The Income Elasticity of Demand for Housing: Evidence from Concentration Curves

Abstract

This study applies techniques developed in the literature on income and consumption distribution to estimate income elasticities of housing demand. Although the approach cannot incorporate other determinants of demand, raising the possibility of bias, it possesses some attractive properties as well. The approach economizes on the amount of data required for estimation and allows the elasticity to vary nonmonotonically with income. If practitioners possess information on the direction of bias, results of the approach can then be used to bound the value of income elasticity.