What Money Can Buy
Apart from food, the most basic need for human beings is shelter. Housing conditions vary according to the amount of money that one has and is willing to spend. Apart from the physical comforts, which we will deal with in detail later, there is also the mental security. It would be reassuring to know that one owns one's home, which is virtually sacrosanct and inviolable. By contrast, if one rents instead of owns the place of residence, there is always the insecurity of living on borrowed space and a sense of alienation. To the phrase, "A man's home is his castle," we may need to add the qualification: "... if he owns it."
We will cite some data taken from the TGI Puerto Rico study. This is a survey of 2,472 adults conducted by MediaFax in 2001. In the chart below, we show the incidences of home ownership separately by household income levels. In today's world, mortgage loans are readily available to qualified individuals to purchase their own homes. However, the successful loan recipients need to be screened as being able (that is, making an income that is sufficient to meet the mortgage payments) and willing (that is, having a good credit history). The chart below shows that people with higher incomes are more likely to own their homes.
Homes can be single family dwelling units or multiple family dwelling units. Rental housing for low-income people usually comes in the form of multiple apartment units. By contrast, the image of a high-price piece of real estate is a standalone large mansion surrounded by a huge lawn (with swimming pool and tennis courts ...). The next chart shows that the incidence of living in a single family dwelling unit is a strictly increasing function of household income.
When one is integrally involved with the place that one lives in, one begins to invest in the infrastructure through various home improvement projects. A way to protect the value of this investment (against theft, fire, flooding, etc) is through insurance. Conversely, such insurance would be quite unnecessary if one has no stake in the place of abode. The next chart shows that the incidence of having home owner/tenant insurance is a strictly increasing function of household income.
The urbanization phenomenon supposedly occurs because of the many opportunities that exist for individuals and businesses and because of reduction in transportation costs when everything is concentrated in a small area. This in turn would drive up the price of real estate, which is usually measured in terms of dollar value per unit area (e.g. USD 5 per square foot). Other things being equal, it obviously costs more to buy more land. Thus, it may cost USD 30,000 to buy one hectare but USD 60,000 to buy two hectares of land. The next chart shows that the incidence of people living in homes with floor areas of 300 or more square meters is a strictly increasing function of household income.
The next two charts deal with the number of rooms in the home. The first chart showed that the incidence of four or more bedrooms increases as a strict function of household income. The next chart shows that the incidence of two or more bathrooms increases as a strict function of household income too.
What have we learned so far? According to the TGI Puerto Rico survey data, households with higher income are more likely to own their homes rather than rent; they are more likely to live in spacious single family dwelling units with more bedrooms and bathrooms, and they purchase home insurance to protect their investment.
Our next question is: What do people have inside their homes? The next table shows the incidences of the ownership of many home appliances and utilities, reported in total and also separately by household income. Without exception, the incidences are increasing functions of household income.
| Own Item | TOTAL | HH Income $8,000 < |
HH Income $8,000 - $15,000 |
HH Income $15,000 - $30,000 |
HH Income $30,000 - $50,000 |
HH Income $50,000 or more |
| Automatic washing machine |
72% | 64% | 72% | 77% | 79% | 87% |
| Electric clothes dryer |
11% | 2% | 6% | 11% | 23% | 42% |
| Air conditioner (window unit) |
16% | 6% | 13% | 23% | 36% | 45% |
| Ceiling fan | 41% | 28% | 35% | 49% | 59% | 71% |
| Outdoor grill | 8% | 1% | 4% | 11% | 19% | 33% |
| Electric stove/range | 32% | 22% | 31% | 34% | 46% | 67% |
| Microwave oven | 51% | 36% | 51% | 63% | 74% | 81% |
| Electric can opener | 25% | 15% | 20% | 34% | 37% | 49% |
| Electric knife | 5% | 2% | 3% | 8% | 10% | 19% |
| Electric mixer | 9% | 5% | 6% | 15% | 18% | 28% |
| Electric blender | 57% | 51% | 52% | 67% | 68% | 80% |
| Electric toaster | 30% | 22% | 28% | 37% | 48% | 55% |
From what we have seen so far, the answer to the question, "What can money buy?" in the context of one's home is "A lot" in so far as security, comfort and amenities are concerned. However, we do not have the answer for the question "Can money buy happiness?" because that is another story ...
(posted by Roland Soong, 11/15/2001)
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