tag:blogger.com,1999:blog-32580352362315642272024-03-28T01:15:10.288-07:00Real Estate and Urban Development ViewpointSteve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.comBlogger49125tag:blogger.com,1999:blog-3258035236231564227.post-3573694198115806222023-12-04T15:24:00.000-08:002024-01-10T15:37:51.297-08:00Studying Climate Change: A Brief Introduction<p> </p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8wsyQwWS8eEkX2OYHtgTe8mpGddBK_Ma3evWcVmAGKLUIMH7ufrqOavmRkGBXzdvpVzovRviQxW7kM7-RivDQb3ZD_zBgo6h7MoD7REXCFLbZOPamq1H4SiEnURqZo3cOeM_LBFHWq_FNytuS144ZccQWbpiN2rUkxLQLmdcp9sUrFoTK79wwCINbHaLK/s470/Keeling-image-3.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="311" data-original-width="470" height="376" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8wsyQwWS8eEkX2OYHtgTe8mpGddBK_Ma3evWcVmAGKLUIMH7ufrqOavmRkGBXzdvpVzovRviQxW7kM7-RivDQb3ZD_zBgo6h7MoD7REXCFLbZOPamq1H4SiEnURqZo3cOeM_LBFHWq_FNytuS144ZccQWbpiN2rUkxLQLmdcp9sUrFoTK79wwCINbHaLK/w567-h376/Keeling-image-3.png" width="567" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Charles David Keeling measures CO2, creates a time series beginning in the 1950s<br />https://sustainability.illinois.edu/charles-david-keeling-1928-2005/<br /></td></tr></tbody></table><br /><p></p><p>We might date the "modern" study of climate change to the 1950s, when Charles Keeling and colleagues began a careful series measuring atmospheric CO2 at the Mauna Loa Observatory. He found startling regularities in the growth of CO2, now often referred to as the <a href="https://www.acs.org/education/whatischemistry/landmarks/keeling-curve.html">"Keeling Curve."</a> After Keeling's death the work was carried out by his son, and others:</p><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi72syOO4STLCxPEqNCIj6Qjz9YXrTb8iO_40rLvOpfyAdN0CATs1HxRC4uF0WOCpgjqd2xT-djTf10uaMOLyz9AEGl3hHGTSGXWxQPimqOSisLJbnZsLeDl85gYpn1gq1DjgB4_5EkbnnJsz7OtIldqoCtjgqSwghN_2alVq7L6vsk8c943iE5nA3rNLUS/s948/Keeling%20CO2%20curve%20updated.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="945" data-original-width="948" height="484" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi72syOO4STLCxPEqNCIj6Qjz9YXrTb8iO_40rLvOpfyAdN0CATs1HxRC4uF0WOCpgjqd2xT-djTf10uaMOLyz9AEGl3hHGTSGXWxQPimqOSisLJbnZsLeDl85gYpn1gq1DjgB4_5EkbnnJsz7OtIldqoCtjgqSwghN_2alVq7L6vsk8c943iE5nA3rNLUS/w485-h484/Keeling%20CO2%20curve%20updated.PNG" width="485" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">https://en.wikipedia.org/wiki/Keeling_Curve#/media/File:Mauna_Loa_CO2_monthly_mean_concentration.svg</td></tr></tbody></table><br /><p>Keeling's paper is certainly one of the most influential climate papers within my lifetime, but as early as 1827 Joseph Fourier described the "greenhouse" mechanism that warms the earth, and in 1896 August Arrhenius predicted the greenhouse effect of doubling atmospheric CO2. These and other precursors such as Eunice Foote (1856), John Tyndall (1861) and later G.S. Callendar (1938) posited and provided some evidence of links between CO2 and climate; but after the work of Keeling and colleagues, the study took off.</p><p>This chart is one of dozens we could post to illustrate that there is an apparent empirical relationship between CO2 and global temperatures:</p><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7KiKBWqaLOuqjCoaqq_y4dg6pXp3k-koYo8ZDdWXkewf5RaJ2GTsQ2zrkUbeOLh67IRVaz-xQC-9tt2_8J3OKq9CiMWA3nVH-p4v_Wj8dGlKG25zkz4yjQRd_1vpMc0pwebtqfebn85Cu8NVJ3jsqlcXXwxY3D3iSNz9Lh1Rbztzo_qrju6eFqxiMXqIh/s450/co2_temp_1900_2008.gif" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="360" data-original-width="450" height="415" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7KiKBWqaLOuqjCoaqq_y4dg6pXp3k-koYo8ZDdWXkewf5RaJ2GTsQ2zrkUbeOLh67IRVaz-xQC-9tt2_8J3OKq9CiMWA3nVH-p4v_Wj8dGlKG25zkz4yjQRd_1vpMc0pwebtqfebn85Cu8NVJ3jsqlcXXwxY3D3iSNz9Lh1Rbztzo_qrju6eFqxiMXqIh/w519-h415/co2_temp_1900_2008.gif" width="519" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">https://skepticalscience.com/The-CO2-Temperature-correlation-over-the-20th-Century.html</td></tr></tbody></table><br /><p>Of course everyone knows that correlation, per se, is not sufficient to demonstrate any causal link.</p><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgCkD8cqiX-ckuKbvId7YwaYmcvvdEP-ec7osotTpr4FVGE339SirVyDOHrltYkPeM_ww37sIWyXPpfeOktLFD7AiSV6bctwK2na_TnTveyos0FzKny-fODHxWlsabQZum0S1zc-IQ_i80PhuJ1T3ey5ZnV3t21V4d9qBVm7rV1FT1NYRhGJNE_gR-oZLoi/s735/correlation%20causation.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="309" data-original-width="735" height="203" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgCkD8cqiX-ckuKbvId7YwaYmcvvdEP-ec7osotTpr4FVGE339SirVyDOHrltYkPeM_ww37sIWyXPpfeOktLFD7AiSV6bctwK2na_TnTveyos0FzKny-fODHxWlsabQZum0S1zc-IQ_i80PhuJ1T3ey5ZnV3t21V4d9qBVm7rV1FT1NYRhGJNE_gR-oZLoi/w482-h203/correlation%20causation.PNG" width="482" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">https://xkcd.com/552/</td></tr></tbody></table><div><br /></div><div>Side note: if you haven't been checking out the brilliant cartoon work of Randall Munroe, you should <a href="https://xkcd.com/about/">go to his website </a>immediately after reading all my blog posts and downloading all my PowerPoint decks etc.</div><div><br /></div><div>While correlation does not prove causality, neither does it disprove it.</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0ceCB7wiIPWUnRkFfqQRnyAaQgvy3cIjXP3mhwMdEEB1yqPXaAdhpF55dnWnWTYU9tFPO-IWUn2GgHyXbH9AWB9DXxt66tx7DeQ8ZM6C4GO-gwqhLPgg4cliGqme2ORvdrZIHoriX_0GDdzrvj9q0D4zvHfjK0AgVYJxEW0i9mLqUS-CNSfNhz8xWyseM/s960/early%20bird%20worm.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="338" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0ceCB7wiIPWUnRkFfqQRnyAaQgvy3cIjXP3mhwMdEEB1yqPXaAdhpF55dnWnWTYU9tFPO-IWUn2GgHyXbH9AWB9DXxt66tx7DeQ8ZM6C4GO-gwqhLPgg4cliGqme2ORvdrZIHoriX_0GDdzrvj9q0D4zvHfjK0AgVYJxEW0i9mLqUS-CNSfNhz8xWyseM/w451-h338/early%20bird%20worm.png" width="451" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;">As already noted, there have been solid scientific models that predict global warming if/as atmospheric carbon dioxide increases. These correlations support the theory, and the theory predicts such relationships.</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">So far, we are only scratching the surface of a subject on everyone's mind, including those involved in the real estate industry, students preparing for real estate careers, work in planning or education, those involved in any aspect of urban development -- in other words the target audience of this blog.</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">For some years I've been discussing climate change in courses and elsewhere, and if you are one of the three regular readers of this blog you know what's coming next: a<a href="https://www.dropbox.com/scl/fi/rj7jsp4mzt05db9cnishc/UW-Climate-Change-Malpezzi-01-10-24-REVISED.pptx?rlkey=7kwn22k0ecajchrrgchemkmrf&dl=0"> PowerPoint deck that you can download</a>.</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">A year and a half ago, I posted a blog entry and slide deck on "<a href="https://reudviewpoint.blogspot.com/2022/06/urbanization-and-climate-change-first.html">Urbanization and Climate Change: A First Look</a>." Now I've got something better. Recently I gave some lectures on climate change to <a href="https://luhan2.weebly.com/">Professor Lu Han's</a> course on urban economics at the <a href="https://business.wisc.edu/centers/graaskamp/">Grasskamp Center for Real Estate</a> at the <a href="https://business.wisc.edu/">Wisconsin School of Business</a>.</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">These lectures gave me an excuse to freshen up my teaching materials from 2020. In the interim I was fortunate to learn more about this subject from USC's <a href="https://sites.google.com/site/mek1966/">Matt Kahn</a>, and a number of presenters at conferences organized by <a href="https://cre.mit.edu/people/siqi-zheng/">Siqi Zheng</a>, at MIT; and Harvard's <a href="https://www.linkedin.com/in/henry-pollakowski-082b4131">Henry Pollakowski</a>, for the Hoyt Institute. Doing justice to the material I've learned from the participants at these events, and comments from other colleagues would take more than a slide deck, and of course they are not responsible for my opinions, errors and omissions.</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;"><a href="https://www.dropbox.com/scl/fi/rj7jsp4mzt05db9cnishc/UW-Climate-Change-Malpezzi-01-10-24-REVISED.pptx?rlkey=7kwn22k0ecajchrrgchemkmrf&dl=0">You can downoad the slides from my November 2023 lectures here</a>. There are about 300, organized as follows:</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: left;"><ul style="text-align: left;"><li>Climate change in perspective</li><li>Climate change basics</li><li>Energy basics</li><li>Some economics of climate change</li><li>Option 1, climate mitigation: lessons from urban economics, roles of cities</li><li>Option 2, climate adaptation: lessons from urban economics, roles of cities</li><li>Option 3, if we cut corners on options 1 and 2 </li><li>Policy prescriptions and research agenda</li><li>Resources</li></ul></div><div class="separator" style="clear: both; text-align: left;">I strongly recommend that you download the PowerPoint file and open it in PowerPoint, instead of just opening it in your browser. Otherwise, the formatting of many slides is usually messed up. And you'll not see the notes, that have links, sources, and discussion.</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">Three hundred slides might sound like a lot, but it's a big subject and these slides only provide an introduction. As always, colleagues, please feel free to select any of the slides that are useful in your own teaching and presentations. Comments and corrections are welcome.</div><div><br /></div></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><br />Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com2tag:blogger.com,1999:blog-3258035236231564227.post-21868797055535954802023-11-08T19:49:00.001-08:002023-11-09T07:57:44.641-08:00Israel, Palestine, and the "Middle East:" Some Background<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjMjePBYkJGC-i8knc-ksVsqSFeQhIpVFx5P5ureO9vSviCzdQKy-_CNF09PBXNSEbRUVPrUSkFU1D6MIBNp6toj6gnVQgALqw2maTVshSLtRVqbrL_0aVHtDvJ74ilIyDC3JOt1XyXKBtkFru9VzCMsTDzGyG3kdeQIIrIHxZj5vm96YanqT0rWIKp0uM1/s5100/shutterstock_2372552213.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="3825" data-original-width="5100" height="430" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjMjePBYkJGC-i8knc-ksVsqSFeQhIpVFx5P5ureO9vSviCzdQKy-_CNF09PBXNSEbRUVPrUSkFU1D6MIBNp6toj6gnVQgALqw2maTVshSLtRVqbrL_0aVHtDvJ74ilIyDC3JOt1XyXKBtkFru9VzCMsTDzGyG3kdeQIIrIHxZj5vm96YanqT0rWIKp0uM1/w572-h430/shutterstock_2372552213.jpg" width="572" /></a></div><br /><p></p><p>As every reader will know, on October 7, 2023, Hamas terrorists attacked Israel from Gaza, slaughtering hundreds of civilians, and taking some 200 hostages before retreating to Gaza.</p><p>Israel has responded -- is responding, as of this writing -- with a bombardment and apparently increasing assault on Hamas strongholds in Gaza. These strongholds are scattered within a very densely packed Gaza Strip, many in tunnels beneath Gaza City. Gaza City proper contains about 650,000 people in 18 mi.2 (47 km2). This insures that collateral damage to civilian life and property will be substantial.</p><p>"Those that forget the past are condemned to hear that quote from George Santayana again." The purpose of this post, and more specifically the slide deck that you can obtain here, is to provide some background on the history that underlies this terrible conflict.</p><p>The intended audiences for this material are students and others who desire to learn more about the history, politics and economics of the region, especially in light of recent events, including Hamas’ recent attack on Israel, and its aftermath. However, it is not primarily about those events, which are unfolding rapidly. See “Resources” at the end of the deck for suggestions on some sources to stay abreast.</p><p>This material, while preliminary and incomplete, should nevertheless provide context and history that will aid students in understanding current events and thinking critically about the underlying issues of the region. Other faculty should feel free to use any of these slides you find useful in your own teaching.</p><p>I have studied the region off-and-on since 1972, but as an interested lay person. I do not claim specialist expertise, and my understanding is continually evolving. I plan to update this material from time to time, as I learn more. Nevertheless, I have tried to present material that is balanced and accurate, if woefully incomplete. I welcome comments and corrections, especially from those with deeper expertise.</p><p>You can <a href="https://www.dropbox.com/scl/fi/5ml0q7ja34dtxpka4bvij/WORKING-DRAFT-Middle-East-collection.pptx?rlkey=4z1msvp8czo2kail0vypr3iuo&dl=0">download the current draft of the PowerPoint deck (November 8, 2023) here.</a></p><p>Again, this is a work in progress. Comments and corrections are welcome. Expect updates in due course.</p><div><br /></div>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com1tag:blogger.com,1999:blog-3258035236231564227.post-66395637886625640592023-04-20T11:45:00.000-07:002023-04-20T11:45:02.541-07:00Disasters Redux: This Time, Earthquakes<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkM3x-QyE3RHC8gX-5Ugvm08RPb1Zxbpoza6QxAiZD053PED8B3CKnGio-5upfPsHIRrfT0n_qHun_2qtVpxi9xBYRrn0VDmLvE5peh0DSa4VpwLO7C_CgSknDvVxKEUT7S8j890B_RrfWO9F2xFaMDeNWeq1dWvpTmVRWaE5Y5P6eA5gjOqCj3MWq_w/s5168/shutterstock_2267251269.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="3448" data-original-width="5168" height="418" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkM3x-QyE3RHC8gX-5Ugvm08RPb1Zxbpoza6QxAiZD053PED8B3CKnGio-5upfPsHIRrfT0n_qHun_2qtVpxi9xBYRrn0VDmLvE5peh0DSa4VpwLO7C_CgSknDvVxKEUT7S8j890B_RrfWO9F2xFaMDeNWeq1dWvpTmVRWaE5Y5P6eA5gjOqCj3MWq_w/w629-h418/shutterstock_2267251269.jpg" width="629" /></a></div><br /><div class="separator" style="clear: both; text-align: left;">In several recent posts, I've focused on some of the bad things that can happen to our cities and real estate, including pandemics (COVID), conflicts (Ukraine's invasion by Russia), climate change, and bad urban policies. On February 6, 2023, southern Turkey and northern Syria were struck by a 7.8 earthquake centered in Turkey's southernmost province of Antakaya, and a series of aftershocks. As of this writing the death toll is estimated to be about 50,000 in Turkey and 9,000 in Syria, with other devastating losses, including injuries, property damage, and large stresses on individuals and communities.</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">Teaching urban courses for a quarter century, I have assigned (or students volunteered) a number of papers asking students to apply the course's lessons to (usually then current) disasters such as Hurricane Katrina (2005), Haiti's 2010 earthquake, and of course the 9/11 attacks on New York City, the Pentagon, and Shanksville, Pennsylvania. More recently, I've discussed Russia's invasion of Ukraine in some of my guest lectures.</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">But the most recent deck I've created relates to the February 8, 2023 earthquake that struck southern Turkey and northern Syria. It's still a work in progress, but you can <a href="https://www.dropbox.com/scl/fi/co3ygq0tdrf0kbbw13fi9/Notes-on-Earthquake-Disasters-4-17-23.pptx?dl=0&rlkey=yac2mlp971hd6v6oky5a4lxnv">download the current version here.</a></div><div style="text-align: left;"><br /></div><p></p>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com7tag:blogger.com,1999:blog-3258035236231564227.post-87004813305291970802023-03-29T12:22:00.003-07:002023-04-04T08:15:13.247-07:00Nino Pedrelli (1956 to 2023): Real Estate Economist, Developer, One Who Knew How to Live<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjI69IwX3DGVt2bOEq95oryHtdNKie2VIOP7mxX9stg_vQZKdyH5lAwni_BAfUeJh6nDMWq0XeUAKCRB1YGxV02myY95r247gjJG_eMX6cYicV1UKOVUKo2bPL0w62e_GGR8b-In1OfdzZ9LgSUAsvV3uNx0JHTbDhCgtwvgM9Yeiyhtq8CCHdBvdO_Pg/s480/Nino%20headshot.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="480" height="417" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjI69IwX3DGVt2bOEq95oryHtdNKie2VIOP7mxX9stg_vQZKdyH5lAwni_BAfUeJh6nDMWq0XeUAKCRB1YGxV02myY95r247gjJG_eMX6cYicV1UKOVUKo2bPL0w62e_GGR8b-In1OfdzZ9LgSUAsvV3uNx0JHTbDhCgtwvgM9Yeiyhtq8CCHdBvdO_Pg/w417-h417/Nino%20headshot.jpg" width="417" /></a></div><br /> Nino Dante Pedrelli came to Wisconsin’s real estate program with a unique background and skillset. Given his prior education in engineering and business, and his already significant accomplishments as a developer, it was a no-brainer to admit him to our PhD program. Once he arrived, we learned that he brought so much more to the table. A slightly tamed Boston accent, a love of Italy that infected anyone who hadn’t yet made the trip themselves, a sly sense of humor, and a deep curiosity about anything urban or real estate related, but most especially, an ability to connect with people – this is the Nino that we were fortunate to know and, yes, love. And as if that weren’t enough, if you knew Nino, you got to know Susan and Laura and Cara, and over time some of the extensions to their family, notably Laura’s husband Steve, and the newest Pedrellis, his beloved granddaughters Lina and Luca.<p></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhGXt0UWPNw_kjm_WeM-_lRvFlQ1Qzir2Uf3KjnEVOYml2pqqAFp_uBMqMh87Hq4LfebJn0_I9T1ysZKyb0s6nDU6tRmHy1g3EmHmOxgxIDZxUeQ8-65lgiMymvzTuz_Rcg7MiepM6GiWwlLeYuothPVEJlpebA_x3s0LUgH7tdZyvdEyLmW3XxIRwamQ/s2016/Nino%20Cara%20Laura%20Susan%20cheese.JPG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1512" data-original-width="2016" height="411" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhGXt0UWPNw_kjm_WeM-_lRvFlQ1Qzir2Uf3KjnEVOYml2pqqAFp_uBMqMh87Hq4LfebJn0_I9T1ysZKyb0s6nDU6tRmHy1g3EmHmOxgxIDZxUeQ8-65lgiMymvzTuz_Rcg7MiepM6GiWwlLeYuothPVEJlpebA_x3s0LUgH7tdZyvdEyLmW3XxIRwamQ/w548-h411/Nino%20Cara%20Laura%20Susan%20cheese.JPG" width="548" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Cara, Nino, Laura and Susan, and friend -- circa 2010</td></tr></tbody></table><br />Sadly, Nino was taken from us at an early age, after a long struggle with cancer. You can <a href="https://docs.google.com/document/d/1k5uDGgTkgyONiLMzx6rADd2DDP966Z7v/edit?usp=share_link&ouid=101686380884371908395&rtpof=true&sd=true">read his official obituary here</a>, including more family details.<div><br /></div><div>Speaking of family, in 2021 Nino was visiting the Boston area, and he took me to see his family home in Arlington (Mass.) One of the highlights was this bas-relief -- of Nino's mother, Thelia. Some Italian workmen were staying with the Pedrellis. Perhaps artisans would be a better word -- one of the workmen created this classical motif with Thelia Pedrelli as the model, in thanks for their hospitality.<br /><div><br /></div><div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjk7JbeAdu-hQIk5yrLzHlQ_EwGUTcde2LlRfeyd7vwORJYlriRfZlmu4LGZcupSojOs3oPtGzsMhsIvh6Gg_9zYH6ZNHJHXePEQiFxUTUeokXy-NCPw6NCRqG0gY6GXm_EQQWHBD8OJd_FH00ZnlW-7R4lV0ibHWDs0GfybbCUs5O-J-iw1XtGIFvLTw/s4032/Nino%20and%20mother%20bas-relief.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="3024" data-original-width="4032" height="401" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjk7JbeAdu-hQIk5yrLzHlQ_EwGUTcde2LlRfeyd7vwORJYlriRfZlmu4LGZcupSojOs3oPtGzsMhsIvh6Gg_9zYH6ZNHJHXePEQiFxUTUeokXy-NCPw6NCRqG0gY6GXm_EQQWHBD8OJd_FH00ZnlW-7R4lV0ibHWDs0GfybbCUs5O-J-iw1XtGIFvLTw/w535-h401/Nino%20and%20mother%20bas-relief.jpg" width="535" /></a></div><br /><p>Every PhD student caps their studies with a dissertation – a significant piece of original research that adds something to the body of knowledge in our field, and also demonstrates one’s mastery of research tools. Most dissertations stick close to whatever the fad of the moment is, in terms of topic, model, data. Not for Nino. He painstakingly dug out data on real estate financial transactions from the 1850s and 1920s, rather than looking for a canned dataset to download and “torture until it confessed.” These early bonds and warrants were the precursors to today’s CMBS and other derivative markets. Nino brought modern time-series technology to bear on the problem, and showed how, and why, a century ago as well as today, “every real estate boom is followed by something else that starts with the letter B.” Let's take a quick look at some of the basic data:</p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi63oiddDBQuLNDAUg_R_VsFyDJiVzhVNqB0CBTJL_pVJK4R34K5IyQq2qCIivGjt-rDzPpO9On8MgfGf4k05j9z9LzP-IxjcOOTjpo7GG4zULXFqrETPy2sBcjbll8WXiRk-YbOCJf0msi4X-h8wgXLAFRAgNeverZEqDeb5-XrTpf3IUZGCWbxtTyDQ/s580/Pedrelli%20mortgage%20returns%20Great%20Depression.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="438" data-original-width="580" height="448" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi63oiddDBQuLNDAUg_R_VsFyDJiVzhVNqB0CBTJL_pVJK4R34K5IyQq2qCIivGjt-rDzPpO9On8MgfGf4k05j9z9LzP-IxjcOOTjpo7GG4zULXFqrETPy2sBcjbll8WXiRk-YbOCJf0msi4X-h8wgXLAFRAgNeverZEqDeb5-XrTpf3IUZGCWbxtTyDQ/w594-h448/Pedrelli%20mortgage%20returns%20Great%20Depression.PNG" width="594" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Excess returns in mortgage bonds, Great Depression, from Nino's dissertation</td></tr></tbody></table><br /><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgNpVOpyhaB_quCWR_q5fA5-2m-_gieQAVbMN4myaqc4knuaeW9Q_ZCCLMDE3bn23PLGgoPPX0mWonxEuaMLNPZUuNH1mPtid0RPEB_15uQ4ZRq5L2QvRVbfm0C7cW27IvR372mdKs6IuC-JLjwgRnXjkL6LBY_oPGc8EMtEs1sxpCrrfFZqAfu6fKGCw/s561/Pedrelli%20land%20warrant%20returns%201850s.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="401" data-original-width="561" height="401" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgNpVOpyhaB_quCWR_q5fA5-2m-_gieQAVbMN4myaqc4knuaeW9Q_ZCCLMDE3bn23PLGgoPPX0mWonxEuaMLNPZUuNH1mPtid0RPEB_15uQ4ZRq5L2QvRVbfm0C7cW27IvR372mdKs6IuC-JLjwgRnXjkL6LBY_oPGc8EMtEs1sxpCrrfFZqAfu6fKGCw/w561-h401/Pedrelli%20land%20warrant%20returns%201850s.PNG" width="561" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Nominal returns in land warrants, 1850s, from Nino's dissertation</td></tr></tbody></table><br /><p>If you're like me, this introductory data from "Volatility and Performance Analysis of Two Past Real Estate Markets: Mortgage Bonds of the 1920's and Land Warrants of the 1850's" whets your appetite. You can <a href="https://drive.google.com/file/d/1T_oglmD8pZ949XiqaKf2sythSGzvyoKD/view?usp=share_link">download Nino's entire dissertation here</a>, for your perusal. If you want the executive summary, <a href="https://www.dropbox.com/s/x6px6kyacs0bl2d/Pedrelli%20CMBS%201920s%20Article.pdf?dl=0">here's a very short piece</a> Nino wrote for the magazine <i>Financial History</i>.</p><p>While he was resident at UW, Nino also showed his chops as an outstanding teacher. If you want to learn more about something technical like urban economics or how to price a mortgage-backed security, geeks like Malpezzi or Shilling or Green are just what you want. Nino could geek out with the rest of us. But if you want to really learn development, well then, you want someone with experience in the trenches; and the ability to generalize and connect theory to practice and vice versa; and someone who knows how to teach those things effectively. Dozens of students confirmed that Nino was that rare master of all three, someone who set a template for his own and today’s outstanding UW lecturers that ensure our students emerge with the right balance of education and skills to “hit the ground running.”</p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-lpuSbfng_2uGfsO4hWjwwCsPfwZ6c8-fUg_qEyihnYsteXUzFJoyiZ1i-YA54jhcXZmyY7VR5e0PWE-AGADsw_yC0HGEtLgNgA5YFobzBSZHg4SV7NP4TPd-TPXt3kUBWD8tB0Re4e8Pz1dfsXIB1B4szS2xRkh0g_bkHSp8KbCfStr1DeYKD5gwUg/s2016/Nino%20at%20work%20Graaskamp%20Center.JPG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1512" data-original-width="2016" height="375" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-lpuSbfng_2uGfsO4hWjwwCsPfwZ6c8-fUg_qEyihnYsteXUzFJoyiZ1i-YA54jhcXZmyY7VR5e0PWE-AGADsw_yC0HGEtLgNgA5YFobzBSZHg4SV7NP4TPd-TPXt3kUBWD8tB0Re4e8Pz1dfsXIB1B4szS2xRkh0g_bkHSp8KbCfStr1DeYKD5gwUg/w500-h375/Nino%20at%20work%20Graaskamp%20Center.JPG" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Nino working in the Graaskamp Center, circa 1998</td></tr></tbody></table><br /><p>After completing his PhD, Nino eventually decided to refocus on real estate development and consulting, and moved to Minnesota; but he continued to teach real estate finance and development at Saint Thomas, continuing to give back to another generation of students.</p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhG4IewnflDYcMboqdIpJ2mLLUef7e0WgL4yQ-dgiTad3Siuo3ECsRIEpldElYR-9sVu-u9qSp1YYUwPzOrZKEsP6oY1oYl9yj5o6W9Uusf4qNk2mSlatO-jHDVuSkyA5ka2H1ZgeL3S8OxKoOhfLVKKegpOTaepEGXxLhVDGLGBiFlw1OQMtJH5ol0xA/s2016/Nino%20cant%20enjoy%20cheese%20without%20wine.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1512" data-original-width="2016" height="406" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhG4IewnflDYcMboqdIpJ2mLLUef7e0WgL4yQ-dgiTad3Siuo3ECsRIEpldElYR-9sVu-u9qSp1YYUwPzOrZKEsP6oY1oYl9yj5o6W9Uusf4qNk2mSlatO-jHDVuSkyA5ka2H1ZgeL3S8OxKoOhfLVKKegpOTaepEGXxLhVDGLGBiFlw1OQMtJH5ol0xA/w542-h406/Nino%20cant%20enjoy%20cheese%20without%20wine.JPG" width="542" /></a></div><br /><p><br /></p><p>Nino and I became close friends. We were delighted to find out that our Italian families were rooted only 50 miles apart, Nino’s in Parma, and Steve’s in small hill towns near Pontremoli. Some blog readers might have been privileged to participate in Nino's annual Parmigiana Reggiano ritual, but not everyone knew the struggles Steve and Nino endured in the early days, cutting up an 85 pound wheel of cheese covered with a rind seemingly borrowed from a rhinoceros. We tried every knife in the house, multiple saws, and guitar wire. Eventually we got the hang of it, and by the time Nino left Madison he’d obtained a set of the “tagliagrana” knives that the pros use. Of course, one wouldn’t spend an hour cutting up a wheel of cheese without sharing a good bottle of Montepulciano, which helped pass the time. Once you’ve got a share of the wheel, what do you do with it? Everything! On soups, pastas, a few chunks with a glass of wine. Nino also took Steve under his wing in the kitchen; every time Steve makes a variation of the risottos Nino taught him, Nino’s there again, in the kitchen in spirit, whether the rest of him is in Wisconsin or Minnesota or wherever he’s at now.</p><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUiGWolz3uD5vyuhE1JwfxUR5WbLXFsI__DDswY7XYxMVqqyrrThwi5ghAtN_NbBiApJtj2VjQS5DwwvTUXB_VtMcD16q1zR8KRgIL1O8CoR4EYUf_zWkeHEh9H6Fltf7v1yoZJOr_yUrdFUXRHATv2pVEsg4637hDE8kToOuidwBQA87DkkjKFH6E2g/s2016/Nino%20and%20Steve%20smell%20cheese.