Housing Satisfaction Empirical Research In UK Real Estate Market

The Easterlin Paradox is a key concept in happiness economics, which refers towithin a given country people with higher incomes were more likely to report being happy.However, in international comparisons, the average reported level of happiness did notvary much with national income per person, at least for countries with income sufficient tomeet basic needs. Similarly, although income per person rose steadily in the United Statesbetween1946and1970, average reported happiness showed no long-term trend anddeclined between1960and1970. This kind of phenomena which is contrary to thecommon sense causes extensive research concern in academics.This paper just starts from the perspective of Easterlin Paradox to examine whetherthere is positive relationship between the improvement of personal income and thehousing satisfaction levels. Due to the complicate of personal happiness, this paper justconcentrates on housing satisfaction which is one branch of personal happiness. Firstly,this paper explains the concepts of housing satisfaction, then reviews the determinants andresearch methods of housing satisfaction, at the same time, this paper introduces the keyconcepts of reference points in behavior economics into housing satisfaction studies, andtries to explorer the effects of social comparison on housing satisfaction. Here, thereference points are reference groups specified by individuals’social-economic group, age,education and living region.After considering the advantages and disadvantages of various methods, this paperdecides to use ordered logistic method to study the effects of social comparison onhousing satisfaction. The research shows that the housing attributes of one’s referencegroup are also important and should be included in one’s housing utility function. Besides,A new method of defining one’s reference group （people to whom one compares with）along with other existing methods are studied in this paper. We find that the socialcomparison variables created based on our methods are statistically significant by studyingthe data of British Households Panel Survey from1997to2009. The empirical resultsindicate that housing satisfaction can be a zero sum game, i.e., the increasing housingconditions of all increases the happiness of no one. This result helps us to explain the phenomenon that despite general housing conditions have been increased in UK duringthe past decade, the average residential satisfaction of British people has remainedconstant. And the results shows that improving everyone’s housing condition will neverimprove the housing satisfaction of anyone.