Do Housing Wealth and Tenure (change) Moderate the Relationship Between Divorce and Subjective Wellbeing

Homeownership, as a storage for housing wealth, is believed to play an increasingly important role in terms of welfare provision. However, the global economic crisis demonstrated that homeownership is not always a nest-egg, homeownership can also be a source of financial anxiety. In the event of divorce for instance, housing wealth has to be split between partners and the burden of mortgage payments is carried by those divorcees that remain in the marital home. Furthermore, leaving the owned marital home, the place for peace and family, might be emotional more damaging than leaving the rented marital home. In this paper we investigate how homeownership and housing wealth moderate the relationship between divorce and different indicators of subjective wellbeing (life satisfaction, happiness, financial satisfaction). Using longitudinal data for Australia and the Netherlands, we find for Australia that homeowners are more negatively affected by divorce than tenants, among others because the owned house becomes a financial burden after divorce and therefore lowers financial satisfaction which mediates the relationship between divorce and subjective wellbeing. No effect of divorce on wellbeing was found for the Netherlands, possibly because of the small size of our sample. Findings for Australia further show that, when women move from an owned to a rented house, divorce has a smaller negative effect on happiness and financial satisfaction than when remaining in the owned home, which shows that moving enables these women to adjust their housing costs to income better than when remaining in the owned house. For men however, housing wealth alleviates financial stress when the divorcees stay in an owner-occupied house after divorce. We found no evidence for housing wealth to buffer the negative effect of divorce on happiness or life satisfaction; if anything it strengthened the negative effect of divorce.

Publication Date: 
2017