Archive for June 16th, 2009

Homeowners are fatter than renters … and other downsides of owning a home.

June 16, 2009

TakeAway: Now that the housing bubble has burst and owned homes have lost their luster as piggybanks, more attention is being placed on the non-financial aspects of owning a home. 

The obvious: more chores mean less time for socializing. 

The shocker: homeowners are, on average, fatter.   Hmmmm.

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Excerpted from Knowledge @ Wharton, “You Think Owning a Home Will Make You Happy? Don’t Be Too Sure”, June 10, 2009

For generations, the conventional wisdom  is that owning a home is the cornerstone of the American Dream, the foundation for a happy family life and long-term financial security. “On average people like living in zip codes with a higher median housing value so they can live in reflected glory.”

Now, a new research paper challenges that conventional wisdom …   while homeowners do experience significant joy, they also face more aggravation, spend less time with friends and are even heavier than renters living in comparable homes.

Past research into the mood of homeowners showed that people felt a sense of pride and comfort in having their name on a deed. But, once the data are controlled for a range of variables, owning a home appears to deliver no more happiness than signing a monthly rent check.

“Our perception that homeowners are better off than renters might be fueled only by casual observations. The conventional wisdom might not hold up so well when you look at the data carefully.”

Obviously, the bursting of the housing bubble has led to a good deal of stress — both financial and psychological.

Even in a period of optimism about housing as a financial investment, homeownership does not necessarily represent the fulfillment of a dream. “Overall, there is little evidence that homeowners are happier by any of the following definitions: life satisfaction, overall mood, overall feeling, general moment-to-moment emotions and affect at home. The average homeowner, however, consistently derives more pain (but no more joy) from a house and home.”

The study focused on the intensity of 10 feelings : Impatient, Competent/Confident, Tense/Stressed, Happy, Depressed/Blue, Interested/Focused, Affectionate/Friendly, Calm/Relaxed, Irritated/Angry … and created a created a net measure of mood.  

It is clear that homeowners derive as much pain from their home that is similar in magnitude and significance to the joy they gain from homeownership.

Even after controls are applied for financial insecurity — often cited  as the main negative of homeownership — homeowners report more pain associated with their home … it is simply not true that homeowners are happier because they enjoy greater self-esteem and a greater sense of control in their lives.

The average homeowner tends to spend less time on active leisure or with friends, experiences more negative feelings during time spent with friends, derives less joy from love and relationships and is also less likely to enjoy being with people.  Average homeowners spend 4% to 6% less time interacting with friends and neighbors

Adding insult to injury, the average homeowner tended to be 12 pounds heavier.

Full article:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2257

Posted in Home Ownership, Real Estate | 1 Comment »

Healthcare “reform” … cost adders are certain … keep your fingers crossed re: the savings

June 16, 2009

Ken’s Take: For sure, 45 million uninsureds  will get government coverage. That includes 15 million non-citizens and 15 million healthy young adults who choose to self-insure now, but will be “mandated” into the program. The cost of adding these folks is a certainty.

What’s far less certain is whether any of the pie-in-the-sky cost reductions – most of which have been tried and failed in the past – will generate offsetting savings.

Still, no talk of real structural changes – e.g. free gov’t run Minute Clinics, tort reform.  Just “evidence based” veils being thrown over healthcare rationing.

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Excerpted from IBD, “Wrong-Way Health Care ‘Reform’ Could Actually Increase Spending”, June 12, 2009

Background

The central cause of runaway health spending is clear. Hospitals and doctors are paid mostly on a fee-for-service basis and reimbursed by insurance, either private or governmental.

The open-ended payment system encourages doctors and hospitals to provide more services — and patients to expect them. It also favors new medical technologies, which are made profitable by heavy use.

Unfortunately, what pleases providers and patients individually hurts the nation as a whole.

That’s the crux of the health care dilemma .

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The Issue

No doubt the health program that Congress fashions will counter this reality by including some provisions intended to cut costs (“bundled payments” to hospitals, “evidence-based guidelines,” electronic record keeping).

But, the main aim of health care “reform” now being fashioned in Congress is to provide insurance to most of the 46 million uncovered Americans.

This is popular and seems the moral thing to do. After all, hardly anyone wants to be without insurance.

But the extra coverage might actually worsen the spending problem. How much healthier today’s uninsured would be with that coverage is unclear. They already receive health care — $116 billion worth in 2008.

Some is paid by the uninsured themselves (37%), some by government and charities (26%). The remaining “uncompensated care” is either absorbed by doctors and hospitals or shifted to higher private insurance premiums. Some uninsured would benefit from coverage, but others wouldn’t. Either they’re healthy (40% are between ages 18 and 34) or would receive ineffective care.

The one certain consequence of expanding insurance coverage is that it would raise spending. When people have insurance, they use more health services.

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Some Stats

A new report from Obama’s own Council of Economic Advisers shows why controlling health costs is so important. If current spending growth continues, the CEA projects that:

Health spending, which was 5% of gross domestic product in 1960 and is reckoned at almost 18% today, would grow to 34% of GDP by 2040 — a third of the economy.

Medicare and Medicaid, the government insurance programs for the elderly and poor, would increase from 6% of GDP now to 15% in 2040 — roughly equal to three-quarters of present federal spending.

Employer-paid insurance premiums for family coverage, which grew 85% in inflation-adjusted terms from 1996 to $11,941 in 2006, would increase to $25,200 by 2025 and $45,000 in 2040.

Full article:
http://www.ibdeditorials.com/IBDArticles.aspx?id=329696969267196

Posted in Health Care / Medical Insurance | Leave a Comment »