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1512" data-original-width="2016" height="434" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUiGWolz3uD5vyuhE1JwfxUR5WbLXFsI__DDswY7XYxMVqqyrrThwi5ghAtN_NbBiApJtj2VjQS5DwwvTUXB_VtMcD16q1zR8KRgIL1O8CoR4EYUf_zWkeHEh9H6Fltf7v1yoZJOr_yUrdFUXRHATv2pVEsg4637hDE8kToOuidwBQA87DkkjKFH6E2g/w578-h434/Nino%20and%20Steve%20smell%20cheese.JPG" width="578" /></a></div><br /><p><br /></p><p><br /></p><p><br /></p><div><br /></div></div></div>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com4tag:blogger.com,1999:blog-3258035236231564227.post-13272636741059877532023-01-31T16:28:00.003-08:002023-02-01T10:04:33.334-08:00More "Reading for Life" News: Order Without Design is Now Available in Chinese<p> </p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikobNEOFy8hV6pXh4P1JS351svBLx8V9pLh06w-RVmZ-fyhsltYl_bLmuc9xTh_Uwyq7byzkgm8gOSe7pEOkAppkmKSFZdk5cDuq-eKIwt4ZlOq-RVAhHssMwQ8qube2VViXABiM8IFN6A4zKYTNPUV5VN5Ov0MiY5dt1KMBkwp6fbImjGnpD5cYeRWg/s1133/Steve%20and%20Hayden%20reading.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1133" data-original-width="1130" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikobNEOFy8hV6pXh4P1JS351svBLx8V9pLh06w-RVmZ-fyhsltYl_bLmuc9xTh_Uwyq7byzkgm8gOSe7pEOkAppkmKSFZdk5cDuq-eKIwt4ZlOq-RVAhHssMwQ8qube2VViXABiM8IFN6A4zKYTNPUV5VN5Ov0MiY5dt1KMBkwp6fbImjGnpD5cYeRWg/s320/Steve%20and%20Hayden%20reading.jpg" width="319" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">There's no better way to spend a morning...</td></tr></tbody></table><br /><p></p><p>"The more that you read, the more things you will know. The more you learn, the more places you'll go." — Dr. Seuss, <i>I Can Read With My Eyes Shut!</i></p><p>Life has given me the opportunity to travel to more places, more countries than I could ever have dreamed of in my youth. But reading good books has long taken me even farther, to more countries, sometimes beyond earth; and into the past, sometimes into the future. Hence today's edition of <a href="http://wisconsinviewpoint.blogspot.com/2010/12/observations-on-essays-blogging-and.html">Reading for Life.</a></p><p>Urbanist Alain Bertaud's <i>Order Without Design</i> is one of those books that's taken me to places I've never been (Yemen, El Salvador, Haiti... ) and taught me more about places I know a little bit about (India, China, New York....) I've written about the book, and about Alain and his wife and partner in a life of studying cities, Marie-Agnès before, you can <a href="http://reudviewpoint.blogspot.com/2019/07/reading-for-life-one-of-best-books-ever.html">find that post here</a>.</p><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8uiRn7yCw1ZUwzjZUtCTfROHBF_pgVqU4XuVAVKN3evf2X8TOpjxKoFcmliLEBwWnHHieiA3mC2Q_2vz2bArrhXgEIP5a38gH-DMKXCZwuzpN4Gt2rYNi7rHBjIsDHuo_YYflHlWyRYO4KGoYeFVKMFLF9umgKHnvcLYQsbJL4LZLLmtKxgLJuCXJ5g/s434/Marie-Agnes-Bertaud.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="434" data-original-width="413" height="504" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8uiRn7yCw1ZUwzjZUtCTfROHBF_pgVqU4XuVAVKN3evf2X8TOpjxKoFcmliLEBwWnHHieiA3mC2Q_2vz2bArrhXgEIP5a38gH-DMKXCZwuzpN4Gt2rYNi7rHBjIsDHuo_YYflHlWyRYO4KGoYeFVKMFLF9umgKHnvcLYQsbJL4LZLLmtKxgLJuCXJ5g/w480-h504/Marie-Agnes-Bertaud.jpg" width="480" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Alain and Marie-Agnès Bertaud</td></tr></tbody></table><br /><div>Sadly, Marie-Agnès passed away at the end of September 2022 after a long illness. I learned a lot from Marie-Agnès, about cities and satellite imagery and urban design, and also about many other things that comprise a good life. She, like Alain, has been a great friend to me and to my family. At my earlier post you'll find links to some podcasts, and YouTube videos as well as some comments about the book. I especially recommend the several interviews of the Bertauds together by their friend Devon Zuegel <a href="http://reudviewpoint.blogspot.com/2019/07/reading-for-life-one-of-best-books-ever.html">you can find there</a>, which bring out some great stories of their life together as well as a lot about cities, their vital systems, and their inhabitants.</div><div><br /></div><div>I will discuss the life and work of Marie-Agnès Bertaud Roy in more detail in a future post -- it's a topic that deserves more time and attention. The other news I bring in this short post is that <i>Order Without Design</i> has recently been translated into Chinese.</div><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgcfGEye8oeDBtm6whUymr_1qHFYLB1W-QtbtT0OuaMtpsLf2PqB6lhOHdZM9S4536rMsJI9vmP6DlCRkWMT7F1bASwJqbBmduKk4eeKOD6M_mBzP6H7n_1yfq1T_aMbrWfz_JKZhW8sUCy7KCac_qbfrfjAKp-9ipZVC5fqIR6Zm_-ceQg39WP-t3p4A/s350/29501010-1_w_1.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="350" data-original-width="350" height="452" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgcfGEye8oeDBtm6whUymr_1qHFYLB1W-QtbtT0OuaMtpsLf2PqB6lhOHdZM9S4536rMsJI9vmP6DlCRkWMT7F1bASwJqbBmduKk4eeKOD6M_mBzP6H7n_1yfq1T_aMbrWfz_JKZhW8sUCy7KCac_qbfrfjAKp-9ipZVC5fqIR6Zm_-ceQg39WP-t3p4A/w452-h452/29501010-1_w_1.jpg" width="452" /></a></div><br /><div><br /></div><div>If you read Chinese -- or know someone who does -- and want to order a copy, you can <a href="http://product.dangdang.com/29501010.html">find out more here.</a></div><div><br /></div><div>As it happens, about 25 years ago I wrote a book chapter that summarized a large literature on the "Economic Analysis of Housing Markets in Developing and Transition Economies," which Paul Cheshire and the late Ed Mills were kind enough to include in their <a href="https://www.elsevier.com/books/handbook-of-regional-and-urban-economics/cheshire/978-0-444-82138-6">Handbook of Regional Economics</a> volume.</div><div><br /></div><div><br /></div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhr3Qp6MwWGxV437iQRkXvgFuhm9EtBDScvRMDQRRyI_qk5JHyZ-n41W2fFvCFSQBTWbkZI9pt4mp-Pz_u8Pmo4bx2K0MzOW1oDQOtPh3vgdDBrlAtV256NLYLBUV3Wzt-qM31qc4g1my18jdTNKu0YsOslnb1olVApiV7HrJYgWvrGi7d0siLZVIgtLQ/s284/9780444821386.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="284" data-original-width="198" height="293" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhr3Qp6MwWGxV437iQRkXvgFuhm9EtBDScvRMDQRRyI_qk5JHyZ-n41W2fFvCFSQBTWbkZI9pt4mp-Pz_u8Pmo4bx2K0MzOW1oDQOtPh3vgdDBrlAtV256NLYLBUV3Wzt-qM31qc4g1my18jdTNKu0YsOslnb1olVApiV7HrJYgWvrGi7d0siLZVIgtLQ/w204-h293/9780444821386.jpg" width="204" /></a></div><br /><div>The original paper <a href="https://www.dropbox.com/s/1zr0z1u535qsxms/Malpezzi_handbook.pdf?dl=0">can be found here</a>, but I mention it in this post because there is a Chinese version of this paper as well, which <a href="https://www.dropbox.com/s/ccullw2gqvkty1w/Chinese%20Version%20Hand%20Book.pdf?dl=0">can be found here</a>.</div><div><br /></div><div>Their are obvious differences between <i>Order Without Design</i> and "Economic Analysis" ..., for example they were written two decades apart, and mine reads like something written by an academic drudge, while Alain's is livelier and, in some ways, deeper. But I like to think that in many respects Alain's book and my paper complement each other. Read both and decide for yourself? </div><div><br /></div><div>Some readers of this post will have known one or both of the Bertauds, that is our good fortune. But whether you know them yet or not, read the book and check out the podcasts. “Reading brings us unknown friends,” is as true today as when Honoré de Balzac said it a couple of centuries ago. Were he writing today, known for his "<a href="https://en.wikipedia.org/wiki/Honor%C3%A9_de_Balzac">keen observation of detail and unfiltered representation of society</a>," the author of <i>La Comédie humaine</i> would doubtless have much to say about <a href="https://www.youtube.com/watch?v=DYOpjXg0Amc">social media</a> as well as today's <a href="https://mitpress.mit.edu/9780262038768/order-without-design/">books</a>, but would doubtless<a href="https://www.youtube.com/watch?v=3hj4ugQmbfs"> approve</a> of <a href="https://devonzuegel.com/tag/order-without-design-podcast">some</a> of the <a href="https://www.youtube.com/watch?v=W3FiCp_GFfg">best</a> of the <a href="https://cowenconvos.libsyn.com/alain-bertaud">lot</a>.</div><div><br /></div><div><br /></div>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com0tag:blogger.com,1999:blog-3258035236231564227.post-61151527769169932642023-01-02T11:41:00.000-08:002023-01-02T11:41:05.849-08:00Housing Policy ‘Recipes’: International Lessons for China? China's Lessons for other Countries?<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiUrWGpvgOYXypPrp6kGR7et0NZ2nTGaIhiSMyjEsDUouP6CJ7zcHDkVI9EZckBoPjUPCI1RQA7rDBrfu_-uscdCGxnnAs2SxNcv_EVfFfVM074_0TAkwmiu8FNkn95GML7sHI70j0yFMPNCGrCTaE6Rkx27PxgNeLqvGti5EVuK74jC7eItkLXgPJs4A/s960/Chinese%20cooks.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="441" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiUrWGpvgOYXypPrp6kGR7et0NZ2nTGaIhiSMyjEsDUouP6CJ7zcHDkVI9EZckBoPjUPCI1RQA7rDBrfu_-uscdCGxnnAs2SxNcv_EVfFfVM074_0TAkwmiu8FNkn95GML7sHI70j0yFMPNCGrCTaE6Rkx27PxgNeLqvGti5EVuK74jC7eItkLXgPJs4A/w588-h441/Chinese%20cooks.png" width="588" /></a></div><br /><p></p><p>Housing policies have been one of my central interests since I began my career in 1977. Several years later, while at the World Bank with <a href="https://drive.google.com/file/d/1R6Fwy3ICLb7zR6IjdqzJZ2LS1q3lf_Oq/view?usp=sharing">Steve Mayo</a> and numerous other colleagues, I began to participate in developing lists of recommended housing policies or areas for reform. An example of one of our shorter, earlier lists can be found in Mayo Malpezzi and Gross, “<a href="https://drive.google.com/file/d/1eAHNXA_2zl2qXpOeLvMrT7fkNYI39Fa2/view?usp=sharing">Shelter Strategies for the Urban Poor in Developing Countries</a>" (World Bank Research Observer, 1986). In this list, summarized here, we suggested countries needed to focus on:</p><p></p><ul style="text-align: left;"><li>Broader economic development of an unstable macroeconomy as preconditions for improving housing conditions;</li><li>Provision of infrastructure at appropriate and affordable standards;</li><li>Cost recovery for that infrastructure through efficient taxes and user charges to enable its full coverage and maintenance;</li><li>The creation of systems of land information along with the legal and administrative framework for the operation of land markets</li><li>Reforms that would move high-risk low investment in formal markets into the formal sector that facilitate finance and better bricks and mortar investment;</li><li>Development of appropriate financial markets and institutions including mortgage markets but also finance for construction and development as well as for rental housing;</li><li>The critical review of housing subsidies to direct them more efficiently and more equitably and to safeguard the public purse;</li><li>Replacement of old-style public or Council housing with appropriately designed sites and services and slum upgrading projects that address the housing problems of low- and moderate-income households;</li><li>Tenure-neutral systems that facilitate the development of private markets for both owner occupied and rental housing;</li><li>Reform of regulations like building codes and zoning regulations, subjecting those to cost-benefit tests; modifying or removing inefficient and inequitable regulations while strengthening and enforcing those required for basic safety and soundness of housing and financial systems;</li><li>Focus on upgrading rather than simply demolishing so-called slums;</li><li>Understanding that public housing developers often simply displace private investment, in many cases at higher costs with poorer or even perverse distributional outcomes;</li><li>And finally that all these recommendations be underpinned by careful data collection, research, and monitoring and evaluation of the programs and policies involved.</li></ul><p></p><p>IMHO this 40-year-old list stands up reasonably well today, but certainly is subject to criticism and improvement. It’s a little general, no doubt any reader can think of important omissions, and a few of the recommendations are still hotly debated, especially those regarding the relative roles of public and private sectors.</p><p>This is not the first such list of housing policy recommendations, of course. We can cite dozens of examples, some before and many since. To give just one additional example, when <a href="https://marroninstitute.nyu.edu/people/shlomo-solly-angel">Shlomo Angel</a> and Steve Mayo drafted the World Bank’s official housing policy handbook <a href="https://drive.google.com/file/d/0B1YFkNFy0nUQRUk3TTl6OVV2Ums/view?usp=sharing&resourcekey=0-YB7lQWq_YszzeJZsoD7yGA">Enabling Housing Markets to Work</a> in 1993, they put forward the following list of housing policy do’s and don’ts:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4hSRtfrTXcusRQ8d7ZXOoJaFoB6-gFqVGI9O8K5eOokbqF6BCPoR69C6otFuMAdndms-VloBRH81zCLAm_Q8JilaDw6weZJI9Gem2L-MmzhyzBfw1rdVw9hZyMcs7fm0nIZehW7xHvqlsJPK723bOWYCgs2G7G7CflBjtgk38thXoR0hJmcx0TK5AkQ/s960/Enabling%20Housing%20Dos%20and%20Donts.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="452" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4hSRtfrTXcusRQ8d7ZXOoJaFoB6-gFqVGI9O8K5eOokbqF6BCPoR69C6otFuMAdndms-VloBRH81zCLAm_Q8JilaDw6weZJI9Gem2L-MmzhyzBfw1rdVw9hZyMcs7fm0nIZehW7xHvqlsJPK723bOWYCgs2G7G7CflBjtgk38thXoR0hJmcx0TK5AkQ/w605-h452/Enabling%20Housing%20Dos%20and%20Donts.png" width="605" /></a></div><br /><p>It’s a bit hard to read but you can find the full document here. For now, note that our lists are getting longer; and this far from the longest such list we could dig up!</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjix03qLMvERT2nIhlE62n4JEaHj0VsGbQS87lWdalKwiUP_IGeSewKjRJMQ7VgHA2kG5VaESI3U0P5B2pw5On58vQp24KZmQyq9_eZhHhdffy-ZMuQETHXzWddsXLLIovcknafLR2G8f9czUx_vVuHkde9oHzyHm4rKoSHZ7EX2R7jsgDk9VP5LB5bfA/s960/Long%20checklists.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="431" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjix03qLMvERT2nIhlE62n4JEaHj0VsGbQS87lWdalKwiUP_IGeSewKjRJMQ7VgHA2kG5VaESI3U0P5B2pw5On58vQp24KZmQyq9_eZhHhdffy-ZMuQETHXzWddsXLLIovcknafLR2G8f9czUx_vVuHkde9oHzyHm4rKoSHZ7EX2R7jsgDk9VP5LB5bfA/w574-h431/Long%20checklists.png" width="574" /></a></div><br /><p><br /></p><p>In 2015 my friend and colleague Prof. <a href="https://penniur.upenn.edu/people/susan-m-wachter">Susan Wachter</a> of the Wharton School and Codirector of Penn’s <a href="https://penniur.upenn.edu/">Institute for Urban Research</a> invited me to serve on a panel discussing <a href="https://penniur.upenn.edu/events/sustainable-development-goals">Sustainable Global Urbanization</a> The panel included a number of other colleagues including Susan’s colleague and fellow Co-Director Genie Birch, Maruxa Cardama, William W. Burke-White, Bob Buckley and Marja Hoek-Smit. The session was headlined by Columbia University’s Jeffrey Sachs. </p><p>As I prepared my presentation and started to put together yet another list of housing policy recommendations I was struck, not for the first time, that while the lists had some utility they were getting longer and ever more unwieldy. As lists, they didn’t have much to say about how to set priorities among many possible policy areas and interventions, much less how to modify them for a given country context.</p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhNkisVmsN411gYNdidks-_CzGDnWp_cYuPGBdeN4Gu0BcyWzcA8Qy59IwmevgGbIcRT4Is7EcVuXrUoIRaBj8YArKCAf_fjXLiKcjR8f6llyrkAx5q5zr8qX5I_hhQrTR_FJFyuGvOr3sc4SRQWN1Y9wu5XXwetahEU9QCEoD93aqRn_Cz5Roq4LYcg/s960/Julia%20Child.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="414" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhNkisVmsN411gYNdidks-_CzGDnWp_cYuPGBdeN4Gu0BcyWzcA8Qy59IwmevgGbIcRT4Is7EcVuXrUoIRaBj8YArKCAf_fjXLiKcjR8f6llyrkAx5q5zr8qX5I_hhQrTR_FJFyuGvOr3sc4SRQWN1Y9wu5XXwetahEU9QCEoD93aqRn_Cz5Roq4LYcg/w551-h414/Julia%20Child.png" width="551" /></a></div><br /><p><br /></p><p>This put me in mind of a classic short volume by Dani Rodrik, <a href="https://press.princeton.edu/books/paperback/9780691141176/one-economics-many-recipes">One Economics, Many Recipes</a>: Globalization, Institutions and Economic Growth. Like any ambitious volume, when I read it I saw points of agreement and some I’d question; but I really liked that in a short volume Rodrik uses the development recipe metaphor to highlight a need to set priorities among many possible policy recommendations; and just as importantly, to modify them for particular country contexts. I decided to shamelessly steal Rodrik’s “recipes” metaphor for my own presentation on housing policies. </p><p>(You can watch the presentations of all the Penn panelists<a href="https://penniur.upenn.edu/events/sustainable-development-goals"> here</a>.)</p><p>A few years later I found myself preparing a modified version of the Penn presentation for my colleague <a href="https://www.siqizheng.com/">Siqi Zheng</a>’s course on China’s urbanization at MIT. As is my custom, I prepared a possibly <a href="https://docs.google.com/presentation/d/11V6qrjeEUNhVck9A6-Amw5c7NdUxCM2_/edit?usp=sharing&ouid=101686380884371908395&rtpof=true&sd=true">overly elaborate PowerPoint deck which, with just a few later modifications, you can download here</a>.</p><p>In the deck you’ll find a few comments about food but at least as many about housing policies; an elaboration of the “recipes” metaphor; and a number of suggestions for further readings on both topics (food and housing). The focus of the deck is on China, of course, but many of the points are, I think, readily transferable to other countries with a bit of work.</p><p>Next steps? In due course I plan to turn this presentation into a long paper or a short monograph for wider dissemination. In the meantime do feel free to use any of these slides in your own teaching or other presentations. If you have time, let me know if you do so. Comments and criticisms are, as always, extremely welcome.</p><div><br /></div>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com1tag:blogger.com,1999:blog-3258035236231564227.post-75118421233222476942022-09-18T18:09:00.003-07:002023-04-28T14:26:24.434-07:00Housing’s Contribution to Economic Development: Reframing the Narrative<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjT9gto-KaBbGtYUV6rk2X193efYCVovgDn8YgF_clU7jmip3ruGKYQkK5fiiurx9WvJUn2JnlZyBgVdCVNaNxJz_-uZY0BYpulaeOrT2wX3WLUBuT46wOzuyGR8kOvPUQAruKpJxNbOpxxkDGfRpGjQAmXK3eN9OdoC4JxBTaOevC-O7BUuYKO7U7QhQ/s2740/1589631-R1-E010.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1830" data-original-width="2740" height="430" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjT9gto-KaBbGtYUV6rk2X193efYCVovgDn8YgF_clU7jmip3ruGKYQkK5fiiurx9WvJUn2JnlZyBgVdCVNaNxJz_-uZY0BYpulaeOrT2wX3WLUBuT46wOzuyGR8kOvPUQAruKpJxNbOpxxkDGfRpGjQAmXK3eN9OdoC4JxBTaOevC-O7BUuYKO7U7QhQ/w643-h430/1589631-R1-E010.jpg" width="643" /></a></div><br /><p></p><p><br /></p><p>On September 7-8, 2022, in Bethesda MD: The Way Forward Housing Coalition organized a conference to review the economic and social benefits of well-functioning housing markets, and how to chart a better path forward in emerging markets and developing countries (EMDCs). I was pleased to help the organizing committee flesh out the program, and honored to give the wrap-up presentation at the end of the conference.</p><p>The organizing committee included <a href="https://priceschool.usc.edu/people/richard-k-green/">Richard Green</a> and Marilyn Ellis of the USC's <a href="https://lusk.usc.edu/">Lusk Center for Real Estate</a>, <a href="https://csde.washington.edu/affiliates/acolin-arthur/">Arthur Acolin</a> of the University of Washington, <a href="https://real-estate.wharton.upenn.edu/profile/mhoek/">Marja Hoek-Smit </a>of the Wharton School and <a href="http://hofinet.org/">HOFINET</a>, <a href="https://www.linkedin.com/in/monica-rashkin-931b5aa">Monica Rashkin</a>, <a href="https://www.linkedin.com/in/patrick-mcallister-5a320a16">Patrick McAllister</a> and <a href="https://www.linkedin.com/in/patrick-kelley-3027152">Patrick Kelley</a> of <a href="https://www.habitat.org/">Habitat for Humanity's</a> <a href="https://www.habitat.org/our-work/terwilliger-center-innovation-in-shelter">Terwilliger Center</a>, and <a href="https://www.linkedin.com/in/malaika-cheney-coker-93700ba">Malaika Cheney-Coker</a>, formerly with Habitat and now with <a href="https://www.ignitedword.com/about">Ignited Word</a>.</p><p>Details of <i>Housing's Contribution to Economic Development – Reframing the Narrative</i> can be <a href="https://lusk.usc.edu/way-forward/home">found here</a>, including the <a href="https://lusk.usc.edu/way-forward/program">conference program</a>, information on the <a href="https://lusk.usc.edu/way-forward/speakers">speakers</a>, <a href="https://lusk.usc.edu/way-forward/partners">conference partners</a>, and some online resources including<a href="https://lusk.usc.edu/way-forward/resources"> useful readings </a>on the subject.</p><p>The proceedings were recorded, and you can find them on YouTube: <a href="https://www.youtube.com/watch?v=GvvwXhIwGIA">Day 1</a>, and <a href="https://www.youtube.com/watch?v=za0LjucwHDI">Day 2</a>.</p><p><a href="https://www.dropbox.com/scl/fi/6dif9bd73hnyl8k8k0h5s/Way-Forward-Wrapup.pptx?dl=0&rlkey=l59zzoxg926ynn4o0vh5ztu8o">These slides are based on my wrap-up comments for the conference</a>, revised and extended. They are in PowerPoint, and many of the slides have discussion and links in the notes section below the slides. There are a list of references in the notes to one of the slides near the end of the deck.</p><p>My comments and these slides were inspired and informed by my colleagues’ presentations, but they are not a comprehensive summary of all the lessons of the conference. There is much more to be learned, and discussed, about each of the topics. As always, feel free to use any of these slides in your own teaching or other non-profit endeavors. Comments and corrections to these are always welcome.</p>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com0tag:blogger.com,1999:blog-3258035236231564227.post-79185450842175118202022-09-05T14:37:00.002-07:002022-09-05T15:37:44.354-07:00"Financialization" and Housing: An Economist's Thoughts<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHnD_Z2KomWfiRZoVt0nwMbRny4hmikFpQMObXwN46LIHEvoNdZdciAsK34r8eP8_EiroaerMp8VMCMCPfjDu_mwQmBapNoK3xywSnKl047kOQhx1R41MQBeFEbiKyhhP4jRnqEoQNv1i5Cnscub3J8U0V8UgPUuRnkSQtpYofZteNW5gC0J3BV7Exww/s5619/shutterstock_1723593970.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="3638" data-original-width="5619" height="348" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHnD_Z2KomWfiRZoVt0nwMbRny4hmikFpQMObXwN46LIHEvoNdZdciAsK34r8eP8_EiroaerMp8VMCMCPfjDu_mwQmBapNoK3xywSnKl047kOQhx1R41MQBeFEbiKyhhP4jRnqEoQNv1i5Cnscub3J8U0V8UgPUuRnkSQtpYofZteNW5gC0J3BV7Exww/w538-h348/shutterstock_1723593970.jpg" width="538" /></a></div><br /><p></p><p>For a slide presentation on "financialization" from an economist's perspective, with a focus on housing, <a href="https://www.dropbox.com/scl/fi/48comqdkpxjpmaka63yky/Financial-Economics-and-Financialization-Tidbits.pptx?dl=0&rlkey=pwkfa2tkrfgctah0dzamhx93g">please click here.</a></p><p><a href="https://www.dropbox.com/s/0c3menec6tyna5q/Malpezzi%20comments%20on%20financialization%209-5-22.mp4?dl=0">Here's a video</a> with my running commentary.</p><p>Comments and corrections are always welcome!</p><p><br /></p><p><br /></p>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com0tag:blogger.com,1999:blog-3258035236231564227.post-84270997800516865272022-07-01T08:14:00.008-07:002022-08-02T14:06:17.332-07:00Background on Ukraine: Some History, Some Current Events, Some Thoughts on Reconstruction<p> </p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWa6grjOXK-VoLiJ3E4YtlAQX86wUBPmS6lMth47jRgbkSnS1VkK6WU4gK2La_cH9UXqO4zOVbGIMwOvS_q-j1RPLvsMPPagQ2QrXfSsPgYw4iAoZi_yd6m3h-8tcSvueIChMJLV_0dCL7TJDyvvb-d5YwMoMfWnW7huekONgjbrJsq9ukj9mqUJ5y8A/s5464/shutterstock_2096116342.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="3640" data-original-width="5464" height="422" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWa6grjOXK-VoLiJ3E4YtlAQX86wUBPmS6lMth47jRgbkSnS1VkK6WU4gK2La_cH9UXqO4zOVbGIMwOvS_q-j1RPLvsMPPagQ2QrXfSsPgYw4iAoZi_yd6m3h-8tcSvueIChMJLV_0dCL7TJDyvvb-d5YwMoMfWnW7huekONgjbrJsq9ukj9mqUJ5y8A/w635-h422/shutterstock_2096116342.jpg" width="635" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Shutterstock: Kyiv, July 2021. Photo by Ingus Kruklitis.</td></tr></tbody></table><br /><p></p><p>In early 2022, I delivered several introductory lectures presenting <a href="http://reudviewpoint.blogspot.com/2022/02/global-perspectives-on-housing-finance.html">global perspectives on housing finance</a>. As part of the last of those lectures I included a discussion of Russia's then-threatening behavior towards Ukraine. Our class discussed how the Russia-Ukraine conflict might spill over into the economies of Europe, the U.S., eventually the globe; and a few implications for real estate markets.</p><p>Our class met in the morning, and later that day, Russian troops invaded Ukraine. In the past few months I've expanded the original teaching materials. They include a little history, some discussion of the economics of Ukraine and Russia, with a focus on oil and gas markets. Ukrainian housing markets and policies are discussed, as well as some thoughts about reconstruction. A list of reading and links related to this topic are included at the end.</p><p>These materials are pitched at students and assume no familiarity with Ukraine or the region, and are presented in a very informal style. Professionals and those who know the region well may still find some useful nuggets, especially in the discussion of reconstruction and housing markets.</p><p>Since the teaching materials have expanded, here they are presented as a <a href="https://www.dropbox.com/scl/fi/k2k9zt4lvcqd1z5ht0g5y/Ukraine-Slides.pptx?dl=0&rlkey=bxjam9rpib5kcn4u718wq21m5">stand-alone PowerPoint file</a>. They are a work in progress. I am not an expert in Ukraine and I appreciate any comments or corrections those who are expert might provide -- especially from Ukrainians.</p><p>Update: My colleague <a href="http://reudviewpoint.blogspot.com/2019/07/reading-for-life-one-of-best-books-ever.html">Alain Bertaud</a> recently spoke to a group of Ukrainian architects and planners on issues of reconstruction. The presentation (in English, Ukrainian subtitles available) is a<i> tour de force</i> and <a href="https://www.youtube.com/watch?v=FOnykRBURqE&t=4249s">is available here.</a> It is pitched to a higher level audience than my teaching notes, but is extremely accessible to students or anyone interested in the subject. Five star recommendation.</p>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com1tag:blogger.com,1999:blog-3258035236231564227.post-32771718819045093512022-06-22T14:39:00.006-07:002022-12-07T15:36:31.102-08:00Urbanization and Climate Change: A First Look<p> </p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPCvOTT6XGHZ0ezvhHwoVYCVuqKZHogEsZy9R-e3h1m0K_q2D7o_fK4cTGs4Og_l5iFcP8wvjV7O3YzmiLd72wWz9ThZHjx8-rdPodu70xK_1nU7IvD_X4qX5qL_O2Tbsi9gCmWEn9zHivdfMvAw6befWQbRRxv5GuQ8rFX_hh1FJ8p_lbWUZDTnkr8g/s3100/iStock-174525514.