in:The Journal of finance (New York) Vol. 79; no. 2; pp. 795 - 841
Main Authors: MCCARTNEY, W. BEN, ORELLANA‐LI, JOHN, ZHANG, CALVIN
Format: Journal Article
Language:English
Published: Cambridge Blackwell Publishers Inc 01-04-2024
Subjects:
Animosity
Households
Neighborhoods
Neighbors
Partisanship
Polarization
Political identity
Politics
Real estate sales
Sales
Transactions
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Summary:ABSTRACT Political identity and partisanship are salient features of today's society. Using deeds records and voter rolls, we show that current residents are more likely to sell their homes when opposite‐party neighbors move in nearby than when unaffiliated or same‐party neighbors do. This is especially true when the new neighbors are politically active, consistent with an animosity between parties mechanism. We conclude that affective polarization is not limited to purely political settings and affects one of the household's most important financial decisions, their home transactions.
Bibliography:McCartney is with the McIntire School of Commerce, University of Virginia. Orellana‐Li is with the Federal Reserve Bank of Philadelphia. Zhang is with the Federal Reserve Bank of Philadelphia. We are grateful for the guidance and suggestions of Editor Amit Seru and two anonymous referees. We thank Manuel Adelino; Milena Almagro (discussant); Pat Bayer; Levi Boxell; Marcus Casey; David Chapman; Ronnie Chatterji; Tony Cookson; Emily Gallagher (discussant); Mike Gallmeyer; Andra Ghent; John Graham; Lauren Lambie‐Hanson; Bob Hunt; Jeffrey Lin; David Matsa; Manju Puri; David Robinson; Carola Schenone; Karen Shen; and James Vickery; and conference participants at the 2020 Virtual Meeting of the Urban Economics Association, 2021 AREUEA‐ASSA Conference, and Finance in the Cloud I Conference; and seminar participants at the AREUEA Virtual Seminar, Baruch College (Newman), Duke University (Fuqua), the Junior Household Finance Seminar, Purdue University (Krannert), the University of Virginia (McIntire), and West Virginia University (Chambers) for helpful comments and suggestions. The views expressed are solely those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System. Any errors or omissions are the responsibility of the authors. We have read
disclosure policy and have no conflicts of interest to disclose.
The Journal of Finance
ISSN:0022-1082
1540-6261
DOI:10.1111/jofi.13315