A microeconometric analysis of housing quality and wellbeing in Malta

Abstract

Poor housing quality undermines stability and security, negatively affects physical and mental health, and hinders affected individuals from achieving acceptable standards of living. Despite the significant influence of housing quality, limited research assesses how the conditions within one’s house and its neighbouring environment affect wellbeing in Malta. Against this backdrop, this study investigates (i) the association between housing quality (as measured through housing and environmental conditions) and wellbeing (as measured through life satisfaction); (ii) the impact of a change in housing and environmental conditions on life satisfaction, and (iii) the moderating effects of tenure and material and social deprivation. The final question assesses heterogeneities by subgroups. By utilising longitudinal microdata from the EU Statistics on Income and Living Conditions (2018-2022) for Malta, the study implements a Two-Way Fixed Effects (TWFE) model to tackle endogeneity bias. The findings reveal that poorer housing quality is associated with significantly lower life satisfaction. However, this relationship is predominantly correlational, characterised by significant unobserved heterogeneities. Changes to housing and environmental conditions using TWFE do not significantly affect life satisfaction, unless complemented by improvements to those factors that cause poor housing quality. Meanwhile, environmental conditions in the neighbourhood, mostly noise and pollution, impose a significant negative effect on the materially and socially deprived. Such cohorts are less likely to witness improvements to their housing quality due to insufficient resources. On the other hand, tenure is not a significant moderator. This implies that although renting is a precursor to experiencing poorer quality housing, the effect on life satisfaction is more strongly related to deprivation. Policy should focus on the underlying causes of poor housing quality, and target interventions to cohorts a) most likely to experience poor housing quality, and b) least likely to improve it. Moreover, the legal framework that regulates noise and pollution should be standardised.