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="2441" data-original-width="3100" height="505" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPCvOTT6XGHZ0ezvhHwoVYCVuqKZHogEsZy9R-e3h1m0K_q2D7o_fK4cTGs4Og_l5iFcP8wvjV7O3YzmiLd72wWz9ThZHjx8-rdPodu70xK_1nU7IvD_X4qX5qL_O2Tbsi9gCmWEn9zHivdfMvAw6befWQbRRxv5GuQ8rFX_hh1FJ8p_lbWUZDTnkr8g/w642-h505/iStock-174525514.jpg" width="642" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">iStock</td></tr></tbody></table><p></p><p>On June 21, 2022, I joined 30 participants in a discussion of climate change, with a focus on cities and some of the lessons we can draw from urban and real estate economics, as well as the basics of environmental economics.</p><p>The (virtual) venue was organized by <a href="https://hubert-beroche.medium.com/">Hubert Beroche</a>, of the <a href="https://www.polytechnique.edu/en">Ecole Polytechnique</a>. Hubert is the founder of the school's <a href="https://urbanai.fr/about-us/">URBAN AI </a>think tank, which seeks to better apply emerging technologies to urban challenges. One of URBAN AI's activities is its<a href="https://urbanai.fr/emerging-leaders-program/"> Emerging Leaders Program</a>, which brings together a group of young scholars and professionals from diverse backgrounds, who participate in a program of lectures and hands-on projects designed to foster new approaches to urban technologies.</p><p>I was pleased to participate in one of the sessions, on Urban Economics and Climate Change, which combined lecture and discussion. You can <a href="https://www.dropbox.com/scl/fi/h4fo51sxj9eqltor6wupm/Urban-Economics-and-Climate-Change-Malpezzi.pptx?dl=0&rlkey=o62vje2k8m4bld89wwmrp6bhi">download the session materials here</a>, a set of roughly 200 PowerPoint slides (what else? 😉)</p><p>The video of my presentation <a href="https://www.youtube.com/watch?v=XXcXI90e20k">can be found here</a>.</p><p>Comments and corrections are, as always, very welcome.</p><p><br /></p><p><br /></p>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com0tag:blogger.com,1999:blog-3258035236231564227.post-39850937838167489432022-02-21T10:44:00.006-08:002022-03-31T10:24:52.954-07:00Global Perspectives on Housing Finance<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEigZza-4G3Pe6PLIbzWF817PIFqh_WqlS9ie--Ww7oPZASyfZs1ZwLPX8OaQOMcHxABboTpR0IDcXy5G3W7xnzISTUNL9svSwHnnB3x6CGbokbucSfA2x4d3WOxKN1A51soVBXn7SfX31HRddfwU9Wcd17apOwXjvUnq4wzUBPWy-FFf78WyotuKulRKA=s2419" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1239" data-original-width="2419" height="319" src="https://blogger.googleusercontent.com/img/a/AVvXsEigZza-4G3Pe6PLIbzWF817PIFqh_WqlS9ie--Ww7oPZASyfZs1ZwLPX8OaQOMcHxABboTpR0IDcXy5G3W7xnzISTUNL9svSwHnnB3x6CGbokbucSfA2x4d3WOxKN1A51soVBXn7SfX31HRddfwU9Wcd17apOwXjvUnq4wzUBPWy-FFf78WyotuKulRKA=w621-h319" width="621" /></a></div><br /><p></p><p><i>Revised posting, March 31, 2022</i></p><p>Recently I taught several guest lectures on "Global Perspectives on Housing Finance, at USC (thanks to Richard Green!), at Rutgers (thanks to Morris Davis!) and at Connecticut (thanks to Alex Van de Minne!)</p><p>In each of the classes we covered a brief <i>tour d'horizon</i> of global economies and housing markets, and some basic comparisons of housing finance systems hither and yon. Part of the class was devoted to some global risks faced by real estate investors in the U.S. and elsewhere, including but not limited to COVID. In the USC class we spent some time on Evergrande and the risks in China's housing markets; at Rutgers and Connecticut, we spend significant time on possible fallout from the Russian invasion of Ukraine (though we started pre-invasion). Since the Connecticut class was most recent, and there's a lot of overlap across classes, I'm posting that version here. (The major topic missing is the earlier discussion of China).</p><p>Soon after the Rutgers class met, Russia did invade. I've updated a few of the slides, but I've made no attempt to keep up with the ongoing invasion. I do provide suggestions for reliable sources on those ongoing events.</p><p>These collections are slightly revised versions of the Connecticut presentation. I make these slides available as a public good: feel free to use any of them in your own classes or presentations. </p><p>I recommend the PPT version because it includes notes on many of the slides and more links to original sources. PDF is included for those who don't have access to PowerPoint and/or a hard drive.</p><p><a href="https://docs.google.com/presentation/d/1qQY7tKbonGcm1SG0P49Q4P3HVcWxhQiz/edit?usp=sharing&ouid=101686380884371908395&rtpof=true&sd=true">Download revised class slides in PowerPoint</a> (with notes; 83MB)</p><p><a href="https://drive.google.com/file/d/1RZd4nxtvHG28O5sNi1DpCbj4vvzqRTiu/view?usp=sharing">Download the slides in PDF</a> (no notes; 11MB)</p><p>If you are downloading the larger file, I recommend doing a "save as" to your hard disk, then open in PowerPoint. Google Docs doesn't handle these files well.</p><p>Comments and corrections are welcome, as always.</p><p><br /></p><p><br /></p>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com2tag:blogger.com,1999:blog-3258035236231564227.post-25581896812090523952022-02-08T13:58:00.006-08:002022-02-24T07:23:47.261-08:00Rent Control Redux<p> </p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEj-TpnWqSOnXjF_Hqd6fM3ww1V_ZCCBt3sUEDmTep5z_Z2-bt-ia2dJWyNrR55qdw0EZhvJutK6A8JceJrJPRcr3o0V6O_GzO8T3tiFylKypazVs--h9jWMVqXwNSfZXDD2vIFGNNNrtSBIz4hJvptrIuTIM1uo28WouZ_Ywl8mXGr4rbsvOGnjipJwzw=s1280" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="880" data-original-width="1280" height="441" src="https://blogger.googleusercontent.com/img/a/AVvXsEj-TpnWqSOnXjF_Hqd6fM3ww1V_ZCCBt3sUEDmTep5z_Z2-bt-ia2dJWyNrR55qdw0EZhvJutK6A8JceJrJPRcr3o0V6O_GzO8T3tiFylKypazVs--h9jWMVqXwNSfZXDD2vIFGNNNrtSBIz4hJvptrIuTIM1uo28WouZ_Ywl8mXGr4rbsvOGnjipJwzw=w640-h441" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">https://www.bostonherald.com/2020/01/14/rent-control-debate-puts-tenants-landlords-at-odds/ </td></tr></tbody></table><br /><p></p><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: justify;"><span style="text-align: left;">"BOSTON, MA – JANUARY 14: Demonstrators attend a rent control rally on the State House steps on January 14, 2020 in Boston, Massachusetts. (Staff Photo By Angela Rowlings/MediaNews Group/Boston Herald)"</span></div></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;"><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEi-Wd7JW1bcjxZvxoXfFnfdcs7NoxQSh_ReRTmmFiMIY1-UEcvDRpN45eiP0xxAVoXIF8GNx_08OhzzhW7yD_8DXM9ziMlNEfz5_MPVQ_wCdbBJu2dNWWaAkSb6EaHmCXWUOBTY-B9vXeqCpFlSbgoVLpMuEmkRO9zQf7XTRamkKzJ2ze3yLkSjDEj1HA=s1200" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="628" data-original-width="1200" height="334" src="https://blogger.googleusercontent.com/img/a/AVvXsEi-Wd7JW1bcjxZvxoXfFnfdcs7NoxQSh_ReRTmmFiMIY1-UEcvDRpN45eiP0xxAVoXIF8GNx_08OhzzhW7yD_8DXM9ziMlNEfz5_MPVQ_wCdbBJu2dNWWaAkSb6EaHmCXWUOBTY-B9vXeqCpFlSbgoVLpMuEmkRO9zQf7XTRamkKzJ2ze3yLkSjDEj1HA=w640-h334" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">https://www.illinoisrealtors.org/blog/the-rent-control-threat-is-real/</td></tr></tbody></table><br /><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">We’ve all seen versions of these photos. and many of us have been in these meetings. Rent control is a contentious policy and it’s easy to find passionate voices on both sides of the debate.</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;"><div class="separator" style="clear: both;">There have been some cycles in the popularity of controls of one form or another. Controls are often put in place in wartime. During World War II the United States, most of Europe, in fact many countries around the world instituted emergency controls during the housing shortages that accompany a major mobilization of resources for such a war. </div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">After the war, over time, these were relaxed in many places and removed in others. The popularity of controls seemed to rebound about 40 years ago, partly because of the rapid inflation that many countries experienced. </div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">As LSE's <a href="https://www.lse.ac.uk/business/consulting/reports/assessing-the-evidence-on-rent-control-from-an-international-perspective">Christine Whitehead and Peter Williams</a> among others point out, as inflation subsided controls were relaxed in a number of countries, although certainly not all. In recent years, given increasing concern with housing affordability, and very recently the COVID pandemic, we’ve seen a <a href="https://shelterforce.org/tag/rent-control/">resurgence</a> of <a href="https://www.vox.com/22789296/housing-crisis-rent-relief-control-supply">interest</a> in <a href="https://www.brookings.edu/research/is-rent-control-making-a-comeback/">controls</a>, in <a href="https://www.nmhc.org/research-insight/analysis-and-guidance/rent-control-laws-by-state/">some</a> <a href="https://www.naahq.org/news-publications/government-policy-response-covid-19-creates-conditions-spread-rent-regulation">parts</a> of the <a href="https://www.politico.com/news/2021/11/26/renters-rent-control-523351">United States</a>, and <a href="https://www.oecd.org/els/family/PH6-1-Rental-regulation.pdf">around</a> <a href="https://commonslibrary.parliament.uk/research-briefings/sn06760/">the</a> <a href="https://www.thehindu.com/opinion/op-ed/rent-control-amidst-pandemic/article31521840.ece">world</a>. </div></div><div style="text-align: left;"><br /></div><div style="text-align: left;">In the late 1980s and early 1990s I directed a World Bank research project comparing costs and benefits of rent controls in a range of countries. A terrific team that included <a href="https://journals.scholarsportal.info/browse/10511377/v10i0002">Steve</a> <a href="https://journals.scholarsportal.info/browse/10511377/v10i0003">Mayo</a>, <a href="https://www.rand.org/pubs/authors/r/rydell_c_peter.html">Peter Rydell</a>, <a href="https://www.linkedin.com/in/ricardo-silveira-80563123">Ricardo Silveira</a>, <a href="https://in.linkedin.com/in/vinod-tewari-07872b14">Vinod Tewari</a>, <a href="https://eprints.ncl.ac.uk/author_pubs.aspx?author_id=70500">Graham Tipple</a>, <a href="https://www.ncl.ac.uk/apl/people/profile/kenwillis.html">Ken Willis</a>, joined me in preparing a series of case studies, and a wider review of controls in about 50 countries. The best point of entry is a <a href="https://documents1.worldbank.org/curated/pt/486131468765269193/pdf/multi-page.pdf">summary monograph</a> that I wrote with the assistance of Gwen Ball; that paper also credits the much larger team that contributed research assistance, data, and country details. Soon after, <a href="https://www.tandfonline.com/doi/pdf/10.1080/14616710701496789">Bengt Turner</a> brought his expertise on European controls and housing markets to the table, and in 2003 we collaborated on <a href="https://www.government.se/contentassets/6e57e1d818bb4b289ac512bb7d307fa5/bengt-turner--stephen-malpezzi-a-review-of-empirical-evidence-on-the-costs-and-benefits-of-rent-control">another survey paper.</a></div></div><p>The government of Scotland is planning to institute a new system of controls on private rental housing; details as of this writing can be found in their consultation paper, <a href="https://www.gov.scot/publications/new-deal-tenants-draft-strategy-consultation-paper/">A New Deal for Tenants</a>. As part of the consultation process, the <a href="https://housingevidence.ac.uk/">UK Collaborative Centre for Housing Evidence</a> (CaCHE) organized an <a href="https://www.eventbrite.co.uk/e/scottish-housing-policy-conference-a-fair-flexible-future-rental-market-tickets-245761869367?aff=ebdsoporgprofile">online conference </a>to bring together researchers, policymakers, and market participants to discuss the details of rent controls, chaired by <a href="https://policyscotland.gla.ac.uk/team/duncan-maclennan/">Duncan Maclennan</a>. Links to the sessions can be found here:</p><p></p><ul style="text-align: left;"><li>Session 1, <a href="https://housingevidence.ac.uk/scottish-housing-policy-conference-2022-session-1/">A Growing Mosaic</a></li><li>Session 2, <a href="https://housingevidence.ac.uk/scottish-housing-policy-conference-2022-session-2/">Supply Side Reactions</a></li><li>Session 3, <a href="https://housingevidence.ac.uk/scottish-housing-policy-conference-2022-session-3/">Proposals and Policy Implications</a></li><li><a href="https://housingevidence.ac.uk/scottish-housing-policy-conference-2022-supporting-materials/">Supporting Materials</a></li></ul><p></p><p>I was privileged to be a participant in that conference. The organizers asked me to prepare some brief remarks about research on rent controls, with an emphasis on supply. You can find my<a href="https://www.youtube.com/watch?v=pjcRusiEF9s"> recorded remarks here</a>.</p><p>The PowerPoint slides from the presentation, along with references, can be downloaded <a href="https://docs.google.com/presentation/d/1cZ47Gvy7wvpKOEdgh-b8bPHR0rGS9YDL/edit?usp=sharing&ouid=101686380884371908395&rtpof=true&sd=true">here</a>. I do recommend a somewhat expanded version, <a href="https://docs.google.com/presentation/d/1xnGYbSRW47dNihc5DxELIsuwSHSe_hHL/edit?usp=sharing&ouid=101686380884371908395&rtpof=true&sd=true">which you can find here</a>.</p><p>Mid-conference, as we discussed policy alternatives, I quickly drafted some additional thoughts, including some "big picture" thinking, e.g. about efficiency and fairness; a few more slides with some simple analytics and research results; and some quickly assembled thoughts about "mechanism design" for rent regulations. (The Government of Scotland is committed to putting rent control legislation in place, so we're in an n<span style="font-size: xx-small;">th</span> best world, n to be determined partly by specifics of the regime). You can find that <a href="https://docs.google.com/presentation/d/18fSeMwV7hWsiEDocKx6mjCVhCGE_8Q2g/edit?usp=sharing&rtpof=true&sd=true">second deck here</a>. Comments on any of this material are welcome, but especially on my initial thoughts on mechanism design.</p><p>Among other readings, along with the <a href="https://documents1.worldbank.org/curated/pt/486131468765269193/pdf/multi-page.pdf">Malpezzi and Ball,</a> <a href="https://www.government.se/contentassets/6e57e1d818bb4b289ac512bb7d307fa5/bengt-turner--stephen-malpezzi-a-review-of-empirical-evidence-on-the-costs-and-benefits-of-rent-control">Turner and Malpezzi</a>, and <a href="https://www.lse.ac.uk/business/consulting/reports/assessing-the-evidence-on-rent-control-from-an-international-perspective">Whitehead and Williams</a> papers above, I highly recommend:</p><p></p><ul style="text-align: left;"><li>Ed Olsen's classic empirical analysis of controls in New York, "<a href="https://www.jstor.org/stable/pdf/1830211.pdf?casa_token=Pt-m3jdsARAAAAAA:fCvNx6dadQCRqhcAsPCDqMm7IJw4Uhg5_T8R39iPy_7T_ql9Nr3E56xBsafbEZ0QoAjHZQxRprKUpXXXJLG65SmoPKBM4OMQx-kqzymDZe9FVJqMWqxF">An Econometric Analysis of Rent Control</a>."</li><li>Richard Arnott's "<a href="https://www.jstor.org/stable/2138358?seq=1#metadata_info_tab_contents">Time for Revisionism on Rent Control?</a>"</li><li>Konstantin Kolodilin's "<a href="https://www.econstor.eu/handle/10419/249152">Rent Control Through the Lens of Empirical Research</a>"</li></ul><p></p><p>Late breaking news: Ken Gibb, Adriana Mihaela Soaita and Alex Marsh have just completed their excellent "Rent Control: A Review of the Evidence Base," <a href="https://housingevidence.ac.uk/publications/rent-control-a-review-of-the-evidence-base/">which you can download here</a>.</p><p><a href="http://reudviewpoint.blogspot.com/2018/05/a-guide-to-some-of-my-blog-posts-hither.html">Faithful readers of my blogging</a> (<a href="https://lusk.usc.edu/membership/people/richard-k-green">both</a> of <a href="https://www.macropolicyperspectives.com/team">you</a>?) might remember that I wrote a rent control post for <a href="https://www.business.rutgers.edu/faculty/morris-davis">Morris Davis</a>' Rutgers <a href="https://realestate.business.rutgers.edu/">Center for Real Estate</a> several years ago, when Newark and several other tri-state municipalities were discussing new controls. Most of the post stands up well as an elaboration of some of the ideas in the materials I've provided above, and <a href="https://realestate.business.rutgers.edu/news/digging-deeper-rent-controls">you can read that post here</a>. I think the bottom line from that earlier post, lightly edited, is worth repeating here:</p><h3 style="text-align: left;">The Bottom Line</h3><p>Early models of rent control, the kind usually found in economics principles texts, suggest that regulating rents will lead to dramatically reduced supply from decreasing construction and accelerated depreciation. Simple evidence we presented here, and the preponderance of more detailed research, suggest these effects have been found. But the kinds of rent control systems we have in the United States, which mainly limit rent increases (rather than set rent levels well below market, as sometimes found in other countries) are associated with decreases in supply but do not shut off development completely as feared by early analysts like Milton Friedman and George Stigler. Furthermore, rent control is often inefficient in the sense that the benefit delivered to tenants is often much less than the corresponding cost to landlords.</p><p>The distribution of benefits from controls, whether first or second generation, is rarely related to any measure we’d use to target housing assistance by income or other measure of need. The sparse evidence we have on landlord income suggest that while landlords are richer on average than tenants, landlord and tenant incomes often overlap. Small scale landlording is often an important point of entry for potential entrepreneurs.</p><p>The “bottom-bottom line” can be stated succinctly: Second-generation rent control rarely has the catastrophic effects some early economists suggested, but neither does it deliver effective and targeted relief to households that we would identify as having the strongest housing needs. It does create frictions and perverse incentives that have unintended consequences for housing quality and supply, and labor mobility. Once installed, politically rent controls become very hard to modify or remove if they do begin to become even more binding on supply.</p><p>Other approaches like housing vouchers and changes in building codes land use and development regulations and the like are likely to have a much more positive impact on housing affordability issues. <a href="https://realestate.business.rutgers.edu/news/affordable-housing-are-vouchers-answer">You</a> can <a href="https://realestate.business.rutgers.edu/news/vouchers-win-housing-market-and-economy">read</a> about <a href="https://realestate.business.rutgers.edu/news/can-we-change-game-low-income-housing">some</a> of <a href="https://realestate.business.rutgers.edu/news/affordable-housing-supply-side-innovation">those</a> in <a href="https://realestate.business.rutgers.edu/news/how-do-they-mesh">a few</a> related <a href="https://realestate.business.rutgers.edu/news/are-fair-and-effective-housing-policies-really-hard-find">posts</a>, which <a href="http://reudviewpoint.blogspot.com/2019/08/inside-baseball-on-affordable-housing.html">you</a> can find <a href="http://reudviewpoint.blogspot.com/2019/09/a-global-look-at-housing-affordability.html">here</a>.</p><p><br /></p><p><br /></p><p><br /></p><p><a href="https://www.government.se/contentassets/6e57e1d818bb4b289ac512bb7d307fa5/bengt-turner--stephen-malpezzi-a-review-of-empirical-evidence-on-the-costs-and-benefits-of-rent-control"><br /></a><br /></p>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com1tag:blogger.com,1999:blog-3258035236231564227.post-33978524383410643362021-09-23T17:14:00.001-07:002021-09-23T17:20:11.294-07:00Remembering Jim Curtis<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiosb7i4y9ZpjcbgxjxVvGfRLjIwbZcRcjRW6lKDbLm-9IlaRdoXRzHQgA-IEO7qIVrEGD3lNJZY-BN4W30_9_7mpyIpjZoIYdBR2JGCnmJoTnPnBlEd-WVrT54JAE9VmRrys38hEYojaVx/s620/curtis-2-620x396.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="396" data-original-width="620" height="344" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiosb7i4y9ZpjcbgxjxVvGfRLjIwbZcRcjRW6lKDbLm-9IlaRdoXRzHQgA-IEO7qIVrEGD3lNJZY-BN4W30_9_7mpyIpjZoIYdBR2JGCnmJoTnPnBlEd-WVrT54JAE9VmRrys38hEYojaVx/w541-h344/curtis-2-620x396.jpg" width="541" /></a></div><br /><div><br /></div><div>James J. Curtis III <a href="https://www.legacy.com/us/obituaries/sfgate/name/james-curtis-obituary?n=james-curtis&pid=193305487">passed away at the end of June 2019</a>, after a full but all-to-short life. When I arrived at the University of Wisconsin's Real Estate Program in 1990, Jim was one of the Graaskamp-era alums who greeted me and my new colleagues Kerry Vandell, Jim Shilling and Richard Green. Over the years I relied a lot on Jim's advice, which he gave freely, especially when I took on roles as Department Chair and Center Director. He supported UW Real Estate -- and many other institutions, including the Urban Land Institute -- unstintingly. Some of his support was financial, much of that was on the QT, but for someone with so many irons in the fire, I was always most impressed with Jim's commitment of his most precious resource, his time. If I sent him a draft strategy document, it invariably returned with pages of detailed and invaluable comments. If anyone asked him to come speak to a class or a real estate club meeting, he was there.</div><div><br /></div><div>In my favorite Bond movie, Skyfall, another James is asked to provide some <a href="https://www.youtube.com/watch?v=6ALlJJT62VA">word associations</a>. Say the word "Curtis" to me and the first word that comes to mind is "passion." Other words follow, including "commitment," "integrity," and "values."</div><div><br /></div><div class="separator" style="clear: both; text-align: left;"><div class="separator" style="clear: both;">Like so many, I was shocked to hear about Jim's health problems. I sent a letter to Jim in February 2019. Later in the year I was in the Bay area, and despite his illness Jim and his wife Melanie Duke were kind enough to invite me to their home where we had an hour together, an hour I remember and treasure.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">Here are some edited selections from the letter, suitably transformed, e.g. I now refer to Jim in the third person. I’ve extended the remarks in a few places, too.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">By the way, over three decades, while everyone around me called him “Curtis,” I called him “Jim.” Even his obituaries mention the fact that most called him Curtis. There are a lot of Jims that have played important roles in the program, not limited to Curtis and Graaskamp; and I’ve got a brother by that name. As I did for 30 years, in this note and elsewhere, I’ll continue to stick to Jim.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">I was, as you’d imagine, shocked and saddened when I first heard about Jim’s health. I know ALS is a difficult disease and the outlook is never good. <a href="https://economicdevelopment.extension.wisc.edu/about/professor-ron-shaffer/">Ron Shaffer,</a> a friend of mine in Applied Economics, was dealt the same lousy cards some years ago. Ron was a leader in community economics. When Jim Curtis and I had our conversation a few months after the letter, it turned out their paths had not crossed, but I’m sure Jim Graaskamp knew Ron and his work. </div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">Ron taught me a little bit about community economics, but he taught me some deeper lessons throughout his illness. Ron stayed active as long as he could, intellectually and to the extent he could, physically. Jim G. was not the only “materials handling problem” to face Wisconsin winters in a wheelchair! I asked Ron once how he could handle his situation with a mostly positive outlook. His answer was something along these lines. “I decided that I could spend my days doing my best to treat people well and make them glad I was still around. Or I could be a pain in the ass and make them think the reverse.” Ron chose the former path, as did my illustrious predecessor and Jim’s mentor.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">I wrote Jim to express my thanks for his friendship and guidance over the years – even if sometimes I might have paid much more attention to the guidance part!</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">I have a vivid memory of our first meeting in Fall 1990 at a picnic table after some event or other involving alumni. To be honest at first I thought Jim had been drinking a bit. My mistake. Before long I realized that it was rather a combination of deep nonlinear thinking and an awful lot of passion, about real estate and especially about our program.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">I had never been to Wisconsin before 1990, and I never knew Graaskamp personally, though of course I met many others who played important roles in the University and in our program. Over the years I developed a strong attachment to the program, one that went beyond the normal employment contract. That was some combination of deep connection to probably the greatest real estate faculty ever assembled over time, Kerry Vandell, Jim Shilling, Richard Green, Tim Riddiough, Morris Davis, Rod Matthews … well, the list is long. Staff at all levels: Sharon McCabe, Phyllis Miller, Lee Gottschalk, too many to list once again. And great colleagues outside the Department, like Don Hausch, Joan Schmit, Dan Bromley, Antonio Mello, again far too many to list here. Mike Brennan. See the T&I paper for more names and details.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">So the thing that attracted me to Wisconsin wasn’t Graaskamp, or the program’s history – I’d heard a little bit about it but not so much. It was that I knew Kerry and Jim for a number of years from conferences and other interactions over research. I had a great job at the World Bank and I had the equivalent of tenure there. But I was coming up on a decade at the Bank after five years at the Urban Institute, and I knew that if I stayed a few more years I would be a lifer. Which would’ve been fine, but I thought it was a good time to test out a different path since I always had an academic bent. When I saw that Kerry and Jim were rebuilding a program at a great university, and that they wanted me to join, I knew that was something I couldn’t pass up. Of course, having Richard join us shortly after I signed on, and finding Rod Matthews upon arrival, that was icing on the cake.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">We were also lucky to have a group of committed PhD students that helped us a lot during the transition. In my own case, Mark Eppli, Dan Knox, and Tony Ciochetti served as my TAs out of the box, and they and others (Elaine Worzala , Tim Riddiough, Chuck Carter) took on a lot of extra work during the transition.