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use four categories determined by building age: move-in pre–1970; move-in 1971–1980;
move-in 1981–1990; and move-in 1991–1998. 21 Buildings constructed between 1991 and
1998 into which respondents moved in during the same period are the reference group. In the
older category, spells for tenancy duration are long. Because the longer-duration housing is
protected by tenancy rent control, we can determine the effect of tenure security on housing
quality from the sign (or the marginal effect) of the coefficients of these dummy variables.
As we found in theory, the propensity to utilize and maintain the dwelling depends on the
degree of tenure security. Thus, these dummies also proxy u and m.
To estimate only the effects of the rental externality and tenure security, we limit the
sample to single-family houses. This is because there is a free-rider problem in condominiums
and apartment buildings in the sense that owners have a disincentive to maintain common
areas and users have an incentive to over-utilize them.
Table 1 reports frequencies and means for the variables used in the probit analysis.
21 If the current house was rebuilt on the same site after the respondent moved in, we have equated the
moved-in year to the rebuilt year.
19