Homeownership, Social Capital and Satisfaction with Local Government

Abstract

Prior studies suggest that homeownership positively impacts on social capital formation. However, many studies find it difficult to control adequately for selection effects in the form of factors, some of which may be unobserved, that encourage both homeownership and investment in social capital by households. A biennial survey conducted in New Zealand cities provides data that enable the control of such selection effects with propensity score matching methods, while also benchmarking the results by means of regression methods. The results confirm that homeownership exerts positive impacts on the formation of social capital. At the same time, homeownership demands greater accountability of local government and leads to reduced satisfaction with local government performance, thereby negatively impacting on community social capital. Hence these two dimensions of housing-related social capital work in opposite directions from each other, a finding which has not been previously observed.