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">I was more or less prepared for, and looked forward to, great academic colleagues and a great university. I expected, and found, great students. But nothing had prepared me for the intensity of alumni commitment to the program, to its place in the commercial real estate firmament, and of course to its deep history reaching back to the very establishment of real estate as an academic discipline a century ago.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">Another part of my education in 1990 was my own first year’s teaching. In addition to urban economics (for which I was pretty well prepared intellectually) I dove into the deep end of the pool with 300 students in Real Estate Process in room B-10; a course in Local Public Finance; and Richard Andrews’ course in “History and Theory of Urban Land Economics.” The latter course was particularly important to my development. We dropped the course from the curriculum given other teaching needs after one semester, but teaching it that one time got me to delve into writings by Ely, Ratcliff, Andrews, and Graaskamp among others. Adam Smith, David Ricardo and other usual suspects were also on that reading list. Those readings were put to good use later when preparing the teaching note that <a href="http://reudviewpoint.blogspot.com/2016/06/wisconsin-real-estate-century-of.html">morphed into the Tradition & Innovation paper</a>. </div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">Jim became a huge fan of the T&I paper (as did <a href="http://reudviewpoint.blogspot.com/2016/07/most-inspirational-ceo-mike-brennan-of.html">Mike Brennan</a>, I think a number of others). Jim appreciated how it carried on the Graaskampian tradition, but he also emphasized how it was important, in his opinion, that the paper put the Graaskamp era and his contributions into a larger perspective, of the world that Richard Ely and Richard Ratcliff and Richard Andrews also played such a huge role in.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">Alumni engagement was one of the things that impressed me early on, as I’ve already indicated. It wasn’t just talk and advice, valuable as those can be. Jim knew better than I the role alums played in keeping the real estate program alive after 1988, and getting Kerry and the rest of us on board. And remember what the markets were like during my first few years. More than one alum would tell me how their business was frankly struggling, then pull out a checkbook and provide some funds for scholarships or whatever was needed. Beyond financial contributions, everyone was generous with their time. Any time we were looking for help on case study materials, outside speakers, whatever was needed, Jim and his friends, among many others, came through.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">As years passed and I filled in some of my gaps in my knowledge of real estate, I never sought leadership positions, but I did try to step up when I saw it was needed. Much of the credit for any success I had along those lines has to be shared with colleagues, both faculty and staff, and in no small part people like Jim. </div><div class="separator" style="clear: both;">Jim’s contributions stood out from the beginning. An academic’s highest praise is, “I learned a lot from that –.” (Paper, presentation, colleague, whatever). I learned a lot from Jim.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">I tried to pass to students and others some of what I learned from Jim, and so many other real estate professionals like Craig Manske, Jim Smith, Jim Haft, Jill Hatton, Kelley Smith, Mike Arneson, Mike Komppa, Paul Gilbert, Fred Petri, Dianne Orbison, Wendell Kurtz… too many to list fully here. Many aren’t alums of course, here I’d have to put Mike Brennan at the top but Fred Cooper, Brad Olsen, E.J. Plesko, so many others contributed to my education.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">When I think about Jim’s contributions I could list many specifics – his contributions to our strategic plan and fundraising, AREIT, helping me sharpen my reunion presentations. But the one that always comes to mind first is a particular half hour of our day at House of Blues in Chicago when about 10 of us – senior faculty, a few key alums and other professionals, including, of course, Jim – hammered out a framework for communicating the values of the Wisconsin Real Estate Program to future students and many other friends of the program. It wasn’t just the list itself, though that was important. It was also that Jim helped me see just how important values were as part of our education, and that I could and would have to ramp up that part of the curriculum, even if it did not come naturally to me at first.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">A few pages about those values can be found in the T&I paper. Here’s the briefest summary of the values that Jim and I and our colleagues drafted years ago:</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEja2p9S_84ml3hiMMvYFiKBNG4sJOA9febzchXc5YR46qR67TO9vxleK8xMsph-moe6fv57vbfU5ce2eslaHHyUWAMksqq-9w_R037z7S7sGSsg5vCd6kHP6qA49TrDQo1zZZk1n4vfJmX6/s1280/Screen+Shot+2021-09-23+at+5.06.15+PM.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="918" data-original-width="1280" height="377" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEja2p9S_84ml3hiMMvYFiKBNG4sJOA9febzchXc5YR46qR67TO9vxleK8xMsph-moe6fv57vbfU5ce2eslaHHyUWAMksqq-9w_R037z7S7sGSsg5vCd6kHP6qA49TrDQo1zZZk1n4vfJmX6/w525-h377/Screen+Shot+2021-09-23+at+5.06.15+PM.png" width="525" /></a></div><br /><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;"> </div><div class="separator" style="clear: both;">There’s a lot that can be said about each of these; and effective teaching requires that we revisit each of them from time to time during a semester and during a program. Here's <a href="http://reudviewpoint.blogspot.com/2016/09/values-of-wisconsin-real-estate-program.html">a little more elaboration in another blog post.</a></div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">It’s very important to note that this is a bottom-up list. This is not Steve’s or Jim’s list of our personal favorites, at least we try not to make it that. We are trying to report the values we see brought up repeatedly within the program, especially in what happens after somebody graduates.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">It’s also important to note that the list is aspirational. We are all human, and none of us measure up all the time to all our values. But we do our best.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">One important value was later added, thanks to another great friend of the program, David Shulman. David reminds us of the importance of curiosity.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">Jim leaves quite a legacy, and of course I only know about some of that legacy. I told Jim even he only knows about some of his own legacy. Jim Curtis’ passion, his honesty, his love for the program, his focus on the importance of values, all made a difference in how I and many others think about real estate, and beyond. For this and more, I’m in Jim’s debt.</div><div><br /></div></div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjrd7VB56_04xd4TS932kIdL2A0bFKZJP48UJk9nrBDDmKeXwgyStnDjQf1wnk09Q9-TD_1rRiRk-PvLsCHKMQQdrzfbDLwzfEEsb-Tf8l-Z5wUjc8P9vdHLKjGtLaRFWpElzS41KED2aZj/s1544/Screen+Shot+2021-09-23+at+5.04.39+PM.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1544" height="379" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjrd7VB56_04xd4TS932kIdL2A0bFKZJP48UJk9nrBDDmKeXwgyStnDjQf1wnk09Q9-TD_1rRiRk-PvLsCHKMQQdrzfbDLwzfEEsb-Tf8l-Z5wUjc8P9vdHLKjGtLaRFWpElzS41KED2aZj/w572-h379/Screen+Shot+2021-09-23+at+5.04.39+PM.png" width="572" /></a></div><br /><div><br /></div><div><br /></div><div>Finally, why not hear from the man himself. Here's a <a href="https://americas.uli.org/videos/uli-next-global-visionary-video-series-james-j-curtis-iii-short/">short interview clip</a>, courtesy of ULI; and <a href="https://www.youtube.com/watch?v=4SCzN7pHtUc">here's a longer version</a>.</div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com13tag:blogger.com,1999:blog-3258035236231564227.post-75391315875398625292021-03-12T09:42:00.002-08:002021-03-23T16:44:09.948-07:00Economic Impact of COVID-19 on the Housing Market (Second Draft)<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4cHJEnvZ89XKswHoHy8cFfBM8Vod2ACL9fhqys0Y7QiiYl1TTxHzjcrPBWupEgb7hT4GMoV78YZmJbT7_Qvm0PoF-0iAqAMKgBFsKjX1bwYVKnp1pCUig7ZkX_L8BuAy8jE37N5vlrScJ/s960/confused+analyst.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="419" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4cHJEnvZ89XKswHoHy8cFfBM8Vod2ACL9fhqys0Y7QiiYl1TTxHzjcrPBWupEgb7hT4GMoV78YZmJbT7_Qvm0PoF-0iAqAMKgBFsKjX1bwYVKnp1pCUig7ZkX_L8BuAy8jE37N5vlrScJ/w559-h419/confused+analyst.png" width="559" /></a></div><br /><p></p><p>For someone often labeled a "housing economist," I've been slow to post much specifically on this topic (though there are plenty of housing-related slides in my <a href="http://reudviewpoint.blogspot.com/2020/03/a-small-posting-on-big-problem.html">larger PowerPoint library</a> on the coronavirus.)</p><p>There's a lot to unpack, lots of data to collect and analyze. And I'd be deceiving you if I didn't admit I have been surprised at the strength of some (not all!) housing markets.</p><p>Housing and the pandemic: I'm working on it. It's handy to have some commitments that help to focus the mind, provide some deadlines.</p><p>Recently I presented some of my preliminary work to the <a href="https://www.collateralrisk.org/">Collateral Risk Network</a>, thanks to a kind invitation from<a href="https://www.collateralrisk.org/crn-council/"> Joan Trice </a>and colleagues. I presented this version in mid-February.</p><p>Now I'm excited to present an extended version of that material to the urban economics course I taught for years at the <a href="https://www.wisc.edu/">University of Wisconsin</a>. The course is now in the more-than-capable hands of my friend and colleague <a href="https://wsb.wisc.edu/directory/faculty/yongheng-deng">Yongheng Deng</a>. </p><p>Among other improvements to the presentation, I've added discussion of the "<a href="https://onlinelibrary.wiley.com/doi/pdf/10.1111/1540-6229.00579?casa_token=4jWQ_o6huQ8AAAAA:KFltCctGcjy0ESRaIpTaLHo7s7Gq_OlcZdWGxvo5fWzJvjKbDYWunuZmgeu6poioPuXuYic4rAnykzfP">Four Quadrant Model</a>" of real estate stocks and flows developed by <a href="https://economics.harvard.edu/people/denise-dipasquale">Denise DiPasquale</a> and <a href="https://economics.mit.edu/faculty/wheaton">Bill Wheaton</a>, and sketched out how students might apply that model to pandemic-affected rental housing markets.</p><p>Here is the <a href="https://drive.google.com/file/d/1rjXv2KHDUZR3DVbvYn6NtYUNcZFfFRkv/view?usp=sharing">PowerPoint deck</a> for the presentation to our urban economics students. There are notes below many of the slides that provide explanation and commentary.</p><p>If you're checking these out on a phone, you might have better luck with the<a href="https://drive.google.com/file/d/1oDBWeo3MnzNIn_79AVkfuQlN96_l_rhM/view?usp=sharing"> pdf version of the slides</a>. But the pdf does not include the notes, so I recommend using the PowerPoint version if your device can handle it!</p><p>These presentations included some exploratory data analysis of Federal Housing Finance Administration metropolitan-level <a href="https://www.fhfa.gov/DataTools/Downloads/Pages/House-Price-Index.aspx">house price indexes</a>, and <a href="https://coronavirus.jhu.edu/map.html">coronavirus data</a> from Johns Hopkins. Those data can be downloaded in <a href="https://drive.google.com/file/d/1t1Yb8bcFRglE_5DsagUCNXeKCBTqg-cb/view?usp=sharing">spreadsheet form here</a>.</p><p>Still a work in progress -- comments and corrections always welcome!</p><p><br /></p>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com15tag:blogger.com,1999:blog-3258035236231564227.post-3135191987619839182021-02-24T17:58:00.010-08:002021-02-25T17:31:18.359-08:00Thoughts on the Post-storm Power Shortages in Texas<p> </p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3R1webqkb5LyZaf4ZrJe3rcyFHWhCdeRoLCRn1Vx6Ka94r-lZivQmWRMyAVHfikPv4P83yxaPVDvK7vc7ZxvDKta8VhZnAL1F-WyocKIXlHEFPBFI6sBqb-AFRXg5VVGSeYgB3l1vrLgm/s1417/texas+storm+e.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="797" data-original-width="1417" height="327" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3R1webqkb5LyZaf4ZrJe3rcyFHWhCdeRoLCRn1Vx6Ka94r-lZivQmWRMyAVHfikPv4P83yxaPVDvK7vc7ZxvDKta8VhZnAL1F-WyocKIXlHEFPBFI6sBqb-AFRXg5VVGSeYgB3l1vrLgm/w582-h327/texas+storm+e.PNG" width="582" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 1</td></tr></tbody></table><br /><p></p><p>Photo from <a href="https://www.msnbc.com/the-last-word/watch/texas-congressman-this-was-foreseeable-we-knew-this-storm-was-coming-101207621781">MSNBC</a></p><p>In mid February 2021,Texas (and several other states) are still reeling after a terrible and unusual (but far from unprecedented) winter storm.</p><p>This storm came while I was organizing materials for <a href="https://drive.google.com/file/d/1FyCgTxvLT9JImHflZEn3k4tJMCj4zrDn/view?usp=sharing">The Future of Real Estate</a>. FoRE, as we abbreviate it, is a project begun in 2018 with my colleagues <a href="https://www.business.rutgers.edu/faculty/morris-davis">Morris Davis</a> and <a href="https://www.macropolicyperspectives.com/team">Julia Coronado</a>; I have worked on it off and on since then. As the storm hit I was preparing some material on infrastructure, focusing for the moment on energy.</p><p>Given the connection between my recent reading and writing on FoRE and recent events in Texas and elsewhere, I decided to take a time out and do this post.</p><p>FoRE and my own interests in general tend to focus long run. But sometimes it’s important to look at the short run, obviously including emergencies and disasters. Some of my most “learnable moments” spent with my students at Wisconsin came when students chose to do projects on disasters such as the Fukushima nuclear reactor, the earthquake in Haiti, and Hurricane Katrina. Disasters and emergencies (including the current pandemic) are obviously important in their own right. But they can also clarify weaknesses and issues that affect cities and real estate markets and infrastructure in the long run as well.</p><div><br /></div><h3 style="text-align: left;">Some Basics</h3><div><br /></div><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiIAhOyx8c0koZhurW5A7t0X4HMRhEgPVGhyx56VmO9MhyphenhyphenKmeSQIZ5dZIjy8TmF9RbPLR_PCVxqElnnsf9FC3BHbTVXAU4-VWuMAVFd7ZgmT365Hz0mv32lehfhrszk5yW33JQILVvjgsrK/s2048/GettyImages-1231222415.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1152" data-original-width="2048" height="315" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiIAhOyx8c0koZhurW5A7t0X4HMRhEgPVGhyx56VmO9MhyphenhyphenKmeSQIZ5dZIjy8TmF9RbPLR_PCVxqElnnsf9FC3BHbTVXAU4-VWuMAVFd7ZgmT365Hz0mv32lehfhrszk5yW33JQILVvjgsrK/w561-h315/GettyImages-1231222415.jpg" width="561" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 2</td></tr></tbody></table><br /><p>Photo from <a href="https://www.teenvogue.com/story/texas-power-storm-republican-leaders">Teen Vogue</a></p><div class="separator" style="clear: both; text-align: left;">As I write this on February 21, much of Texas has electricity again, but some 14 million Texans are still waiting for the return of safe water supply.</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKgaMUvkUURmYjJu29ibc-ci3R6G25VhUQJikQidk2tYMSu1DOU2SlSd-cRf6NNIMFZDjwsAydrfq47e9cfrcGP9G6kisT2PRMgJDfe4p3vW-qKsADc6Eg1dpcmgaM_a4a2KcNfTvONqGx/s973/national+temp+to+avg+tuesday.PNG" style="margin-left: 1em; margin-right: 1em;"><div class="separator" style="clear: both; text-align: center;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><img border="0" data-original-height="707" data-original-width="973" height="417" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKgaMUvkUURmYjJu29ibc-ci3R6G25VhUQJikQidk2tYMSu1DOU2SlSd-cRf6NNIMFZDjwsAydrfq47e9cfrcGP9G6kisT2PRMgJDfe4p3vW-qKsADc6Eg1dpcmgaM_a4a2KcNfTvONqGx/w573-h417/national+temp+to+avg+tuesday.PNG" style="margin-left: auto; margin-right: auto;" width="573" /></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 3</td></tr></tbody></table><br /></div></a></div>Graphic from the <a href="https://www.nytimes.com/interactive/2021/02/16/us/winter-storm-texas-power-outage-map.html">New York Times</a><br /><p>The February 2021 storm certainly was not limited to Texas; severe cold and often snow struck much of the central U.S., from Minnesota and the Dakotas down through Texas and Oklahoma and Louisiana, as Exhibit 3 shows. As the storm hit in mid-February about 150 million people or a bit less than half the U.S. population was under storm warning. The first day of the storm Austin recorded a temperature of 8° F and about 7 inches of snow. That’s weather that Boston or Milwaukee would shrug off, but it was the largest recorded snowfall in Austin in 55 years. </p><p>The mid-February shortages are unusual and extreme but not unprecedented and like the COVID pandemic, no black swan; perfectly anticipatable except for the timing. Texas has been through dress rehearsals for this, e.g. in the “Groundhog Day” storm of 2011, but failed to heed the warnings. And if you think that single digit temperatures like the ones recorded in Austin wreak havoc remember, that Texas has had much colder episodes in the past including the 1994 record cold snap in West Texas that reached 20°F below zero. </p><p style="text-align: right;"><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAiZcCquWCVbz2Kq8lAUk2EKWFUBl3L7SNbRTnUJIRJmPJ8ESYZF_0eY601buxBq8_N7-Fmbo0ItQsDQoT2k3L-GgOjwF9X5Mfbm8b6pAk78PM7zpGh8nkRPE_U2FZi3YyNU1KhWp8mJi5/s1200/24201.jpeg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1200" data-original-width="1200" height="471" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAiZcCquWCVbz2Kq8lAUk2EKWFUBl3L7SNbRTnUJIRJmPJ8ESYZF_0eY601buxBq8_N7-Fmbo0ItQsDQoT2k3L-GgOjwF9X5Mfbm8b6pAk78PM7zpGh8nkRPE_U2FZi3YyNU1KhWp8mJi5/w471-h471/24201.jpeg" width="471" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 4</td></tr></tbody></table><br /><p>Graphic by <a href="https://cdn.statcdn.com/Infographic/images/normal/24201.jpeg">Statista</a></p><p>Exhibit 4 shows that the number of Texas customers disconnected at the peak of the blackout, over 4 million, dwarfed the number reported from other states. The graphic above, while correct, is a bit misleading because Texas' population also dwarfs the other states listed.</p><p>The 4.3 million could be compared to Texas' population of 29 million, while neighboring Oklahoma's 200K compares to a population of 4 million.</p><p>Assuming all the disconnects are retail customers, and a household size of 2, at the peak about 30 percent of Texas' population was off the grid, while Oklahoma's ballpark estimate comes in at about 10 percent. There's a huge difference, though: many, at first most, of Texas outages continued for days, while most of <a href="https://oklahoman.com/article/5682612/oklahoma-power-grid-escaping-crisis-hitting-texas">Oklahoma's were back online</a> in a reasonable time. Why? To some extent because Oklahoma had winterized more effectively, but even more so because Oklahoma was a medium-sized state well-connected to the national grid, unlike Texas. More on this below.</p><p>For the record, our ballpark estimates of the percentage of a state's population initially disconnected are about 10 percent for Oregon; 6 percent for Louisiana; 6 percent for Kentucky; 12 percent for West Virginia; 4 percent for Missouri and 2 percent for Virginia.</p><p>(Thanks to my colleague <a href="https://faculty.utulsa.edu/faculty/meagan-mccollum/">Meagan McCollum </a>of Tulsa University, who pointed out my howling error in the first posting: I mixed up Oklahoma City and state populations. Keep those comments and corrections coming!)</p><p><br /></p><h3 style="text-align: left;">The Human Cost</h3><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDKOfsDjHdcNKscw6wBabsplqZYV1cIrcgKvTdrogZn9P2cOo4R-OrBjRD_uifT-FnhIczaA6jtkyMEZBkqZ0-TurdPo006EJjNTWpp-tH8mWU2XBYf_7Kky4s15SF6dwY0Ew2gGzi0Swy/s2048/17storm-photos-austin10-superJumbo.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1364" data-original-width="2048" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDKOfsDjHdcNKscw6wBabsplqZYV1cIrcgKvTdrogZn9P2cOo4R-OrBjRD_uifT-FnhIczaA6jtkyMEZBkqZ0-TurdPo006EJjNTWpp-tH8mWU2XBYf_7Kky4s15SF6dwY0Ew2gGzi0Swy/w538-h358/17storm-photos-austin10-superJumbo.jpg" width="538" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 5</td></tr></tbody></table><br /><p>Photo from the <a href="https://www.nytimes.com/2021/02/15/us/texas-winter-storm-photos.html">New York Times</a></p><p>"Workers helped Dori Ann Upchurch into a warming station at University Avenue Church of Christ in Austin. She evacuated her home after she lost her water supply."</p><div>This photo is one of a number of remarkable photos available at a <a href="This photo is one of a number of remarkable photos available at a New York Times photo essay that I highly recommend.">New York Times photo essay</a> that I highly recommend. Let me comment on just a few of them.</div><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhKonezmGS1V00ZUBwa95EXDChh4Pug1P8OIxSh6GE42hPOcR089DMCdvMqjTIWsulTEfEdO0gXMY-CFrYu8UtQkVV18-eyqL4XISTxuhXZGjn9eULg9yJ6F0dVRjomnsSbcOkoHpii50t5/s2048/merlin_183894615_6565bbd6-ba88-4199-a9ee-d47886f4d9a9-superJumbo.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1365" data-original-width="2048" height="340" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhKonezmGS1V00ZUBwa95EXDChh4Pug1P8OIxSh6GE42hPOcR089DMCdvMqjTIWsulTEfEdO0gXMY-CFrYu8UtQkVV18-eyqL4XISTxuhXZGjn9eULg9yJ6F0dVRjomnsSbcOkoHpii50t5/w511-h340/merlin_183894615_6565bbd6-ba88-4199-a9ee-d47886f4d9a9-superJumbo.jpg" width="511" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 6</td></tr></tbody></table><br /><p>Photo from the <a href="https://www.nytimes.com/2021/02/15/us/texas-winter-storm-photos.html">New York Times</a></p><p>I’ve had the opportunity to work in a number of low-income countries and learn from many colleagues and friends in such environments. One of the important but underappreciated problems in many informal settlements in Africa, South Asia, and elsewhere stems from the use of indoor fuels for cooking and heating. Globally 3 billion people use open fires or simple stoves that give off noxious fumes; <a href="https://www.who.int/news-room/fact-sheets/detail/household-air-pollution-and-health#:~:text=Impacts%20on%20health,18%25%20from%20stroke">close to four million people die prematurely</a> every year from illnesses attributable to such pollution. </p><p>This photo of a Texan family from the New York Times collection brought to mind these tragic issues although I took some comfort from the reporting that this particular family was only cooking indoors very temporarily. </p><p>A number of the fatalities attributed to the storm are from <a href="https://www.npr.org/sections/live-updates-winter-storms-2021/2021/02/18/969050038/a-disaster-within-a-disaster-carbon-monoxide-poisoning-cases-are-surging-in-texa">carbon monoxide poisoning</a> from dangerous indoor heating.</p><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgsLy7KWLwW1nU4g-tXvYR4Rdym38-IM-0fm6ezPf3Ou43OAQ5zisboKNDzViv-a30oQGcfa6bMzTlW8Zfev6F99_tSStfxDjkJqsCC7-LsKYWBliHsSv97gcHzvtVhZhgcOdd_GutW8lAg/s2048/18storm-briefing-pm-lede3-videoSixteenByNine3000.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1152" data-original-width="2048" height="321" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgsLy7KWLwW1nU4g-tXvYR4Rdym38-IM-0fm6ezPf3Ou43OAQ5zisboKNDzViv-a30oQGcfa6bMzTlW8Zfev6F99_tSStfxDjkJqsCC7-LsKYWBliHsSv97gcHzvtVhZhgcOdd_GutW8lAg/w570-h321/18storm-briefing-pm-lede3-videoSixteenByNine3000.jpg" width="570" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 7</td></tr></tbody></table><br /><p>Photo from the <a href="https://www.nytimes.com/2021/02/15/us/texas-winter-storm-photos.html">New York Times</a></p><p>Anyone who works in informal settlements and low-income countries (“slums”) in countries like Kenya India Brazil familiar with pictures of residents <a href="https://www.india.com/news/world/women-girls-spend-200-million-hours-collecting-water-unicef-1445291/">filling bottles and buckets</a> from standpipes and <a href="https://theconversation.com/why-kenyas-urban-poor-are-exploited-by-informal-water-markets-144582">water trucks</a>. This photo from the New York Times photo essay brought back those memories.</p><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjp6pplaZNB_88ClNu3NrDkjHyXyikraDmMpDy0o7wXlMNfm2O3PkVTH43A8J7Sc_ff35apAFXZTdOqFSevdqbBoH78ZurMLD3K0ObyrzY2zoo4I1utD-3JFaQzZA9AzvXMqQQxDHtst1TW/s512/Austin+tweet.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="420" data-original-width="512" height="411" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjp6pplaZNB_88ClNu3NrDkjHyXyikraDmMpDy0o7wXlMNfm2O3PkVTH43A8J7Sc_ff35apAFXZTdOqFSevdqbBoH78ZurMLD3K0ObyrzY2zoo4I1utD-3JFaQzZA9AzvXMqQQxDHtst1TW/w502-h411/Austin+tweet.PNG" width="502" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 8</td></tr></tbody></table>Source: <a href="https://twitter.com/terrig_kvue/status/1361505736749166594">Twitter<br /></a><p>As the <a href="https://www.axios.com/texas-power-outage-minority-neighborhoods-inequality-f57e3e24-a137-4705-ba5f-222f545bca0e.html">Axios</a> and the <a href="https://www.nytimes.com/2021/02/16/climate/texas-blackout-storm-minorities.html?referringSource=articleShare">New York Times </a>reported, Texas power shortages often hit minority neighborhoods particularly hard. </p><p>This is not a new phenomenon. Poor infrastructure provides fertile initial conditions for such reductions in service. In states like Texas, poor neighborhoods are often located near industrial sites. These sites can release additional pollutants during some emergencies, like floods, raising additional health concerns. </p><p>Many urban poor lack access to automobiles and rely on public transit, as Glaeser and Kahn have documented, which can trap them in affected areas. For example, several years ago during Wisconsin debates on voter ID, I calculated that 20 percent of Milwaukee city residents had no access to cars. Two-thirds of Milwaukee's population is minority (Black, Hispanic or Asian).</p><p>Such lack of access to automobiles can limit a family's ability to seek shelter from friends and neighbors during emergencies. To quote Kromm and Sturgis, </p><p></p><blockquote>“While about 80 percent of New Orleans residents heeded the mandatory evacuation order issued before Katrina, tens of thousands stayed behind—and the number-one reason they gave was that they lacked cars. Indeed, at the time of the storm, about one-third of New Orleanians—approximately 120,000 people—did not own automobiles.”</blockquote><p></p><div><br /></div><h3 style="text-align: left;">The Disinformation Machine at Work</h3><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLDRoH4IsDHHesu5QQHmIU38RjrZxJbUsgxCzW4opx9aNPCWm3XF1xIPxnYG4opOurODJNuhGUepr7kRrfAYx8q1_5pwdPNM1p7pLoQmahP0mWNWS75gfqqK3y7H3IfJF4jyiuEAkA5SqK/s960/texas+blame+game.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="430" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLDRoH4IsDHHesu5QQHmIU38RjrZxJbUsgxCzW4opx9aNPCWm3XF1xIPxnYG4opOurODJNuhGUepr7kRrfAYx8q1_5pwdPNM1p7pLoQmahP0mWNWS75gfqqK3y7H3IfJF4jyiuEAkA5SqK/w573-h430/texas+blame+game.png" width="573" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 9</td></tr></tbody></table><br /><div>Sources: Fox, OAN, Twitter</div><div><br /></div><div><br /></div><div>We could post dozens of quotes from politicians and media that put forward the canard that wind and/or renewable energy is primarily if not uniquely responsible for the Texas energy debacle. </div><div><br /></div><div>A quote from <a href="https://www.foxnews.com/opinion/tucker-carlson-texas-green-new-deal-climate-catastrophe">Tucker Carlson</a> represents this view: “Global warming is no longer a pressing concern here. The windmills froze, so the power grid failed.” In the first sentence, Carlson has confused climate and weather a surprisingly common mistake in some quarters. Readers seeking guidance on the difference can consult many sources, e.g., the National Ocean Administration, or NASA. This post is more directly concerned with the second sentence. Carlson’s claim that reliance on wind power was a principle cause of failure of the Texas power grid, repeated by <a href="https://www.newsweek.com/larry-kudlow-suggests-texas-power-outages-consequence-bidens-presidency-1570865">Larry Kudlow</a>, <a href="https://www.newsweek.com/texas-power-cuts-rick-perry-federal-government-renewables-1570117">Rick Perry</a> among others is facile and incorrect.</div><div><br /></div><div>Or to quote Governor <a href="https://twitter.com/ndrew_lawrence/status/1361866553998909442">Greg Abbott:</a></div><div><br /></div><div><blockquote>"This shows how the Green New Deal would be a deadly deal for the United States of America. ... Our wind and our solar got shut down, and they were collectively more than 10 percent of our power grid, and that thrust Texas into a situation where it was lacking power on a statewide basis."</blockquote></div><div><br /></div><div>Well, there's room to debate reported specifics of the <a href="https://www.congress.gov/bill/116th-congress/house-resolution/109/text">Green New Deal</a> even if you support a speedy transition to renewables. For the record, I'm a fan of the latter, not so much of the former (especially in its <a href="https://web.archive.org/web/20190207191119/https:/ocasio-cortez.house.gov/media/blog-posts/green-new-deal-faq">first drafts</a>). For example, I don't see a total shutdown of fossil fuels by 2030 as a realistic proposition, and I think the GND's claims to solve tough problems of growth and distribution are grossly overstated, at best. But politicians and pundits should be called out when they use the GND as a red herring to push back against a transition to renewables that is, sooner or later, inevitable. </div><div><br /></div><div>Oh, and while we're thinking of environmental policies, did I mention -- <a href="https://www.ecosystemmarketplace.com/articles/analysis-a-price-on-carbon-is-neither-liberal-nor-conservative-its-just-practical/">a carbon tax?</a> (Be still, my heart).</div><div><br /></div><div><br /></div><h3 style="text-align: left;">Texas' Energy System</h3><div><br /></div><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKvyZBboGKDIWEIf1nQfWSfki8qbIyJ5HV9xeB2xZeSerJDFy63SqQfs0fEqDUcTwVDnQuHFprhLyvU_d7vw-8OlLck6babtvXyvI-dOJ06smGA2ZJi7ajpwttWiTBW4m1VLKtJQNDepeB/s1200/24202.jpeg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1200" data-original-width="1200" height="460" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKvyZBboGKDIWEIf1nQfWSfki8qbIyJ5HV9xeB2xZeSerJDFy63SqQfs0fEqDUcTwVDnQuHFprhLyvU_d7vw-8OlLck6babtvXyvI-dOJ06smGA2ZJi7ajpwttWiTBW4m1VLKtJQNDepeB/w460-h460/24202.jpeg" width="460" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 10</td></tr></tbody></table><br /><div>Source: <a href="https://www.statista.com/chart/24202/texas-energy-mix-by-fuel-type/">Statista</a></div><div><br /></div><div><br /></div><div>Texas does indeed obtain a significant portion of its electricity from wind.</div><div><br /></div><div>Much of the growth in windpower came under the governorship of -- wait for it -- <a href="https://www.newsweek.com/texas-power-cuts-rick-perry-federal-government-renewables-1570117">Rick Perry</a>. (The same Rick Perry who <a href="https://www.youtube.com/watch?v=YN8uFJz9gTk">couldn't remember the name</a> of the Department of Energy, who later ran it, surprised to find the breadth of DoE's responsibilities, including <a href="https://www.vanityfair.com/news/2017/01/rick-perry-energy-secretary-nuclear-arsenal">nuclear safety.</a></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7AkjH9_MCwkTybxeb8HQG8m5FSoOuO3hBymxJQyFsyjgM4iFypKCX0i7WtbZwtnHx7KNNkj6a4xf0m45NHjS_yr3yz0Zd8Ib-9nHYPO0ryE6wr7NwKYJG8WZosY6ixnQiuHDBz3CybL85/s2048/ERCOT-Internconnection_Branded.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1556" data-original-width="2048" height="445" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7AkjH9_MCwkTybxeb8HQG8m5FSoOuO3hBymxJQyFsyjgM4iFypKCX0i7WtbZwtnHx7KNNkj6a4xf0m45NHjS_yr3yz0Zd8Ib-9nHYPO0ryE6wr7NwKYJG8WZosY6ixnQiuHDBz3CybL85/w586-h445/ERCOT-Internconnection_Branded.jpg" width="586" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 11</td></tr></tbody></table>Source: <a href="http://www.ercot.com/news/mediakit/maps">ERCOT</a><br /><div><br /></div><div><br /></div><div>Texas set up a statewide grid largely unconnected to the rest of the country to avoid regulatory and other costs. This did lower short-run costs, but also limited Texans ability to draw on resources from other states in an emergency. Texas also chose to save money in the short run by failing to weatherize windmills. In fact, they failed to weatherize many parts of their energy infrastructure, including but not limited to critical components of gas production and distribution. </div><div><br /></div><div>The Texas electricity regulator estimated peak winter demand at 67,000 megawatts. But as people resorted to space heaters and other electric devices to try to warm up, demand for electricity hit 69,000 megawatts at a time when 30,000 megawatts of power went off-line. This 30,000 MW off-line was twice the level that the Electric Reliability Council of Texas (ERCOT) used as their extreme generator outage for scenario planning. </div><div><br /></div><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbu0n87qluPku9As5zqcF11G4aEzP6m8MoM8fQToYvWyGW4SJlRbxowQAOm9ocCzIL_i0nWELmpFkx9BJOo4jRfm8yWXBPpk8-ABE35Ws7esFnyjBxwlMeRqM4TLKB-2xPIsJy1pSYuKj3/s1179/Average-US-household-electricty-rate-by-state.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="887" data-original-width="1179" height="423" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbu0n87qluPku9As5zqcF11G4aEzP6m8MoM8fQToYvWyGW4SJlRbxowQAOm9ocCzIL_i0nWELmpFkx9BJOo4jRfm8yWXBPpk8-ABE35Ws7esFnyjBxwlMeRqM4TLKB-2xPIsJy1pSYuKj3/w561-h423/Average-US-household-electricty-rate-by-state.jpg" width="561" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 12</td></tr></tbody></table><br /><div><br /></div><div><br /></div><div>Source: <a href="https://www.eia.gov/electricity/state/">EIA data</a> mapped by <a href="http://howmuch.net">howmuch.net</a></div><div><br /></div><div>Texas does indeed have electricity rates somewhat below the national average -- but actually higher than neighboring Louisiana and Oklahoma, who manage to run their systems while connected to the national grid and subject to the resulting regulations.</div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFjlTsElIZjC5xyKKWzlS-9POzdh7eW20JXsO2AnREg95leuD_eoiX4LVVkhzr__yvwutaQypqkyYagSeB-3uEmtMuBY2a3bZvJtxNHhHKNeUW_sXY2DmPscNcjex78Gm-PuZH6XVZpDk4/s1200/frozen_wind_turbines_20210216212714_bloomberg.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="800" data-original-width="1200" height="386" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFjlTsElIZjC5xyKKWzlS-9POzdh7eW20JXsO2AnREg95leuD_eoiX4LVVkhzr__yvwutaQypqkyYagSeB-3uEmtMuBY2a3bZvJtxNHhHKNeUW_sXY2DmPscNcjex78Gm-PuZH6XVZpDk4/w581-h386/frozen_wind_turbines_20210216212714_bloomberg.jpg" width="581" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 13</td></tr></tbody></table><br /><div>Source: <a href="http://theedgemarkets.com">theedgemarkets.com</a></div><div><br /></div><div><br /></div><div>It’s true that icing did force many turbines to shut down in Texas and elsewhere throughout the South and Midwest during this freeze. But Texas was hit much harder than other states. According to a Bloomberg report, in Texas wind shutdowns accounted for about 13 percent of the 30 to 35 gigawatts of total outages. </div><div><br /></div><div><br /></div><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOpHbNJagraHU4t202VPVezieetj7cBnrRjk-jm8ZZu0oqJbdBj82pgV8is8jrRVE_pAtht4_lZ_FYi_qtMB_y6I7VffvxUbtpdNWcxRGsbq7eeyo_GZB8Dmp0hXEwOoWN7YN48pjhL-_Z/s837/frozen+gas.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="564" data-original-width="837" height="364" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOpHbNJagraHU4t202VPVezieetj7cBnrRjk-jm8ZZu0oqJbdBj82pgV8is8jrRVE_pAtht4_lZ_FYi_qtMB_y6I7VffvxUbtpdNWcxRGsbq7eeyo_GZB8Dmp0hXEwOoWN7YN48pjhL-_Z/w540-h364/frozen+gas.PNG" width="540" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 14</td></tr></tbody></table><br /><div>Source: <a href="https://www.texastribune.org/2021/02/16/texas-power-outage-ercot/">Texas Tribune</a></div><div><br /></div><div><br /></div><div>Wells and pipelines froze, pumps failed. Texas’s thermal plants – plants that generate electricity using heat from gas, coal, petroleum or nuclear energy – went off-line. The decline in thermal sources was the largest source of supply shortfalls. </div><div><br /></div><div><br /></div><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEicXGw8UaUYX2-qTxWet-w_Dor9q1XDqQ2lic-TzwvQ_SbBGG7wbvqEMHllI-zSfFbcVlkuIaQiBwR-w_vCGrtEJeEXd_add2HORMRaKTlEiDizFYHacTDbDh2OFGbLOxbycbIoJOUzvVLX/s596/frozen+lines.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="454" data-original-width="596" height="425" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEicXGw8UaUYX2-qTxWet-w_Dor9q1XDqQ2lic-TzwvQ_SbBGG7wbvqEMHllI-zSfFbcVlkuIaQiBwR-w_vCGrtEJeEXd_add2HORMRaKTlEiDizFYHacTDbDh2OFGbLOxbycbIoJOUzvVLX/w557-h425/frozen+lines.PNG" width="557" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 15</td></tr></tbody></table><br /><div>Source: <a href="http://Powermag.com">Powermag.com</a></div><div><br /></div><div>This photo is not from Texas, and not from 2021. </div><div><br /></div><div>It is taken from my urban environmental teaching library, and represents damage to the power lines in other elements of the grid itself.</div><div><br /></div><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi2yAzrWPh9Nv4ku27SyXqUHgTf7MYNuaAGl0HqOEbmTQ_uIDjiFY4Vh_hCMQ6lv6gioLQ2lTwfNXAcK3Kf4NrjXbrSPXAKfywqeME1Ng7PjIUxxr-6GRZUq_cGErJukmp2Uu-FPXQJ3a2h/s640/GettyImages-1231246692.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="427" data-original-width="640" height="363" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi2yAzrWPh9Nv4ku27SyXqUHgTf7MYNuaAGl0HqOEbmTQ_uIDjiFY4Vh_hCMQ6lv6gioLQ2lTwfNXAcK3Kf4NrjXbrSPXAKfywqeME1Ng7PjIUxxr-6GRZUq_cGErJukmp2Uu-FPXQJ3a2h/w542-h363/GettyImages-1231246692.jpg" width="542" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 16</td></tr></tbody></table><br /><div><br /></div><div>Source: <a href="https://denver.cbslocal.com/2021/02/24/jared-polis-energy-prices-puc-letter-texas-storm/">Denver CBS Affiliate</a></div><div><br /></div><div><br /></div><div><div>Keeping the grid in repair during and after storms requires extreme and sometimes heroic efforts from utility workers. In fact, it’s often no easy job in “normal” times.</div><div><br /></div><div>Many deserve credit for their response to this and similar emergencies, year in and year out, including utility workers but also emergency responders, the people who run shelters, those who keep retail establishments open, those who represent "<a href="https://www.newsbreak.com/texas/houston/weather/2168562949352/strangers-help-out-woman-for-5-days-during-texas-storm">the kindness of strangers.</a>.." in fact far too many others to enumerate here. </div><div><br /></div><div>And of course, all credit to those bellwether supporters of society during emergency conditions in much of the country: the operators and staff of <a href="https://www.usatoday.com/story/news/nation/2019/09/01/hurricane-dorian-waffle-house-index-disasters/2187708001/">Waffle House</a>.</div></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiiFHQSpcshpE0UGpF91CnFQ0emFQ76411uE8QX-mmhNhfSsoioUxK5-LjHTHbYKnwaT33Ad59f8g5uuDpYYDN4Ordjy85EpDKg1yI4KmGiFnNcK9CWir9-458yOXpJN1rL7CCIqO9NspcB/s1082/texas+power+generation+time+storm.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="705" data-original-width="1082" height="375" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiiFHQSpcshpE0UGpF91CnFQ0emFQ76411uE8QX-mmhNhfSsoioUxK5-LjHTHbYKnwaT33Ad59f8g5uuDpYYDN4Ordjy85EpDKg1yI4KmGiFnNcK9CWir9-458yOXpJN1rL7CCIqO9NspcB/w576-h375/texas+power+generation+time+storm.PNG" width="576" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 17</td></tr></tbody></table><br /><div>Source: <a href="https://www.nytimes.com/interactive/2021/02/19/climate/texas-storm-power-generation-charts.html">The New York Times</a></div><div><br /></div><div><div>Before we examine the pre-and post-storm performance note the following features. Solar generation (not including most home installations) are a small part of Texas' electricity generation, a few gigawatts (GW) or about 2 percent of generation according to the 2019 EIA data. And of course, as the cycle clearly visible in this chart shows, solar electricity is only generated when the sun is out.</div><div><br /></div><div>Nuclear power provides about 5 GW of Texas electricity and coal 10 GW; these two sources are in normal times the rock steady-state providers.</div><div><br /></div><div>Wind averages about the same generation as nuclear, but is more volatile.</div><div><br /></div><div>Natural gas is by far the most important single fuel, providing 30 to 40 GW of power, more or less. Gas is not only the largest source, but is also the swing provider in normal times.</div></div><div><br /></div><div><div>As the extreme cold hit after Valentine’s Day, gas and wind (the major swing providers) initially peaked: gas provided energy in the mid-40’s GWs while wind approached 10 GW. </div><div><br /></div><div>But as the storm progressed, and elements of all power sources faced operational problems, gas fell down to the high 20s and wind felt down to about a GW.</div><div><br /></div><div>Notice that solar actually picked up a little bit of the slack when the sun was shining.</div></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3R8JuRKPhtgMjpOn-XboGAyrRKDf2XummVzd7gHxuIGhnfG3rwRzaffJUJ09zvXhxfjGSKHQW14KtilWruP5vu8vDd0YO7TJKt-W7Qh04nfdUQKuH2orZ5Gr013g7G8DpE0l-EW5HT5gm/s1228/green+power+temp.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="891" data-original-width="1228" height="419" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3R8JuRKPhtgMjpOn-XboGAyrRKDf2XummVzd7gHxuIGhnfG3rwRzaffJUJ09zvXhxfjGSKHQW14KtilWruP5vu8vDd0YO7TJKt-W7Qh04nfdUQKuH2orZ5Gr013g7G8DpE0l-EW5HT5gm/w576-h419/green+power+temp.jpg" width="576" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 18</td></tr></tbody></table><br /><div>Source: <a href="https://drive.google.com/file/d/1bYE_dDdjLYfrNUxybabhsXirvcfJ_7Wx/view?usp=sharing">data from EIA and from NOAA</a>.</div><div><br /></div><div>These data on wind and solar are annual averages. I obtained data on 2019 state electricity generation by source from the energy administration an average winter temperature from weather data. Those data are used to construct Exhibit 18.</div><div><div><br /></div><div>No surprise, Hawaii is the warmest state on average during the winter. Florida is also quite warm on average, followed by Louisiana, Georgia, Texas, California and some other southern and southwestern states.</div><div><br /></div><div>Alaska is the coldest state. I lived in Wisconsin for 26 years which I found to be plenty cold. But I don’t really mind cold weather is much as heat and humidity. If it’s cold, I can wear my down coat, and most of the places I’ve lived had had central heating. Nevertheless, the chart shows why I always felt just a bit sorry for my friends in Minnesota. And Iowa. North Dakota’s pretty cold as well.</div><div><br /></div><div>The vertical axis measures the percentage of state electricity generated from wind and solar combined, the renewables that so concerned Tucker Carlson above. Actually in virtually all the states the majority of that renewable energy comes from wind, which to date is generating more for the grid than solar. You can download a small spreadsheet with some of the details of this data <a href="https://drive.google.com/file/d/1bYE_dDdjLYfrNUxybabhsXirvcfJ_7Wx/view?usp=sharing">here</a>.</div><div><br /></div><div>The central finding for our purposes today is obvious. Texas averages about 20 percent of its electricity generation from renewables, primarily wind. Plenty of states with much colder climates including Kansas Iowa, the Dakotas, Minnesota, Maine, and Vermont have similar or higher levels of electricity from renewables. Because they insulate and maintain their equipment better than Texas, and because they are plugged into a larger grid for backup, these states have fewer problems under much more challenging weather conditions. </div><div><br /></div><div>Of course, that doesn’t mean there are never outages or problems when storms hit Kansas or Iowa, far from it. But it’s clear from many sources that Texas had a clear path to prepare for such events and chose not to take it.</div><div><br /></div><div>One roadmap for such preparations was prepared after a 2011 extreme cold event, and is available here.</div></div><div><br /></div><div>(By the way, there are some differences between data in this chart, and seasonal data cited above. Wind and solar are more heavily utilized during summer, when air conditioning and other demand peaks, and their production usually falls during the winter. For example, in Texas wind can produce as much as 60 percent of Texas’s total electricity production during peak seasons; but wind turbines generally drop to 20 to 40 percent of their maximum output during winter under normal lower-demand winter conditions.)</div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhFQXgELcm302s_HVlICWkNZYXvulap54EXGaI3OP1SwZENf1Z3cPr4U3LPX2PBBYkWCIZ-MD0YnktaCAcp_jbKoXPN4UiJIS7_JkqrtB68HVqNLG2OFV83jARjEhPRX56cpbV0iCIVVnR/s600/PWR_1014_SR_WinterRenew_Fig1.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="395" data-original-width="600" height="383" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhFQXgELcm302s_HVlICWkNZYXvulap54EXGaI3OP1SwZENf1Z3cPr4U3LPX2PBBYkWCIZ-MD0YnktaCAcp_jbKoXPN4UiJIS7_JkqrtB68HVqNLG2OFV83jARjEhPRX56cpbV0iCIVVnR/w580-h383/PWR_1014_SR_WinterRenew_Fig1.jpg" width="580" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 19</td></tr></tbody></table><br />Source: <a href="http://www.leedco.org/index.php/resources/70-resources/156-technical">Lake Erie Energy Development Corporation<br /></a><div><br /></div><div>Exhibit 19: The Pori 1 Turbine installed in Finland demonstrates that turbines can manage under extreme conditions, if properly designed and maintained.</div><div><br /></div><div>Texas' system for producing and distributing energy can, of course, be weatherized. As Jesse Jenkins summarizes in “<a href="https://www.nytimes.com/2021/02/18/opinion/future-proof-texas-grid.html">A Plan to Future Proof the Texas Power Grid</a>,” </div><div><br /></div><div><blockquote>“Pipelines can be buried deeper to insulate against the ground’s cold surface. When gas supplies are disrupted, dual fuel power plants can switch from gas to petroleum stored on site. Wind turbines can be equipped with heaters to keep blades free of ice. Sensors, valves and coolant intakes can be protected against freezing. Long-distance powerlines can connect to other regions power system and draw from their supplies during times of need.” </blockquote></div><div><br /></div><div>But up until now Texas has eschewed these measures because of their cost. </div><div><br /></div><div><br /></div><h3 style="text-align: left;">The Transition from Fossil Fuels to Renewables is Underway</h3><div><br /></div><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWNqYI4q_NaLrVJo-WPszLWUDw8pA64M9gamys4fIU6rAb7gNOgyqnG7VOU1IfeiFucLPFY66bqVA8TqMZfF_Ou3yjLoUbCLOL2LIgkFzAjjI5k5iFfx6-dsLd5-Atp110mzPM0HY75wQG/s792/coal-solar-2-01.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="437" data-original-width="792" height="332" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWNqYI4q_NaLrVJo-WPszLWUDw8pA64M9gamys4fIU6rAb7gNOgyqnG7VOU1IfeiFucLPFY66bqVA8TqMZfF_Ou3yjLoUbCLOL2LIgkFzAjjI5k5iFfx6-dsLd5-Atp110mzPM0HY75wQG/w601-h332/coal-solar-2-01.png" width="601" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 20</td></tr></tbody></table><br /><div>Source: <a href="https://www.sanjuancitizens.org/renewable-energy/decisions-loom-about-local-electric-supply">San Juan Citizens Org</a>.</div><div><br /></div><div>For an interesting and entertaining account of the very long run, see William Nordhaus' account of energy sources over a millennium. We appear to be on the cusp of another major transition: from fossil fuels to renewables.</div><div><br /></div><div>Such transitions are by no means limited to energy. Here's another well-known transition, that took place about a century or so ago:</div><div><br /></div><div><br /></div><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIXQALIMzVVazUaj3mo6vpZLqq3-rzukfuNrxgaEvL0JVLMcdes6KuAcN3O5fHH4BqWoG61pVpemfP0F02TGAzLf_NIKbqfDt7ipATtV2ZTcDVO3KgXCTfM4P8S5rfCl0JU-TVXaoKn2cL/s805/auto+meets+horse.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="423" data-original-width="805" height="312" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIXQALIMzVVazUaj3mo6vpZLqq3-rzukfuNrxgaEvL0JVLMcdes6KuAcN3O5fHH4BqWoG61pVpemfP0F02TGAzLf_NIKbqfDt7ipATtV2ZTcDVO3KgXCTfM4P8S5rfCl0JU-TVXaoKn2cL/w594-h312/auto+meets+horse.PNG" width="594" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Source: 21</td></tr></tbody></table><br /><div><br /></div><div>Source: <a href="http://Docsteach.org">Docsteach.org</a>, from Bureau of Indian Affairs</div><div><br /></div><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3pPfup_JGFo3Ba0nQ53ahw9Abh06NLbXmGTDzdvkks0P5fmanlMdtpiXuy6hIqxqk0IoNx9h0M25xPBAium4rosN_SSJkLSHb7oFaWxX7N1MKdU068LMQrk3hf_ZdYmQC5UZYCNLoJNM3/s960/horses+to+cars.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="438" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3pPfup_JGFo3Ba0nQ53ahw9Abh06NLbXmGTDzdvkks0P5fmanlMdtpiXuy6hIqxqk0IoNx9h0M25xPBAium4rosN_SSJkLSHb7oFaWxX7N1MKdU068LMQrk3hf_ZdYmQC5UZYCNLoJNM3/w585-h438/horses+to+cars.png" width="585" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 22</td></tr></tbody></table><br /><div><br /></div><div>Source: Grubler et al.</div><div><br /></div><div>Exhibit 22 shows how rapidly a change in technology can take place, once technical and economic thresholds are reached. In just a few decades after the development of mass-market automobiles, the horse went from a major mode of transport, to a hobby.</div><div><br /></div><div>The pace of technical change is much more rapid than a century ago. The ongoing transition to renewables will take some time, though it's hard to put an exact timeline on it. It is well-known that current storage technology is low-capacity relative to total loads, and is very expensive. Improvements in storage technology are underway and will be required for intermittent energy sources including wind and solar to successfully transition to a large part of total energy production. </div><div><br /></div><div>In the short run, I would imagine over several decades, fossil fuels will remain a significant energy source. During this transition, cleaner fossil fuels like gas (with technical and regulatory changes that reduce their climactic impact, e.g. reducing methane escape during production and transport) will become increasingly important for a few decades. Nuclear power is another baseload power source which faces technical and political challenges, each difficult but neither insurmountable in principle. The forecast that nuclear-generated electricity would be "<a href="https://public-blog.nrc-gateway.gov/2016/06/03/too-cheap-to-meter-a-history-of-the-phrase/">too cheap to meter</a>" reminds us to have some humility about our ability to foresee all the elements and timing of future electrical generation. </div><div><br /></div><div><h3 style="text-align: left;">Learning more about infrastructure</h3><div><br /></div><div>Here’s some sources on energy-related infrastructure. Some have been consulted for the posting above, others are sources as we prepare the section on infrastructure for the forthcoming Future of Real Estate project.</div></div><div><br /></div><div><br /></div><div><div>Borck, Rainald, and Jan K Brueckner. "Optimal Energy Taxation in Cities." Journal of the association of environmental and resource economists 5, no. 2 (2018): 481-516.</div><div><br /></div><div>Federal Energy Regulatory Commission and the North American Electric Reliability Corporation. "Report on Outages and Curtailments During the Southwest Cold Weather Event of February 1-5, 2011." 2011.</div><div><br /></div><div>Ferguson, Charles D. Nuclear Energy: What Everyone Needs to Know. OUP USA, 2011.</div><div><br /></div><div>Gilbert, Alan. "The Return of the Slum: Does Language Matter?". International Journal of Urban and Regional Research 31, no. 4 (2007): 697-713.</div><div><br /></div><div>Glaeser, Edward L, Matthew E Kahn, and Jordan Rappaport. "Why Do the Poor Live in Cities? The Role of Public Transportation." Journal of Urban Economics 63, no. 1 (2008): 1-24.</div><div><br /></div><div>Grübler, Arnulf, Nebojša Nakićenović, and David G Victor. "Dynamics of Energy Technologies and Global Change." Energy policy 27, no. 5 (1999): 247-80.</div><div><br /></div><div>Irvine, Maxwell. Nuclear Power: A Very Short Introduction. OUP Oxford, 2011.</div><div><br /></div><div>Kahn, Matthew E, Nancy Lozano‐Gracia, and Maria Edisa Soppelsa. "Pollution's Role in Reducing Urban Quality of Life in the Developing World." Journal of Economic Surveys 35, no. 1 (2021): 330-47.</div><div><br /></div><div>Kahn, Matthew E, and Erin T Mansur. "Do Local Energy Prices and Regulation Affect the Geographic Concentration of Employment?". Journal of Public Economics 101 (2013): 105-14.</div><div><br /></div><div>Kromm, Chris, and Sue Sturgis. "Hurricane Katrina and the Guiding Principles on Internal Displacement." Institute for Southern Studies, 2008.</div><div><br /></div><div>Levi, Michael. The Power Surge: Energy, Opportunity, and the Battle for America's Future. Oxford University Press, 2013.</div><div><br /></div><div>Nordhaus, William D. The Climate Casino: Risk, Uncertainty, and Economics for a Warming World. Yale University Press, 2013.</div><div><br /></div><div>———. "Do Real-Output and Real-Wage Measures Capture Reality? The History of Lighting Suggests Not." In The Economics of New Goods, edited by Timothy Bresnahan and Robert J Gordon, 27-70: University of Chicago Press, 1996.</div><div><br /></div><div>Raimi, Daniel. The Fracking Debate: The Risks, Benefits, and Uncertainties of the Shale Revolution. Columbia University Press, 2017.</div><div><br /></div><div>Thompson, William L. Living on the Grid: The Fundamentals of the North American Electric Grids in Simple Language. iUniverse, 2016.</div><div><br /></div><div>Usher, Bruce. Renewable Energy: A Primer for the Twenty-First Century. Columbia University Press, 2019.</div><div><br /></div><div>Willrich, Mason. Modernizing America's Electricity Infrastructure. MIT Press, 2017.</div><div><br /></div><div>Yergin, Daniel. The New Map: Energy, Climate, and the Clash of Nations. Penguin Press, 2020.</div></div><div><br /></div><div><br /></div><div><br /></div>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com5tag:blogger.com,1999:blog-3258035236231564227.post-11632404335753328412021-02-01T13:47:00.025-08:002021-02-07T13:18:54.771-08:00A first look: Do presidents drive the economy? What will divided government mean for the economy?<p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjSaR5kEFoT_eLgVZpc2N6FxyODnK9nO0LRpZ9-ZFdb3hyphenhyphentBS_KWhsUDdpcNoAXg_-92McbdOwL18WAA-gSqUCfRKQkkkDIxvls7Nm_UwAV6mupddYhdH2Q8WVqdhb_FQggsR99_ajllECU/s960/do+presidents+drive+the+economy.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="418" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjSaR5kEFoT_eLgVZpc2N6FxyODnK9nO0LRpZ9-ZFdb3hyphenhyphentBS_KWhsUDdpcNoAXg_-92McbdOwL18WAA-gSqUCfRKQkkkDIxvls7Nm_UwAV6mupddYhdH2Q8WVqdhb_FQggsR99_ajllECU/w557-h418/do+presidents+drive+the+economy.png" width="557" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 1</td></tr></tbody></table><br /><p><br /></p><h3 style="text-align: left;">Prologue</h3><p>As an economist with some undergraduate and graduate training in political science. and an abiding interest in the intersection between politics and economics, a few months ago I began to collect some of my old teaching materials relevant to this post. I began to write the post itself a few weeks after President Biden's November 2020 <a href="https://www.npr.org/sections/live-updates-2020-election-results">electoral victory</a>. I was inspired to do so by many comments in media and elsewhere about the pros and cons of a "divided government" for the economy. something I had discussed in classes years ago.</p><p>I thought (and still think) that some of these points would be of interest no matter what the outcome of the January 5 Georgia election that would decide whether the Senate would be a closely divided Republican-led body, or a closely divided Democratic-led body. As it happens, of course, the January 5 Georgia election <a href="https://ballotpedia.org/United_States_Senate_runoff_elections_in_Georgia_(January_5,_2021)">swung the Democrats' way, </a>when I was about halfway through this entry. That result has profound implications for our politics and indirectly for our economy. But whether the results favored R's or D's, with such a closely divided Senate and such a polarized political environment. I thought a blog post exploring divided government would be an interesting one.</p><p><br /></p><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZ8_WPFich_gCICu4xZx1anRMN-zDhqwDnyBNAX9Ot90ZhCyfs0rPYB7GHhq5w5FulCGzIAkzW6WUj6Vg0Jes8Ag5tMakl-Ct68PxRKgtOitEycgd86fnex6H83XJZaDtdaVEofxyKmONn/s960/capitol+riot+headlines.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="432" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZ8_WPFich_gCICu4xZx1anRMN-zDhqwDnyBNAX9Ot90ZhCyfs0rPYB7GHhq5w5FulCGzIAkzW6WUj6Vg0Jes8Ag5tMakl-Ct68PxRKgtOitEycgd86fnex6H83XJZaDtdaVEofxyKmONn/w577-h432/capitol+riot+headlines.png" width="577" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 2</td></tr></tbody></table><br /><p><br /></p><p>I was still in the middle of drafting, on <a href="https://www.nytimes.com/2021/01/06/us/politics/capitol-mob-trump-supporters.html">January 6, 2021</a>, when a news flash crossed my PC that a violent riot had broken out at the <a href="https://www.pbs.org/newshour/show/january-6-2021-pbs-newshour-full-episode">U.S Capitol</a> after Donald Trump had <a href="https://www.washingtonpost.com/nation/interactive/2021/capitol-insurrection-visual-timeline/">egged on his supporters</a> to march on Congress to "<a href="https://www.politifact.com/article/2021/jan/04/counting-electoral-votes-jan-6-what-you-need-know/">Stop the Steal</a>." A "steal" which, of course, <a href="https://apnews.com/article/barr-no-widespread-election-fraud-b1f1488796c9a98c4b1a9061a6c7f49d">had</a> <a href="https://www.nytimes.com/live/2021/01/06/us/fact-check-electoral-certification">never</a> <a href="https://www.factcheck.org/issue/voter-fraud/">happened</a>.</p><p>Well, there went my productivity. such as it is, for a couple of days, while I was transfixed by these developments. More on those developments some other day. For now. though I never would have seen this coming, I'll say <a href="https://www.youtube.com/watch?v=x_P-0I6sAck&t=1s">Arnold Schwarzenegger speaks for me</a>.</p><p>Here we'll continue with the post as originally planned. I'll have more to say about the January 6 events and other matters in a future post. This post will focus on the following questions:</p><p></p><ul style="text-align: left;"><li>Do presidents drive the economy? </li><li>Does presidential <i>party</i> matter?</li><li>Do our political views color our economic outlook?</li><li>Is divided government good for the economy?</li></ul><p></p><p><br /></p><h3 style="text-align: left;">Day-After Posting News Flash: Do "Great" Minds Think -- Somewhat -- Alike?</h3><p>I posted the original version of this blog entry on February 1. Bob Buckley emailed me the next day, before I had the opportunity to read through my New York Times, with a head's-up. On February 2, David Leonhardt has just published a related op-ed:</p><p><a href="https://www.nytimes.com/2021/02/02/opinion/sunday/democrats-economy.html?action=click&module=Well&pgtype=Homepage&section=Opinion">The Economy Does Much Better Under Democrats. Why? G.D.P., jobs and other indicators have all risen more slowly under Republicans for nearly the past century.</a></p><p>There's a lot of overlap between Leonhardt's op-ed and this blog. That's not a surprise, given years of interest in the subject. We both use the classic work by Alan Blinder and Mark Watson as a jumping-off point. We both look at GDP, but while I look at stock prices and inflation, Leonhardt looks at employment. Unsurprisingly, there's some overlap in our interpretation as well, but also some difference. It's not a bad idea to read our two efforts as complements.</p><p><br /></p><h3 style="text-align: left;">Original motivation</h3><p>Media as well as casual conversations often refer to the ''Trump economy,'' or the '"Obama economy," or the "Bush economy.... " To be fair, I've rarely heard anyone refer to the "George Washington economy" or the "John Quincy Adams economy." Nevertheless for many decades the practice has seemed firmly entrenched.</p><p>Here are a baker's dozen links, more-or-less randomly selected from hundreds available via a quick Internet search on "presidents and the economy:</p><p></p><ul style="text-align: left;"><li>Bloomberg, <a href="https://www.bloomberg.com/graphics/2019-the-longest-expansion/">"Economy Breaks Record on Trump's Watch. He Wants All the Credit."</a></li><li>House Budget Committee, "<a href="https://budget.house.gov/publications/report/president-trump-has-failed-american-economy">President Trump Has Failed the American Economy</a>'"</li><li>The Economist, "<a href="https://www.economist.com/leaders/2020/10/17/how-to-judge-president-trumps-economic-record">How to Judge President Trump's Economic Record</a>"</li><li>Bloomberg, '<a href="https://www.bloomberg.com/opinion/articles/2020-10-30/trump-s-economy-really-was-better-than-obama-s">Trump's Economy Really Was Better Than Obama's</a>"</li><li>Forbes, "<a href="https://www.forbes.com/sites/chuckjones/2020/02/17/obamas-2009-recovery-act-kicked-off-over-10-years-of-economic-growth/?sh=338dfde168b7">Obama's 2009 Recovery Act Kicked Off Over 10 Years of Economic Growth</a>"</li><li>Wall Street Journal, "<a href="https://www.wsj.com/articles/his-and-her-clintonomics-1463526482">His and Her Clintonomics</a>"</li><li>The Economist, "<a href="https://www.economist.com/books-and-arts/2015/10/29/fdr-for-beginners">Economic History: FDR for Beginners</a>"</li><li>Mises Institute, "<a href="https://mises.org/library/how-fdr-made-depression-worse">How FDR Made the Depression Worse</a>"</li><li>Carl Piven, "<a href="https://uncpress.org/book/9781469614557/jimmy-carters-economy/">Jimmy Carter's Economy</a>"</li><li>5 Minute Economist, "<a href="https://5minuteeconomist.com/which-presidents-were-best-and-worst-for-the-us-economy.html">Which Presidents were Best and Worst for the US Economy</a>"</li><li>The New Yorker, "<a href="https://www.newyorker.com/magazine/2017/10/23/hating-on-herbert-hoover">Hating on Herbert Hoover</a>"</li><li>Peter Temin, "<a href="https://eh.net/book_reviews/the-jacksonian-economy/">The Jacksonian Economy</a>"</li><li>Robert Hormats, "'<a href="https://hbr.org/2003/08/abraham-lincoln-and-the-global-economy">Abraham Lincoln and the Global Economy</a>"</li><li>George Washington Colonial Life (Mt Vernon), "<a href="https://www.mountvernon.org/george-washington/colonial-life-today/early-american-economics-facts/">Ten Facts About the American Economy in the 18th Century</a>"</li></ul><p></p><p><br /></p><p>Try your own search, including the names of your favorite among the 45 presidents (46 presidencies -- see Grover Cleveland, the 22nd and 24th president), and you'll find many dozens more.</p><p>As a <a href="http://reudviewpoint.blogspot.com/2020/09/thinking-about-thinking-are-you-bayesian.html">good (if informal) Bayesian</a>, I should reveal my priors on this subject My reading of the evidence, scholarly and otherwise, is that (1) presidents and their policies <i><b>do </b></i>have important effects on the economy: but (2) these operate with long lags and are extremely hard to disentangle; and (3) the common attribution of economic success and/or failure to a president and/or his party is a gross simplification at best. </p><p>Thus I will argue that Joe Biden's actions will have profound effects on the economy, but that over the next four years the U.S. economy will be also driven by decisions taken by Donald Trump. And Barack Obama. And a couple of Bushes. Clinton. Carter. .... Eisenhower. FDR. Hoover ... Lincoln ... all the way back to George Washington. </p><p>I have other relevant priors. Perhaps the most salient is that of course presidents don't act alone. Federal Reserve presidents, in fact the entire Fed Board of Governors, Regional Presidents, and the Fed's bureaucracy play important roles. Many cabinet members, other staff. and bureaucrats have made important contributions (and, sadly, more than a few subtractions) to U.S. economic performance. <a href="https://www.britannica.com/biography/Alexander-Hamilton-United-States-statesman">Alexander Hamilton</a> immediately comes to mind, but so many others; to name just a few, <a href="https://en.wikipedia.org/wiki/Harry_Dexter_White">Harry Dexter White</a> (influential in the design of the post WWII Bretton Woods institutions when he wasn't feeding information to the Soviets). Many in Congress have had their impact, for example <a href="https://en.wikipedia.org/wiki/Justin_Smith_Morrill">Justin Smith Morrill</a> (sponsor of the Land Grant Act of 1862 signed by Abraham Lincoln, which created the system of land grant colleges including the University of Wisconsin), or <a href="https://en.wikipedia.org/wiki/Carter_Glass">Carter Glass</a>, who co-sponsored the Federal Reserve Act as well as the Glass-Steagall Act which (until recent decades) separated investment and commercial banking, and created the Federal Deposit Insurance Corporation.</p><p>In this note we focus on two branches of the federal government, the presidency and the legislature. The third branch, the Supreme Court, is easily worthy of its own post. No court term goes by without the Supreme Court, to say nothing of the hundreds of lower courts, putting their stamp on the economy. Just a few landmark cases will be mentioned here as examples. In McCulloch versus Maryland (1819) the court took an expansive view of the Constitution’s stricture that </p><p></p><blockquote>“The Congress shall have Power…To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.”</blockquote><p></p><p>This particular case revolved around the establishment of the Second Bank of the United States. Even though the Constitution did not specifically enumerate the power to establish such a bank, the Court ruled that it was shown to be “necessary and proper.” The door was thus opened for a wide range of implied powers in addition to those explicitly granted in the Constitution. McCulloch versus Maryland also forbade states from taxing federal entities.</p><p>Gibbons versus Ogden (1824), known as “the steamship cases,” established federal primacy in the regulation of interstate commerce. Another riparian case, Charles River Bridge versus Warren Bridge (1837) established limits on contracts to create monopolies. The Court ruled that a charter granted to the first company did not confer an enforceable monopoly on bridges between Boston and Cambridge. The deciding opinion also highlighted the responsibility of government to promote “the happiness and prosperity” of the American people.</p><p>"Real Estate and Urban Development Viewpoint" obviously has an urban focus. Many cases also have helped construct the framework for urban development especially land use. The canonical case of Euclid v. Ambler (1926) is where most discussions of this legal framework start; in Euclid, the Court famously held that even if it reduced the value of a property, zoning and other regulations were not “takings” requiring compensations (see the Constitution’s 5th Amendment) but were exercises of the government’s police power so long as it had some "reasonable relation" to the promotion of "health, safety, morals, and general welfare." Over the years, dozens of other cases – Pennsylvania Coal v. Mahon (1922), Southern Burlington Co. NAACP v. Mount Laurel (1975) Lucas v. South Carolina (1992) and Kelo v. New London (2005), to name just a few – filled in and, at times adjusted, this framework.</p><p>In this note we focus on two branches of the federal government but of course state and local governments have profound implications for the economy and our populace’s well-being. Malpezzi (2007, 2012) provide a brief discussion and some references.</p><div>Finally, since this post focuses on the relative performance of Democrats and Republicans, readers may wish to know if I bring any political biases. Personally, I only ascribe to the first half of <a href="https://www.cmgww.com/historic/rogers/about/biography/">Will Rogers</a>' <a href="https://www.brainyquote.com/quotes/will_rogers_122697">famous epigram</a>: "I am not a member of any organized political party." I have been registered as an Independent since the 1970s, and have been a ticket-splitter ever since. I often lean <a href="https://www.wsj.com/articles/is-classical-liberalism-conservative-1507931462">classical</a> <a href="https://www.economist.com/leaders/2018/09/13/a-manifesto-for-renewing-liberalism">liberal</a> in my opinions (which is not the same as most Americans use the term liberal today). Think the Adam Smith of both <a href="https://www.adamsmith.org/the-wealth-of-nations">The Wealth of Nations</a> (concerned with growth and efficiency) and <a href="https://www.adamsmith.org/the-theory-of-moral-sentiments">The Theory of Moral Sentiments</a> (concerned with our social nature and with equity and fairness). I'm fine with paying taxes and with income redistribution, though I think we need to spend at least as much time thinking about incentives, human capital formation, and widening opportunities. It is fair to say -- it's a gross understatement, actually -- that I've not been a fan of <a href="https://www.britannica.com/biography/Donald-Trump">Donald Trump</a>, since I first began to pay some attention to him while teaching about commercial real estate three decades ago. I won't bother with details, but shortly before the 2016 election <a href="https://www.youtube.com/watch?v=PpZGR_eTbAI">Mitt Romney</a> summarized many of my views; and four years or so later, things turned out even worse, much worse, than I had expected. </div><div><br /></div><div>Whatever my political opinions, I do my best to keep my facts tethered to the real world. I try to stay away from the post-modern ideas of such "philosophers" as Michel Foucault (truth is determined by power), Jacques Derrida ("the deconstruction of narratives"), <a href="https://www.politifact.com/factchecks/list/?speaker=donald-trump&ruling=false">Donald Trump</a> himself, and, yes, Rudolph Giuliani ("<a href="https://www.youtube.com/watch?v=CljsZ7lgbtw">truth isn't truth</a>.") Put me in the camp of Daniel Patrick Moynihan: "everyone is entitled to his own opinions, but not his own facts." Let's look at some evidence.</div><div><br /></div><div><br /></div><h3 style="text-align: left;">So: Do presidents drive the economy? What does the evidence show?</h3><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNqX71vC6VyYjx0Ldt8m5qTAmC6t53ZivhO-yeHWMt136O7_w6OAxqG9r8AOrUxriN0G6FUV-YxLndLvw8x5iozOt7Y4tRvzWS9tNx5168Gawb2s-k0EDJeZh_ZC1ErP9glPEVJAAG0uXt/s450/biden+trump.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="253" data-original-width="450" height="267" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNqX71vC6VyYjx0Ldt8m5qTAmC6t53ZivhO-yeHWMt136O7_w6OAxqG9r8AOrUxriN0G6FUV-YxLndLvw8x5iozOt7Y4tRvzWS9tNx5168Gawb2s-k0EDJeZh_ZC1ErP9glPEVJAAG0uXt/w475-h267/biden+trump.jpg" width="475" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 3</td></tr></tbody></table><br /><p>Economists and political scientists alike have long found support for the hypothesis that economic conditions affect elections, especially presidential elections. In fact, I recently <a href="http://reudviewpoint.blogspot.com/2020/12/classics-illustrated-blog-post-on.html">re-posted a blog post</a> on this subject, from 2010. For a more detailed discussion, see Fair (1978, 2011). </p><p>Is the converse true? Do presidents have a more or less contemporaneous effect on the economy?</p><p>The best-known paper among economists is by <a href="https://www.aeaweb.org/articles?id=10.1257/aer.20140913">Blinder and Watson</a>. Their tabulations lead them to claim that "the U.S. economy has performed better when the president of the United States is a Democrat rather than a Republican, almost regardless of how one measures performance." A later working paper by <a href="https://www.hoover.org/sites/default/files/research/docs/17101-kane-presidents_and_the_us_economy_from_1949_to_2016_updated.pdf">Tim Kane</a> shows that specific results of such tabulations are sensitive to assumed lags between the dates politicians take office and their actions may directly affect the economy. Taking either Blinder and Watson's, or Kane's results (or any other result on such relationships) at face value - even asking the question - leads immediately to other, deeper, questions. Why would<i><b> any</b></i> president matter for U.S. economic performance? Why would their political party matter? And by the way, what<i><b> is</b></i> economic performance?</p><p>In this brief note we will focus on gross domestic product as our main measure of economic performance. This is not because GDP is anything like a sufficient statistic for overall performance. We could quickly name a few dozen additional informative indicators, including measures of inflation (which we will briefly consider), employment, the structure of production, environmental conditions, the ability to enjoy leisure, and measures of poverty and the distribution of income and wealth. among others. To keep this a blog post instead of a book, we will limit ourselves today to GDP and just a few other indicators.</p><p>As it happens a number of other potential measures, including employment, are often - not always - correlated with GDP. Distributional measures in particular are more complex. Fully considering other measures awaits another day.</p><p>Does a president's <i>party</i> matter? In is not entirely clear how much Democrats Harry Truman, LBJ, and Bill Clinton have in common regarding their stewardship of the economy. Certainly Republicans Dwight Eisenhower, the Bushes <i>pere</i> and <i>fils</i>, and Donald Trump have followed very different economic and social policies. For that matter, why would the president's party, as opposed to their individual policies and circumstances, matter so much over time? Especially when we've recently learned, once again, that what it means to be a Republican or a Democrat can change profoundly over less than a decade.</p><p>Results in the literature including Blinder and Watson, Kane, and others, can be boiled down to a few stylized facts:</p><p></p><ul style="text-align: left;"><li>At first glance, many but not all indicators <b><i>seem</i> </b>to perform better under Democrats than Republicans. (Note the emphasis on <i><b>seem</b></i>).</li><li>These simple relationships are not robust when we account for lags between politics and policies, and the measures of economic performance.</li><li>None of this should be a surprise after careful thought. Today's economy is affected by the lagged effects of the policies of 45 presidents and 117 congresses. Among <i><b>many</b></i> other things.</li><li>Most analyses (including ours, below) focus on a necessarily small sample of postwar presidents and legislatures. <i><b>The law of small numbers applies.</b></i></li></ul><p></p><p><br /></p><h3 style="text-align: left;">Without ascribing causality, what do the averages of economic indicators look like, by presidential term?</h3><p>This chart breaks down basic data by presidential term: inflation-adjusted GDP growth, real GDP growth per capita, a measure of the rate of inflation, and the change in the S&P 500 index deflated with the GDP deflator. I have also included the number of quarters each presidential term spans.</p><p><br /></p><p></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVZxDfAo73xifBOeE7HDmZtxEpsKghQlLh4V9farGS5otScx8B9BQFYkOynCx2Rbif4428anzuTmPaABWya0IqkVFRPxDMMIncBlDw5kZSTzZVFf5j3f7Ja09PjoYGtGIIynMJLkpFNlse/" style="margin-left: auto; margin-right: auto;"><img alt="" data-original-height="788" data-original-width="745" height="608" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVZxDfAo73xifBOeE7HDmZtxEpsKghQlLh4V9farGS5otScx8B9BQFYkOynCx2Rbif4428anzuTmPaABWya0IqkVFRPxDMMIncBlDw5kZSTzZVFf5j3f7Ja09PjoYGtGIIynMJLkpFNlse/w575-h608/image.png" width="575" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 4</td></tr></tbody></table><br /><br /><br /><p></p><p>Here are just a few highlights. These are purely descriptive and quite simplistic.</p><p>At the end of the first Harry Truman term the U S. was coming out of a sharp and severe recession that hit at the end of World War II. </p><p>The official Bureau of Economic Analysis' National Income and Product Accounts data begins in 1947. I'm using the post-1947 BEA data here, although economic historians have estimated GDP for earlier periods. If we included the full Truman first term, his growth data would look much worse, because of the short sharp post WWII recession omitted from this dataset.</p><p>The S&P 500 stock index was created in the mid·1950s, and I have data beginning in 1950. Apparently. some other sources have backfilled the data to earlier years but I haven't obtained that as of this writing.</p><p>The second Truman term was characterized by rapid growth as the economy bounced back from the post World War II recession. When Dwight Eisenhower took office the economy began to slow down; the slow growth during Ike's second term is widely considered to have contributed to John F. Kennedy's victory over Richard Nixon in the 1960 election.</p><p>Kennedy's term was characterized by robust growth and low inflation, but of course was cut tragically short by his 1963 assassination.</p><p>Johnson's first term comprised only 5 quarters between his assumption of the presidency in November 1963 and the 1964 election. In the latter year Johnson won election in his own right of course, and presided over rapid growth; but also the beginnings of accelerating inflation as we ran large deficits during the "<a href="https://en.wikipedia.org/wiki/Guns_versus_butter_model">guns <i><b>and</b></i> butter</a>" period of the Great Society and the Vietnam War. During this period Johnson famously bullied Fed chairman William McChesney Martin to follow a loose money policy, exacerbating price instability. In 1968 Johnson was eligible to run again, but the Vietnam War proved a political albatross; Johnson declined to run, and his vice-president Hubert Humphrey then lost to Richard Nixon.</p><p>Inflation picked up further during Nixon's full first term. The second term was cut short by his Watergate-related resignation. Inflation continued to accelerate during the Gerald Ford and Jimmy Carter administrations, two single-term presidencies that were characterized by modest growth, high inflation, and political weakness.</p><p>Of course it wasn't just the economy that contributed to their failures to win a second term. Among other challenges, Gerald Ford faced serious blowback from his pardon of Richard Nixon post-Watergate, and Jimmy Carter faced energy shortages and the Iran hostage situation.</p><p>While Carter's inflation number is the worst in the chart. it was Jimmy Carter who took the politically difficult decision to bring in Paul Volcker as Federal Reserve chairman, and backed Volcker as he instituted a severe! tightening of monetary policy that pushed the U.S. into recession but also finally wrung inflationary expectations out of the system, at least for the time being. Paul Volcker's Fed presidency spanned more than one presidential administration as he finished the job near the end of Ronald Reagan's second term</p><p>After a rocky start, including the largest tax cut in U.S. history (<a href="http://reudviewpoint.blogspot.com/2018/01/a-first-look-at-tax-cut-and-jobs-act.html">sorry Donald!</a>) Ronald Reagan initially saw strong growth and slowing inflation. But his initial tax cut was soon moderated by a series of less famous tax increases, put in place in response to burgeoning budget deficits As the deficits moderated and Volcker continued at the helm of the Fed, GDP growth picked up and the stock market boomed in Reagan's second term.</p><p>A relatively weak economy was problematic for George Herbert Walker Bush, who was limited to a single term by Bill Clinton. The economy was one issue that helped Clinton along with Republican disaffection with Bush's reversal on tax increases during his first term. Bush also finally bit the bullet and began to wrap up the Savings and Loan crisis near the end of his term. </p><p>(Conventional wisdom claims Clinton was also aided by the strong if somewhat strange third party run by Ross Perot, Careful analysis by political scientists such as Alvarez and Nagler suggests Perot took votes from both candidates and may even have harmed Clinton more than Bush in the end).</p><p>Clinton benefited from previous policies including Volcker's conquest of inflation and Bush's initiation of S&.L reform. Volcker's hard-won shift in inflationary expectations allowed his successor Alan Greenspan to follow a much looser monetary policy without igniting inflation. As the Soviet Union collapsed, defense spending fell substantially. Tax increases on higher income taxpayers failed to put a dent in growth or the stock market. After the Reagan stock market boom and a lull that coincided with much of Bush's term, a second stock market boom accompanied much of Clinton's two terms</p><p>As George W Bush took office there was room for optimism, as he came in with solid growth, low inflation and a budget surplus. But the Tech Bubble burst in 2000, and the terrorist attacks of September 11, 2001 provided both an initial shock to the economy and a large increase in defense spending as the U.S. went to war in Afghanistan and, eventually, Iraq. Budget woes were compounded by a large unfunded tax cut. And then, of course well into the second Bush 43 term the housing bubble burst. Lehman Brothers and other financial entities defaulted. and we went into the Great Financial Crisis/Great Recession.</p><p>Barack Obama's first term growth numbers were pulled down by the aftermath of the events above, but growth resumed in summer 2009, albeit at a slower pace than some expected. The U.S. embarked on a long but subpar growth expansion that carried over into Trump's presidency; at least until the pandemic hit the economy and more, early in 2020.</p><p>Donald Trump was <a href="https://www.washingtonpost.com/politics/2018/09/07/president-trumps-repeated-claim-greatest-economy-history-our-country/">fond</a> of claiming that he presided over "<a href="https://www.youtube.com/watch?v=Dmcv2ZNXHbs">the greatest economy in history</a>," until the 2020 coronavirus. Fair enough that SARS-CoV-2 was a huge negative shock which would have challenged any president, although with some exceptions (<a href="https://www.wsj.com/articles/why-operation-warp-speed-worked-11612222129">Operation Warp Speed</a>) the response of Trump and his administration was dismal. A <a href="https://www.gao.gov/assets/720/712030.pdf">recent report by GAO</a> provides a detailed and comprehensive review. In the event, before the pandemic, GDP growth under Trump, overall or per capita, as well as stock market performance and inflation, largely continued the same trends as under the prior Obama administration. </p><p>The pandemic year 2020 was and remains an economic as well as human disaster. To take one bellwether indicator, quarterly per capita GDP fell by 1.5% in the first quarter, fell by 9.2% in the second quarter, bounced back by 7.3 percent in the third quarter, and grew by 0.8 percent in the fourth quarter. Overall GDP is down 3 percent over the year, employment is still down by 10 million, and with coronavirus deaths running 3,000+ per day we are far from out of the woods.</p><p>Now, as I write this post in January 2021, Trump's presidency has ended. Joe Biden embarks on the twin tasks of containing the pandemic, and facilitating recovery from the deepest recession since the Great Depression, all in an environment of political polarization greater than we've seen in over a century.</p><p><br /></p><h3 style="text-align: left;">Do our political views color our economic outlook?</h3><p>Political scientists and psychologists have long studied how political views can predispose us to different perceptions of economic and social reality. Robert Shiller's recent book on <i>Narrative Economics</i> summarizes some of this literature for economists, and tells a good story about how we rely on stories to make sense of our economy.</p><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhpotZSgSVTBtseJ7ZsAKTCvMCqsdF-RP0VEZ24XoFa053LgVgMAOGmUxYyQmnFBJHPoSuxEYxM7a-zF7OwN_Io5PnO02LTfv6NlT7CI_Z4wm0XsMilaCkXb44_PkR2k7mttB_owqDAY1Jj/s405/Pew+2016+to+2020_views-of-economy_0-01+%25281%2529.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="405" data-original-width="310" height="464" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhpotZSgSVTBtseJ7ZsAKTCvMCqsdF-RP0VEZ24XoFa053LgVgMAOGmUxYyQmnFBJHPoSuxEYxM7a-zF7OwN_Io5PnO02LTfv6NlT7CI_Z4wm0XsMilaCkXb44_PkR2k7mttB_owqDAY1Jj/w355-h464/Pew+2016+to+2020_views-of-economy_0-01+%25281%2529.png" width="355" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 5</td></tr></tbody></table><br /><p>In February 2020, Pew Research published a blog entry on Views of the Nation's Economy Remain Positive though Sharply Divided by Partisanship. <a href="https://www.pewresearch.org/politics/2020/02/07/views-of-nations-economy-remain-positive-sharply-divided-by-partisanship/">Exhibit 5 </a>presents one of their central findings.</p><p>A representative sample of U.S. adults polled in January 2019, well before the election, found that a bit less than half of Democrats had a positive view of the economy. Republicans, still on the outs politically at that date, took a much dimmer view.</p><p>Taking these results al face value, it's perhaps ironic that Democratic views of the election look remarkably like Trump's personal poll numbers (before the January 6 2021 Capitol riot). Both were fairly stable, somewhere under 50 percent. But Republican views of the economy took off like a rocket after the 2016 election and well into Trump's term. (And Trump's poll numbers finally did drop after four years of relative stability after his supporters stormed the Capitol, resulting in five deaths and numerous injuries, to say nothing of a shock to the body politic).</p><p>Everyone reads the same BEA and S&P data. Not everyone experiences them the same, of course. Nevertheless, the variation in perceptions is remarkable, and a little hard to explain with any rational model. Politics seems to provide an emotional filter though which we see the data.</p><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjA0Q1WTFLL9I134lGQtRVpbNRQ8ISxRzwrM0COQmqrVwV5uZ86uK4e072GQTS0t5Uep2DGNFtGlOM29_-QyBTiYCGQDEs8VMqC5dMWFNNw8D_b_HgesV6cP-gIcIAyDYpvbV3SAIXsejx9/s420/Pew+1992+to+2020+views-of-economy_0-03box3+%25281%2529.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="327" data-original-width="420" height="422" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjA0Q1WTFLL9I134lGQtRVpbNRQ8ISxRzwrM0COQmqrVwV5uZ86uK4e072GQTS0t5Uep2DGNFtGlOM29_-QyBTiYCGQDEs8VMqC5dMWFNNw8D_b_HgesV6cP-gIcIAyDYpvbV3SAIXsejx9/w541-h422/Pew+1992+to+2020+views-of-economy_0-03box3+%25281%2529.png" width="541" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 6</td></tr></tbody></table><br /><p><a href="https://www.pewresearch.org/politics/2020/02/07/views-of-nations-economy-remain-positive-sharply-divided-by-partisanship/">Exhibit 6</a> presents another interesting, somewhat puzzling chart from Pew, with a longer time frame. For much of the 90s, as expectations about the economy turned increasingly optimistic, party didn't seem to matter so much.</p><p>During the Bush <i>fils</i> years, Republicans took a much more sanguine view. But when the economy went south in 2007-9, <i><b>everyone </b></i>felt the pain.</p><p>During the Obama years, 2009 through 2016, Democratic perceptions began to diverge from Republican. When Trump unexpectedly won the 2016 election, Republicans suddenly decided economic conditions were doing great, while Democrats' perceptions nose-dived. Any examination of GDP, stock prices, employment, interest rates over, say, 2015 through 2018 (including the limited data we examine below) would find only modest differences in economic trends. Politics seems to be driving perceptions of economic performance, with a vengeance.</p><p><br /></p><h3 style="text-align: left;">Is Divided Government Good for the Economy?</h3><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikLd88zCyzEr0RLkSWRCj-bOsFeUitAceNP_VQ0_3ucwtOGteI6EmOMWBpHF_oj-8Z51B1cck2JnedUAtnPAG_brTSk9NEiURFS2WWXMW8umPVXULzkYMZSgoTCoDX06W22P3Rr2PJFNy4/s960/Graphic+divided+govt+good.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikLd88zCyzEr0RLkSWRCj-bOsFeUitAceNP_VQ0_3ucwtOGteI6EmOMWBpHF_oj-8Z51B1cck2JnedUAtnPAG_brTSk9NEiURFS2WWXMW8umPVXULzkYMZSgoTCoDX06W22P3Rr2PJFNy4/w571-h428/Graphic+divided+govt+good.png" width="571" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 7</td></tr></tbody></table><br /><p>It's easy to find dozens of articles in the financial press and elsewhere that suggest divided government might actually be better for the stock market and/or the economy, than having the presidency and both legislative bodies held by the same party. For example:</p><p></p><ul style="text-align: left;"><li>NPR "<a href="https://www.npr.org/2020/11/05/931742402/wall-street-bet-on-a-blue-wave-but-divided-government-suits-it-just-fine-too">Wall Street Bet On A Blue Wave. But Divided Government Suits It Just Fine Too</a>"</li><li>Charleston Currents, "<a href="https://charlestoncurrents.com/2020/11/focus-morris-divided-federal-government-may-help-economy/">Divided Federal Government May Help Economy</a>"</li><li>New York Times, "<a href="https://www.nytimes.com/2020/11/04/business/stock-market-election-trump-biden.html">As 'Blue Wave' Chances Crash Wall St. Warms to Divided Government</a>"</li><li>Barron's, '"<a href="https://www.barrons.com/articles/divided-government-could-be-a-plus-for-investors-51604705424">Divided Government is a Plus for Investors</a>"</li><li>Fortune, "<a href="https://fortune.com/2020/11/04/stock-market-2020-election-results-divided-congress-house-senate-democrats-republicans-us-economy/">Stocks historically perform better under a divided Congress</a>"</li><li>Business Insider, "<a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-wharton-siegel-divided-government-election-excellent-congress-2020-11-1029766554">A split Congress and Biden presidency will be 'excellent' for the economy and stock market, Wharton Professor Jeremy Siegel says</a>"</li><li>New York Magazine, "<a href="https://nymag.com/intelligencer/2020/11/the-stock-market-is-just-fine-with-divided-government.html">The Stock Market Loves the Idea of McConnell Blocking Biden's Plans</a>"</li></ul><p></p><p><br /></p><p>But there is certainly no unanimity of opinion on this. Examples of media pushback include:</p><p></p><ul style="text-align: left;"><li>Washington Post, "<a href="https://www.washingtonpost.com/opinions/2020/11/25/divided-government-is-path-disaster-why-wont-voters-admit-it/">Divided government is a path to disaster. Why won't voters admit it?</a>"</li><li>The Atlantic, "<a href="https://www.theatlantic.com/ideas/archive/2020/11/divided-government-will-doom-economy/617075/">Divided Government Will Doom the Economy</a>'"</li><li>Wall Street Journal, "'<a href="https://www.wsj.com/articles/political-gridlock-is-supposed-to-be-good-for-stocks-the-data-dont-support-that-11604847910">Divided Governments Are Supposed to Be Good for Stocks. The Data Don't Support That</a>"</li></ul><p></p><p><br /></p><p><br /></p><h3 style="text-align: left;">Do Americans Prefer Divided Government? The Evidence is Mixed.</h3><div><br /></div><div>The links above refer to “the markets” and “the economy,” and representative opinions by various media pundits. What do we know about the direct preferences of our people? </div><p><br /></p><p></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSG3eaQgiXoFzjNnBT3bfPNSQzGotsQY0DKSQN2lB2jpiNImdyAw-tiA2hOzh6r9nkPEtvy7FGr23xMZy2BQohH6LaBIZnpshsup5OZTWZEPZuYY92asitygoTH5iYN5h6bXRPDWLxbKKf/" style="margin-left: auto; margin-right: auto;"><img alt="" data-original-height="720" data-original-width="720" height="382" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSG3eaQgiXoFzjNnBT3bfPNSQzGotsQY0DKSQN2lB2jpiNImdyAw-tiA2hOzh6r9nkPEtvy7FGr23xMZy2BQohH6LaBIZnpshsup5OZTWZEPZuYY92asitygoTH5iYN5h6bXRPDWLxbKKf/w382-h382/image.png" width="382" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 8</td></tr></tbody></table><br /><br /><p></p><p>One survey taken roughly a week after Joe Biden's presidential victory (<a href="https://www.statista.com/chart/23506/divided-vs-unified-government/">Exhibit 8</a>) suggests that, at least at that time, a plurality (41 percent) of voters expressed a preference for divided government. Unsurprisingly, with a Democratic House but the Senate still in play at the time (Georgia's runoff wins for two Democrats would resolve who held the Senate two months later), Democrats expressed a preference for unified government, i.e. a Democratic Senate. Republicans liked the idea of a Republican Senate and divided government. <i>Quel suprise</i>.</p><p><br /></p><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgoT1ZzH0fgR0-K8idVEVbpUldJi2qWdunXSuG7Z4oeYxqSaXY1BJrER1tzwICKT6fl8RPTidWL0o2t5vHve88nrJS8-O-22pCyJPHqnxvu5nmaa8p-OBtOG4AvlYVfOog13E0Tj_dd0IPD/s463/gallup+preference+for+party+control.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="281" data-original-width="463" height="381" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgoT1ZzH0fgR0-K8idVEVbpUldJi2qWdunXSuG7Z4oeYxqSaXY1BJrER1tzwICKT6fl8RPTidWL0o2t5vHve88nrJS8-O-22pCyJPHqnxvu5nmaa8p-OBtOG4AvlYVfOog13E0Tj_dd0IPD/w629-h381/gallup+preference+for+party+control.png" width="629" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 9</td></tr></tbody></table><br /><p><br /></p><p>Another survey taken some years earlier with a different question structure is presented in <a href="https://news.gallup.com/poll/178550/no-preference-divided-one-party-government.aspx">Exhibit 9</a>. This survey separates out Independents from Democrats and Republicans. This survey was taken a month before the 2014 midterm elections, when Barack Obama held the presidency and Democrats the Senate; with Republicans in charge of the House. Perhaps it's no surprise that with their party holding two of the three elective elements of government, Democrats thought adding the House to their collection would be a good thing; on the other hand, adding two responses, slightly more Democrats thought a split would be better, or it made no difference.</p><p>Two other patterns stick out. At least at this time and place, Independents responded identically to Republicans, in the aggregate. And while there's no direct information here, we can suspect that most of the 24 percent of Republicans who answered "same party" was preferable were possibly thinking more of a future Republican sweep than a solidly Democratic government across the board.</p><p>So, politics affects how we view the economy. What do the data tell us about "reality?" We will return to our focus on three indicators: stock prices, GDP, and inflation. Stock prices are included not because it's one of my top three indicators, but because politicians and media focus on it so much.</p><p><br /></p><h3 style="text-align: left;">Digression: why do we talk so much about the stock market? </h3><div><br /></div><div>True, the stock market index seems to be Donald Trump’s favorite indicator. And every daily newscast breathlessly tells us what happened to the Dow Jones or S&P that day. (If we needed a daily indicator on the economy, I'd argue for some bond market indicators like the <a href="https://en.wikipedia.org/wiki/TED_spread">TED spread</a>.) </div><div><br /></div><div>Despite its ubiquity, in recent years the shortcomings of stock indexes as a measure of broader output or welfare, long known to economists, have become more widely appreciated. Today, media and even someone cheerleading platforms like CNBC have noted “the stock market is not the economy.” </div><div><br /></div><div><div>Well, duh. The Dow Jones comprises 30 industrial stocks. The S&P 500 contains (wait for it!) ... 500 companies. Add the Wilshire 2000 and we’re up to 2500 companies.</div><div><br /></div><div>There are <a href="https://cdn.advocacy.sba.gov/wp-content/uploads/2019/04/23142719/2019-Small-Business-Profiles-US.pdf">30 million business enterprises </a>in the United States, according to the Small Business Administration. Roughly half the U.S. labor force is employed by small firms with 500 or fewer employers. Firms with fewer than 20 employees employ about 20 million workers. Even if we're focused on business enterprises, the popular stock market indexes give a very incomplete picture.</div></div><div><br /></div><div>Furthermore, most Americans hold little or no wealth in stocks. Exhibit 10 presents a graphic of Federal Reserve Survey of Consumer Finances data, prepared by the <a href="https://www.nytimes.com/2021/01/26/upshot/stocks-pandemic-inequality.html?referringSource=articleShare">New York Times:</a></div><div><br /></div><div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIZggh6Fr5Otrru5rw95l8URUNk2Q8-5XeZRW9uMwvorLqUV6sFX2hQNyhjmmwJGnSaSh6MbR2iqKaQsUeVwIcr1ljXeZTZLnmP_rwABB1_IID9DCdh2lkXuzvKERBXjFdqEijuwlyTKMc/" style="margin-left: auto; margin-right: auto;"><img alt="" data-original-height="493" data-original-width="837" height="306" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIZggh6Fr5Otrru5rw95l8URUNk2Q8-5XeZRW9uMwvorLqUV6sFX2hQNyhjmmwJGnSaSh6MbR2iqKaQsUeVwIcr1ljXeZTZLnmP_rwABB1_IID9DCdh2lkXuzvKERBXjFdqEijuwlyTKMc/w520-h306/image.png" width="520" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 10</td></tr></tbody></table><br /><br /></div><div><div><a href="https://www.nytimes.com/2021/01/26/upshot/stocks-pandemic-inequality.html?referringSource=articleShare">Exhibit 10</a> shows that most U.S. households have negligible holdings of equities, whether one looks at directly held securities, or includes indirect investments through pension funds and the like.</div><div><br /></div><div>Eight-five percent of stocks are held by the top 10 percent of households, ranked by net worth. The bottom half of the wealth distribution hold close to zero stocks.</div><div><br /></div><div>When pension funds etc. are included, the bottom half of the income distribution’s share of the stock market rises from 0% to 1%. The top 10 percent share falls to 71 percent.</div></div><div><br /></div><div>In the event, how do stock prices correlate with the economy's output? Exhibit 11 presents a simple plot of two indicators.</div><div><br /></div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjs-8XVsmpYLFdl4fVyq4Vys1_RxzXk8doHLVkdNGGajZEmJSZxeLbqWf0ZNQWTwzZelgmPfXgkgRJObAgW0HE2yG3Pv7f1_vbon9NGV-UtiKo4vSTjmYr56fqBN3RU6TQU_EVSneUctz4I/" style="margin-left: 1em; margin-right: 1em;"><img alt="" data-original-height="613" data-original-width="901" height="412" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjs-8XVsmpYLFdl4fVyq4Vys1_RxzXk8doHLVkdNGGajZEmJSZxeLbqWf0ZNQWTwzZelgmPfXgkgRJObAgW0HE2yG3Pv7f1_vbon9NGV-UtiKo4vSTjmYr56fqBN3RU6TQU_EVSneUctz4I/w605-h412/image.png" width="605" /></a></div><br /><br /><p><br /></p><p>Exhibit 11 plots the inflation-adjusted S&P 500 and real GDP on the same chart. The data are quarterly, and a log scale is used so the slope approximates the growth rates of each variable. Over 73 years, the real S&P 500 index grew at 8% per annum (average of annualized quarterly growth rates) while real GDP grew at 3%. But stocks have been much more volatile; the standard deviation of stocks, annualized, was 24%, compared to 5% for GDP. And as is well known, in the last 10 years GDP growth has slowed, while stock growth has accelerated. GDP in the last decade has only grown at an annual rate of 1.4%, about half its long-run performance. During the same decade, the inflation-adjusted S&P 500 index grew at an annual rate of 11%. </p><p>Depending on the year, about <a href="https://www.spglobal.com/spdji/en/research/article/sp-500-global-sales">40 to 50 percent of S&P 500 sales come from foreign countries</a>. In addition, the S&P 500 is heavily over-weighted in manufacturing and high tech, compared to the overall U.S. economy.</p><p>As GDP is a flow, and the S&P index is a stock, we might consider charting changes in the S&P index; or even better, total returns or earnings. All these would be more volatile than the S&P index itself. But it's the index value that's commonly cited by pundits and politicians, and so we'll stick with that convention here.</p><p><br /></p><p><br /></p><p></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9VwvjPAA6iSCkfQ9AFGHWRYP86ZJ5BdvLm1ECFeKZ9lSRsseEfGHu5oeexRMq_aGv5ZfN-xD1vANARa88wVn2aYhAkjKLzrYAj8W471vNFLpY2k53f_RX-_q-P9i0MNf2G2k8mgkjs8Zl/" style="margin-left: auto; margin-right: auto;"><img alt="" data-original-height="660" data-original-width="910" height="390" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9VwvjPAA6iSCkfQ9AFGHWRYP86ZJ5BdvLm1ECFeKZ9lSRsseEfGHu5oeexRMq_aGv5ZfN-xD1vANARa88wVn2aYhAkjKLzrYAj8W471vNFLpY2k53f_RX-_q-P9i0MNf2G2k8mgkjs8Zl/w537-h390/image.png" width="537" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 12</td></tr></tbody></table><br /><br /><br /><p></p><p>Let’s examine how strong (or weak) the link is between the stock market and the actual economy. The stock market is extremely volatile, so we’ll use annual data as an ad hoc smoothing measure. On the theory that stock markets are forward looking, we lag the stock market index by one year.</p><p>When we examine a plot of real stock price changes, and real growth in GDP, there is a very small positive correlation; about 8 percent of the variation in GDP is associated with variation in stock prices. Taking these results at face value, for every 10 percentage points stock prices rise, GDP growth rises by 0.7 percent.</p><p>The bottom line? The stock market is not the economy. But these plots suggest that changes in stock prices that persist over a year or so can be viewed as a (weak) signal of economic performance.</p><div><br /></div><p></p><br /><br /><p></p><p></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9DB4aQAJrFYjQny50oQcW_9edQf7vdmLC3fANx6rMKnKR117GXcv7Qp7UrktH5VusUD-1zer0B_sjN29eAJh7odXP6aIGbVk3NBoMxw2mVJowMfYNF0c_bm4G8OAkAUradSUjuZYnDP3h/" style="margin-left: auto; margin-right: auto;"><img alt="" data-original-height="613" data-original-width="901" height="384" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9DB4aQAJrFYjQny50oQcW_9edQf7vdmLC3fANx6rMKnKR117GXcv7Qp7UrktH5VusUD-1zer0B_sjN29eAJh7odXP6aIGbVk3NBoMxw2mVJowMfYNF0c_bm4G8OAkAUradSUjuZYnDP3h/w564-h384/image.png" width="564" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 13</td></tr></tbody></table><br /><br /><p></p><p>Exhibit 13 presents the quarterly real S&P 500 index over time, on a background that illustrates the political control of the three units of two branches of government: the Presidency, the House of Representatives, and the Senate. We’ve had divided government for about 44 years, and undivided government for about 20. </p><p>Which presidents faced opposition by two houses of Congress? Eisenhower, Nixon, Ford, Bush 41 all faced such opposition in much if not all of their terms. Bush 43 faced such opposition at the end of his presidency. Among Democrats, Clinton faced Republican opposition in most of his two terms; Obama at the very end of his second term. </p><p>Who had a "friendly" Congress, with both legislative houses of the same party? Truman was so favored in the beginning of his presidency; JFK and LBJ for most of their presidencies. Obama had both houses of Congress in his first two years. George W. Bush 43 had all Republican legislative houses in his first four and Trump in his first two years. </p><div>How did the stock market behave during these presidencies? Over time, Eisenhower had a bit of a stock market boom. JFK and LBJ not so much. </div><p>Nixon and Ford had to look at a lot of declining stock prices in their daily briefs. Carter was, at best, "meh."</p><p>Reagan and Clinton watched a long boom unfold, the Bushes saw subpar performance.</p><p>Obama saw a large boom that continued under Trump.</p><p><br /></p><p></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiS16cjo-nAdzMeA16AvK8yYoNPoBu-CA4jXUKImL-2a9kC9C8vZFFWe5soo7vlLuynqU_5pCTnIYho5H0GNY4nK2XPNWBrwBTFZOQdWKktJ_8pr4OxJLLt-5MQ6vYi89LtCZHmz6aAyg8d/" style="margin-left: auto; margin-right: auto;"><img alt="" data-original-height="613" data-original-width="901" height="419" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiS16cjo-nAdzMeA16AvK8yYoNPoBu-CA4jXUKImL-2a9kC9C8vZFFWe5soo7vlLuynqU_5pCTnIYho5H0GNY4nK2XPNWBrwBTFZOQdWKktJ_8pr4OxJLLt-5MQ6vYi89LtCZHmz6aAyg8d/w616-h419/image.png" width="616" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 14</td></tr></tbody></table><br /><br /><p>Exhibit 14 is a similar chart, but examining real GDP per capita. Again, from 1950 to 1980 there’s a lot of blue. For three decades after World War II Democrats dominated national politics, with just a few exceptions. The Reagan revolution ushered in a period where Republicans became much more competitive in presidential and legislative races; albeit competitive, not as dominant as the Democrats had been in the first half of our postwar period. </p><p>In Exhibit 11 above, where we directly compare GDP to stock prices, we used total GDP; both are about the overall size of the economy. Here we have switched to GDP per capita, which strips out variance in population growth. Population growth has been declining over recent decades. Either way we measure GDP, total or per capita, we find much less volatility in GDP than in the stock market.</p><p>Who missed recessions during their presidency? Only LBJ and Clinton. Kennedy and Obama inherited recessions that spanned one and two quarters, respectively, at the beginning of their presidencies. </p><p><br /></p><p><br /></p><p></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjl7uF7B5IGFxtNyKkKNdGUAHUQXVImpPglsCnH6sss6A_LZ3T8tE4KW8NlZ5DTlv9vw6df6uojPucHoRT3bc9nHk6eRO8cqRAJGMVD-UWWrlQbbj40yEWhTUk0FP_iRjjnhRFcm0BxecCc/" style="margin-left: auto; margin-right: auto;"><img alt="" data-original-height="613" data-original-width="901" height="379" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjl7uF7B5IGFxtNyKkKNdGUAHUQXVImpPglsCnH6sss6A_LZ3T8tE4KW8NlZ5DTlv9vw6df6uojPucHoRT3bc9nHk6eRO8cqRAJGMVD-UWWrlQbbj40yEWhTUk0FP_iRjjnhRFcm0BxecCc/w557-h379/image.png" width="557" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 15</td></tr></tbody></table><br /><br /><p></p><p>Exhibit 15 presents the final of our triad of time series presentations by presidency. In some respects it's the most startling of the three, especially to younger students (or older ones with fading memories).</p><p>Truman's presidency spanned a short volatile post-war period; it's remarkable today to see the acceleration of inflation in the sixties and seventies under presidents of both parties (but with Democratic legislatures, most of the time, for what that's worth). As noted above, Paul Volcker, with support, implicit and sometimes explicit, from Jimmy Carter and Ronald Reagan, wrung inflation out of the system, albeit at a significant cost in lost short run output and employment.</p><p><br /></p><h3 style="text-align: left;">Some highly preliminary bottom lines</h3><div><br /></div><p>So, did Democrats have high growth because they were economic geniuses?</p><p>Put another way, is it better to be lucky, or to be good?</p><p>(In general, the correct answer: yes.)</p><p>Exhibit 16 presents the averages of our three indicators by the control of three units of government.</p><p><br /></p><p></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgBy9ROu2Y2af9qg1hZupXEg7-HaKqw0As9UvqLv2R1fibAi9Fnnu4V__mJ3PjyheV21z-iC7Xrkwl3k180Xqs8Z7cOPS2gTldMwknwvdNhXexTB6LxirmXH25IFiwiVI-JywjV8bTeH5DF/" style="margin-left: auto; margin-right: auto;"><img alt="" data-original-height="291" data-original-width="762" height="214" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgBy9ROu2Y2af9qg1hZupXEg7-HaKqw0As9UvqLv2R1fibAi9Fnnu4V__mJ3PjyheV21z-iC7Xrkwl3k180Xqs8Z7cOPS2gTldMwknwvdNhXexTB6LxirmXH25IFiwiVI-JywjV8bTeH5DF/w562-h214/image.png" width="562" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 16</td></tr></tbody></table><br /><br /><p></p><p><br /></p><p>Does divided government matter? Taking these numbers at face value - which in reality, we SHOULD NOT:</p><p></p><ul style="text-align: left;"><li>Democrats are associated with the highest level of growth.</li><li>Republicans appear to be the champs at controlling inflation.</li><li>Divided government shows the best stock market result - if you are talking about 2 R's and 1 D.</li><li>Divided government shows the worst stock market result - if you are talking about 1 R and 2 D's.</li></ul><p></p><p>My conclusion - tables like these are sources of the myths. The Law of Small Numbers suggests we read too much into tables like this. The law of small numbers, according to Daniel Kahneman:</p><p></p><blockquote>"We often think a small sample size is equal to a large sample, even though a small sample is inherently not as trustworthy. We pay more attention to the content of messages than to information about their reliability. and as a result end up with a view of the world around us that is simpler and more coherent than the data justify."</blockquote><p></p><p>There have been 13 presidents since WWII. Not a very large sample. And a lot going on in the economy besides who's president. Or who controls the House or Senate. Hey, what's the Fed been up to? OPEC? House prices always go up, right? Pandemic? What pandemic?</p><p>The Wall Street Journal quotes UBS Global Wealth Management exec Tom Mcloughlin on these data exercises:</p><p></p><blockquote><p>"The bottom line is that the sample size isn't large enough to draw a firm conclusion. As a colleague said to me. 'Come back in 500 years and we'll talk..."</p><p></p></blockquote><p><br /></p><h3 style="text-align: left;">So: Is divided government" good for the economy?</h3><p>In fact, the fastest average growth occurred under the "All-Democratic" watch; the lowest inflation occurred when the Republicans ruled unchallenged. It's hard to see any real story here, in the simple data analysis, other than to be reminded of the Democrats' postwar political advantage: they held 2 or 3 of the institutions for 184 quarters: the Republicans held 2 or 3 for only 110 quarters.</p><p>And the Democrats dominated in the early postwar periods of high growth and high inflation. The Republicans have done much better electorally in the recent relatively slow growth, low inflation era.</p><p>My bottom line for the moment: <i><b>I don't see any obvious economic advantage to divided government in the data; nor do I see any obvious disadvantage. </b></i>Perhaps as we study more of the scholarly literature and look at some other variables like employment, the distribution of income, and changes in our fiscal position, I'll have more to report.</p><p>Remember, we haven't said anything about distribution, between labor and capital, between high and low income, by education, by rural and urban, by sector (manufacturing, services. etc.) A future post could examine some of these. My colleague Richard Green suggests examining the Gini coefficient, a common measure of income distribution. A related calculation would be to update Exhibit 17, Larry Bartels' tabulations of family income growth by different quintiles of the income distribution. Bartels found that relative growth at the bottom of the distribution was faster under Democrats. In addition to adding a few more years of Obama's presidency, and Trump's, it would be useful to address how taxes and transfers (not included in Bartel's Census data) have affected distribution.</p><p><br /></p><p> </p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtfrpuza5HZ4Fd_6RXSMfZIA71AWoaW4DOX60T95E7OufzJIYky7nxAnTolGIg63xv6oaAxrgimXc9PVpj_HDVWie3PObWG4X7taMAHT5SsImwAUhLCjPcrAeWPKTl2QjL6vwZ35Nmh6TF/" style="margin-left: auto; margin-right: auto;"><img alt="" data-original-height="451" data-original-width="866" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtfrpuza5HZ4Fd_6RXSMfZIA71AWoaW4DOX60T95E7OufzJIYky7nxAnTolGIg63xv6oaAxrgimXc9PVpj_HDVWie3PObWG4X7taMAHT5SsImwAUhLCjPcrAeWPKTl2QjL6vwZ35Nmh6TF/w556-h291/image.png" width="556" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 17</td></tr></tbody></table><br /><p></p><p><br /></p><p>Exhibit 18, from my <a href="http://reudviewpoint.blogspot.com/2020/03/a-small-posting-on-big-problem.html">presentations on the pandemic</a>, reminds us of the dangers of focusing too much on aggregates and not enough about distribution when thinking about the current and future U.S. economy:</p><p><br /></p><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZ7sM2fO1VTxMNGk3bFkz3oKq9v8wzgJgnZOpZKFQiF5-glVtNw0VGNWrNnZmb1n2Ef8UQYMpuHOB0nslwoGHWFBgibBpyyg_YcYJHBcZJ-hNk4_T4UZTwTFDiK16_oNl3vlcKQN4phHq6/s960/trident+economy.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="413" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZ7sM2fO1VTxMNGk3bFkz3oKq9v8wzgJgnZOpZKFQiF5-glVtNw0VGNWrNnZmb1n2Ef8UQYMpuHOB0nslwoGHWFBgibBpyyg_YcYJHBcZJ-hNk4_T4UZTwTFDiK16_oNl3vlcKQN4phHq6/w550-h413/trident+economy.png" width="550" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 18</td></tr></tbody></table><br /><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><h3 style="text-align: left;">Are the politics of the past a reliable guide to our future?</h3><p><br /></p><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhB1aQ-SOQe7O9aivu9HP9CM_abcVUHjUxwsu1Q-cmnwNQMw7XrM7WR8vMNqU0DIWwQdpPi_D3nJaJ_Wno-vnn3iCR8_WeR7UutlECYQxHefkvtsid_VnjqtCujep3tEq4z5QQ5LXiIe6CO/s597/Who+was+lincoln.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="392" data-original-width="597" height="344" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhB1aQ-SOQe7O9aivu9HP9CM_abcVUHjUxwsu1Q-cmnwNQMw7XrM7WR8vMNqU0DIWwQdpPi_D3nJaJ_Wno-vnn3iCR8_WeR7UutlECYQxHefkvtsid_VnjqtCujep3tEq4z5QQ5LXiIe6CO/w525-h344/Who+was+lincoln.png" width="525" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Exhibit 19</td></tr></tbody></table><br /><p><br /></p><p>Let’s borrow the investment banker’s favorite boilerplate: “past performance is not necessarily a guide to future performance.” Remember how much the policies and culture of political parties have changed over the last half-century. </p><p>It’s often observed recently that such prior conservative stalwarts as Ronald Reagan, Richard Nixon or even Barry Goldwater would have a hard time finding a home in today’s Republican Party. </p><p>After the passage of the 1960s Civil Rights acts, LBJ famously observed that passage would mean the South would be lost to the Democrats for a generation or more. That has turned out to be the case for more than half a century. The post-1960s realignment saw the eventual decline of moderate and principled conservative Republicans in the Northeast and Midwest typified by politicians like George Romney, William Scranton, Tom Ridge, Bob Dole, Tommy Thompson and Margaret Chase Smith. Southern Democrats switched wholesale to the Republican Party (e.g. Strom Thurmond, John Tower, John Connolly), despite the fact that the Civil Rights Acts were passed with the aid of moderate midwestern and northeastern Republicans. Nixon and Bush and others famously followed the “southern strategy” of appealing to racial resentment, exemplified by Lee Atwater. </p><p>Many other examples exist of presidents failing to fit neatly into today's partisan boxes. Richard Nixon championed several programs that today would be considered progressive, including a (never enacted) universal basic income, extended Social Security and Medicare, and created the Environmental Protection Agency. Bill Clinton pushed through welfare reform in alliance with conservative Republicans in the Congress. </p><p>Today’s Republican Party may be about to experience an event similar to the split of the Whig party in the 1850s, when the party’s slavery and antislavery factions broke apart after the Kansas-Nebraska Act. Eventually anti-slavery Whigs joined the Republican party. Still reluctant to defect to Andrew Jackson’s legacy and their traditional rivals, the Democratic party, many pro-slavery Whigs joined the (often) pro-slavery (always) anti-immigrant “Know-Nothing” party. </p><p>Some of the roots of the Trumpist faux-populist wing of today’s Republican party can be seen in Republicans like Patrick Buchanan, Joe McCarthy and Newt Gingrich, but also nominal Democrats like George Wallace, who in turn can trace their roots back to Huey Long, William Jennings Bryan and Andrew Jackson. </p><div>Democrats shouldn't take any comfort from the Republican Party's current (temporary? permanent?) <a href="https://www.basicbooks.com/titles/thomas-e-mann/its-even-worse-than-it-looks/9780465096206/">descent</a> into <a href="https://www.nytimes.com/2021/02/01/us/politics/republicans-trump-ronna-mcdaniel.html?referringSource=articleShare">madness</a>. The Founders famously feared the rise of "factions" (parties), but for over two centuries, competition between two major parties that (mostly) accepted each other's legitimacy has served the country well. A Republican Party that totally splinters, or that finally gives up on serious efforts to appeal to a "bigger tent" than the Trumpist wing, may not only threaten healthy competition but also could well exacerbate serious divisions in the Democratic Party. As a recent president is fond of saying, we'll see what happens.</div><div><br /></div><p><br /></p><h3 style="text-align: left;">Readings and Resources</h3><div><br /></div><div>Readers who would like a PowerPoint deck with the charts used in this posting can<a href="https://drive.google.com/file/d/14tpv7eGNkIqv_oSUxXbdekGKT4IjH_Wk/view?usp=sharing"> download it here.</a></div><div><br /></div><div><div>Acharya, Avidit, Matthew Blackwell, and Maya Sen. "The Political Legacy of American Slavery." The Journal of Politics 78, no. 3 (2016): 621-41.</div><div><br /></div><div>Ahamed, Liaquat. Lords of Finance: The Bankers Who Broke the World. Penguin Press, 2009.</div><div><br /></div><div>Alvarez, R Michael, and Jonathan Nagler. "Economics, Issues and the Perot Candidacy: Voter Choice in the 1992 Presidential Election." American Journal of Political Science (1995): 714-44.</div><div><br /></div><div>Bartels, Larry M. Unequal Democracy: The Political Economy of the New Gilded Age. Second Edition ed.: Princeton University Press, 2016.</div><div><br /></div><div>Chernow, Ron. Alexander Hamilton. Head of Zeus Ltd, 2016.</div><div><br /></div><div>Critchlow, Donald T. American Political History: A Very Short Introduction. Vol. 420: Oxford University Press, USA, 2015.</div><div><br /></div><div>Easterly, William, Michael Kremer, Lant Pritchett, and Lawrence H Summers. "Good Policy or Good Luck?". Journal of monetary economics 32, no. 3 (1993): 459-83.</div><div><br /></div><div>Fair, Ray C. "Econometrics and Presidential Elections." Journal of Economic Perspectives 10, no. 3 (1996): 89-102.</div><div><br /></div><div>Fair, Ray C. Predicting Presidential Elections and Other Things. Second Edition ed.: Stanford University Press, 2011.</div><div><br /></div><div>Fischel, William A. "An Economic History of Zoning and a Cure for Its Exclusionary Effects." Urban Studies 41, no. 2 (2004): 317.</div><div><br /></div><div>Janda, Kenneth. A Tale of Two Parties: Living Amongst Democrats and Republicans since 1952. Routledge, 2021.</div><div><br /></div><div>Kahneman, Daniel. Thinking, Fast and Slow. Farrar, Straus and Giroux, 2011.</div><div><br /></div><div>Kane, Tim. "Presidents and the US Economy from 1949 to 2016." Stanford, Hoover Institution Working Paper, 2017.</div><div><br /></div><div>Kuziemko, Ilyana, and Ebonya Washington. "Why Did the Democrats Lose the South? Bringing New Data to an Old Debate." American Economic Review 108, no. 10 (2018): 2830-67.</div><div><br /></div><div>Lewis, Michael. The Fifth Risk: Undoing Democracy. Penguin UK, 2018.</div><div><br /></div><div>Lewis-Beck, Michael S, and Mary Stegmaier. "Economic Determinants of Electoral Outcomes." Annual review of political science 3, no. 1 (2000): 183-219.</div><div><br /></div><div>Lowenstein, Roger. America's Bank: The Epic Struggle to Create the Federal Reserve. Penguin Press, 2015.</div><div><br /></div><div>Malpezzi, Stephen. "Cities and Economic Success: Some Lessons from the United States." Report to Cities and Communities/Infrastructure Canada, 2007.</div><div><br /></div><div>———. "Local Economic Development and Its Finance." In Financing Economic Development in the 21st Century, edited by Sammis White and Zenia Z Kotval: M.E. Sharpe, 2012.</div><div><br /></div><div>———. "Residential Real Estate in the U.S. Financial Crisis, the Great Recession, and Their Aftermath." Taiwan Economic Review 45, no. 1 (2017): 5-56.</div><div><br /></div><div>———. "The Savings and Loan Crisis of the 1980s: Prequel to the Great Financial Crisis." Wisconsin School of Business, Lecture Notes, 2016.</div><div><br /></div><div>Mann, Thomas E., and Norman J. Ornstein. It's Even Worse Than It Looks: How the American Constitutional System Collided with the New Politics of Extremism. Basic Books, 2012.</div><div><br /></div><div>Mead, Walter Russell. "The Jacksonian Revolt: American Populism and the Liberal Order." Foreign Aff. 96 (2017): 2.</div><div><br /></div><div>Rudolph, Thomas J. "Who's Responsible for the Economy? The Formation and Consequences of Responsibility Attributions." American Journal of Political Science 47, no. 4 (2003): 698-713.</div><div><br /></div><div>Shiller, Robert J. Narrative Economics: How Stories Go Viral and Drive Major Economic Events. Princeton University Press, 2020.</div><div><br /></div><div>Silber, William L. Volcker: The Triumph of Persistence. Bloomsbury Publishing USA, 2012.</div><div><br /></div><div>Snowberg, Erik, Justin Wolfers, and Eric Zitzewitz. "Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections." The Quarterly Journal of Economics 122, no. 2 (2007): 807-29.</div><div><br /></div><div>———. "Party Influence in Congress and the Economy." Quarterly Journal of Political Science 2 (2007): 277-86.</div><div><br /></div><div>Steil, Benn. The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order. Princeton University Press, 2013.</div><div><br /></div><div>Tilley, James, and Sara B Hobolt. "Is the Government to Blame? An Experimental Test of How Partisanship Shapes Perceptions of Performance and Responsibility." The journal of politics 73, no. 2 (2011): 316-30.</div></div><div><br /></div>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com7tag:blogger.com,1999:blog-3258035236231564227.post-30018458161671903472020-12-18T11:50:00.000-08:002020-12-18T11:50:35.397-08:00"Classics Illustrated:" A blog post on economics and elections, from 2010<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihJKP6wAXO3Z8PXRcPtoTRdFiXzCQRfhPnIxVBpW5F7BBr7LbTvOlKsKaE-Ow6kU9ti2DD5buOdtrCbP_zsSCpeSStdz9hgjWbRKpxTkh_HQCF8RUPVvNPoC5i7x-zJD61t5TX72gvtRwB/s878/Classsics+Illustrated+Time+Machine.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="878" data-original-width="600" height="515" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihJKP6wAXO3Z8PXRcPtoTRdFiXzCQRfhPnIxVBpW5F7BBr7LbTvOlKsKaE-Ow6kU9ti2DD5buOdtrCbP_zsSCpeSStdz9hgjWbRKpxTkh_HQCF8RUPVvNPoC5i7x-zJD61t5TX72gvtRwB/w352-h515/Classsics+Illustrated+Time+Machine.jpg" width="352" /></a></div><br /><p></p><p><span style="font-family: arial;">As I note in the <a href="http://reudviewpoint.blogspot.com/2018/05/a-guide-to-some-of-my-blog-posts-hither.html">directory to my blog posts at Wisconsin, Rutgers, and here</a>, Wisconsin has been deleting my blog posts (who wants to read something that's 5 or even 10 years old?)</span></p><p><span style="font-family: arial;">As I find these "Classics Illustrated" posts, I will post them here, mainly without much of an update.</span></p><p><span style="font-family: arial;">Here's the first one I've found, about elections, from a decade ago.</span></p><h2 class="date-header" style="background-color: white; font-family: Arial, sans-serif; font-size: 11.7px; font-weight: normal; margin: 1.5em 0px 0px;"><br /></h2><h2 class="date-header" style="background-color: white; font-family: Arial, sans-serif; font-size: 11.7px; font-weight: normal; margin: 1.5em 0px 0px;"><br /></h2><h2 class="date-header" style="background-color: white; font-family: Arial, sans-serif; font-size: 11.7px; font-weight: normal; margin: 1.5em 0px 0px;">Monday, November 1, 2010</h2><div class="date-posts" style="background-color: white; color: #333333; font-family: Arial, sans-serif; font-size: 11.7px;"><div class="post-outer"><div class="post hentry uncustomized-post-template" itemprop="blogPost" itemscope="itemscope" itemtype="http://schema.org/BlogPosting" style="margin: 0px 0px 1.5em; padding-bottom: 1.5em;"><a name="4187262413549933221"></a><h3 class="post-title entry-title" itemprop="name" style="font-size: 14.625px; line-height: 1.1em; margin: 0px; padding: 0px;">Economics and elections</h3><div class="post-header" style="line-height: 1.3em; margin: 0px 0px 0.75em;"><div class="post-header-line-1" style="line-height: 1.3em; margin: 0px 0px 0.75em;"></div></div><div class="post-body entry-content" id="post-body-4187262413549933221" itemprop="description articleBody" style="line-height: 1.3em; margin: 0px 0px 0.75em;"><span style="font-style: italic;">by <a href="http://www.bus.wisc.edu/realestate/about/malpezzi.asp" style="color: #990000;">Stephen Malpezzi</a>, Professor and Lorin and Marjorie Tiefenthaler Distinguished Chair in Real Estate</span><br /><br />One of the goals of my <a href="http://www.bus.wisc.edu/realestate/degrees/undergrad/curriculum.asp" style="color: #990000;">urban economics</a> classes is to demonstrate how we can use economics, and data analysis, to understand a range of events in real estate markets, in cities, and in our society more broadly.<br /><br />Tomorrow's midterm election provides us with a great set of teachable moments. I'm using the effect the economy can have on the election to illustrate some basic techniques of data analysis, critical thinking, and "storytelling;" and, as always, how "<a href="http://wisconsinviewpoint.blogspot.com/search/label/%22Reading%20for%20Life%22" style="color: #990000;">Reading for Life</a>" can help us make sense of the world.<br /><br />Today, I'd like to share just a few of these points, focusing less on the data analysis techniques and more on some interesting stylized facts and research results (mainly results from other people's research).<br /><br />While much debate surrounds causes, timing, and attribution, the objective fact is that, by some measures, the economy is in the worst shape since the Depression. The next two figures show how two indicators, growth in GDP per capita and inflation, fared during the terms of the postwar presidents since Truman. (The data go back to 1947 and so the early part of Truman's term is omitted. The data run through Q2 of 2010, so the last few months of the Obama administration are also omitted). Let me start with two indicators that previous research has tied to electoral performance.</div><div class="post-body entry-content" id="post-body-4187262413549933221" itemprop="description articleBody" style="line-height: 1.3em; margin: 0px 0px 0.75em;"><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIZiSdarE9APH8khxKOW485USZBUlZ9DGMRHQWa3xnrLJIfr1rNtegHDlOV6LQ8bT-vQYD0A3KTEuYuhZlb7qWCt5ePrZn3oQ61aFsS96Tn1uzMdheQv5anFG43ZVDbM3Ib-93h47-Vys/s1600/avg_gdp_growth_by_president.JPG" style="color: #990000;"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5534657978683606786" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIZiSdarE9APH8khxKOW485USZBUlZ9DGMRHQWa3xnrLJIfr1rNtegHDlOV6LQ8bT-vQYD0A3KTEuYuhZlb7qWCt5ePrZn3oQ61aFsS96Tn1uzMdheQv5anFG43ZVDbM3Ib-93h47-Vys/s400/avg_gdp_growth_by_president.JPG" style="border: 1px solid rgb(0, 0, 0); cursor: pointer; display: block; height: 300px; margin: 0px auto 10px; padding: 4px; text-align: center; width: 400px;" /></a><br /></div><div class="post-body entry-content" id="post-body-4187262413549933221" itemprop="description articleBody" style="line-height: 1.3em; margin: 0px 0px 0.75em;">FIGURE 1. President Obama, so far, has faced a lower growth rate of GDP per capita than any other postwar president. Of course, it's early days, and whatever our partisan leanings, we all hope for better performance in the next two years. Nevertheless, the anemic performance of GDP growth is a challenge for Democrats (who, of course, also control the House and the Senate, at least by the simple definitions of "control.")</div><div class="post-body entry-content" id="post-body-4187262413549933221" itemprop="description articleBody" style="line-height: 1.3em; margin: 0px 0px 0.75em;"><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiL5pJDmnDRzDNc_lYgz5s4I3xVfz5Zojj-5oD_TGMRPI5LFKbiN7fuP_RbgyjRwFsAlt9MFn5WU_GHhjVBOFwiL9uvHbrNnornMkeDfc6THMSYy4hkJ2QjtXRi8f4r0dFwYi4cywdAcGo/s1600/avg_inflation_by_president.JPG" style="color: #990000;"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5534657979851138402" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiL5pJDmnDRzDNc_lYgz5s4I3xVfz5Zojj-5oD_TGMRPI5LFKbiN7fuP_RbgyjRwFsAlt9MFn5WU_GHhjVBOFwiL9uvHbrNnornMkeDfc6THMSYy4hkJ2QjtXRi8f4r0dFwYi4cywdAcGo/s400/avg_inflation_by_president.JPG" style="border: 1px solid rgb(0, 0, 0); cursor: pointer; display: block; height: 300px; margin: 0px auto 10px; padding: 4px; text-align: center; width: 400px;" /></a><br /></div><div class="post-body entry-content" id="post-body-4187262413549933221" itemprop="description articleBody" style="line-height: 1.3em; margin: 0px 0px 0.75em;">FIGURE 2. On the other hand, Obama has held office during a period that's exhibited lower average inflation than we've seen during any other postwar President's term.<br /><br /><span style="font-weight: bold;">Are Presidents responsible for “their” economic averages?</span></div><div class="post-body entry-content" id="post-body-4187262413549933221" itemprop="description articleBody" style="line-height: 1.3em; margin: 0px 0px 0.75em;"><b><br /></b>A huge body of research argues the effects of economic policies (taxes, subsidies, deficits, regulations…) and Presidents (and other politicians) do affect these policies. However, the economy has a lot of inertia (lags) built in, and there is a lot of luck involved. (Luck, of course, can be good or bad.) Policies have their lags, too. The economy can react to the perception of future policies and uncertainty in the same. But fair, or not, there is a lot of evidence that election outcomes are affected by the performance of the economy, even over short periods.<br /><br />Economist <a href="http://cowles.econ.yale.edu/faculty/fair.htm" style="color: #990000;">Ray Fair</a> (Yale) has published several papers and a <a href="http://www.amazon.com/exec/obidos/ASIN/0804745099/ref=pd_ecc_rvi_1/002-6107553-7387234" style="color: #990000;">book</a> about how to forecast U.S. elections according to the state of the economy. Recently he extended his work from Presidential elections (as in his book) to House elections, in “Presidential and Congressional Vote-Share Equations,” <span style="font-style: italic;">American Journal of Political Science</span>, 53(1), January 2009, pp. 55-72<br /><br /><span style="font-weight: bold;">Ray Fair’s prediction of this week’s Congressional election</span></div><div class="post-body entry-content" id="post-body-4187262413549933221" itemprop="description articleBody" style="line-height: 1.3em; margin: 0px 0px 0.75em;"><b><br /></b>Fair’s model has three equations: for the Presidential vote, the “on-term” House vote, and the midterm House vote. The economic variables are derived mainly from growth in GDP per capita and inflation. Other variables include whether there is a Presidential election, and if there’s a war on. <a href="http://fairmodel.econ.yale.edu/vote2008/index2.htm" style="color: #990000;">Fair’s latest forecast</a> (10/29/10) is that the Democratic share of the House vote will be 49.2%, i.e. a razor-thin Republican majority. He doesn’t forecast Senate results.<br /><br /><span style="font-weight: bold;">What about unemployment?</span></div><div class="post-body entry-content" id="post-body-4187262413549933221" itemprop="description articleBody" style="line-height: 1.3em; margin: 0px 0px 0.75em;"><b><br /></b>Fair’s model shows the House vote as closer than most political pundits. The two main economic drivers in his model are GDP per capita growth and inflation. Current low inflation numbers are helping to keep it close. I think the other thing this model misses is our high unemployment and its extraordinary average duration. See the next two figures:<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNdeKurjwFfiPtw0MhqTqvNK7HVflaLwxjJ2U6FXuwy9F_UOIweoa3LNF6kQkrg53_T_nFNvcO9Fj1nt80UgGZEODap77dAYDJuLcbpiBBCWANOflFpwMc60WVnuX6-QstArtnh45iBWg/s1600/avg_unempl_rates_by_president.JPG" style="color: #990000;"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5534659692232874658" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNdeKurjwFfiPtw0MhqTqvNK7HVflaLwxjJ2U6FXuwy9F_UOIweoa3LNF6kQkrg53_T_nFNvcO9Fj1nt80UgGZEODap77dAYDJuLcbpiBBCWANOflFpwMc60WVnuX6-QstArtnh45iBWg/s400/avg_unempl_rates_by_president.JPG" style="border: 1px solid rgb(0, 0, 0); cursor: pointer; display: block; height: 293px; margin: 0px auto 10px; padding: 4px; text-align: center; width: 400px;" /></a><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgm6y-cIkAgtl-thoSJ2Rhq4zfiFebo3_Wsz7N1CH3eCXf64h8YbvGPlwLl9fhDanlPRJutd1YJf9UZuqy38VimXFee0q9KCBeJh5wf2k_joTmy7aIPz0xBDRcw8ojJkwYumwR0uMRgxFs/s1600/avg_unempl_duration_by_president.JPG" style="color: #990000;"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5534659698218884466" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgm6y-cIkAgtl-thoSJ2Rhq4zfiFebo3_Wsz7N1CH3eCXf64h8YbvGPlwLl9fhDanlPRJutd1YJf9UZuqy38VimXFee0q9KCBeJh5wf2k_joTmy7aIPz0xBDRcw8ojJkwYumwR0uMRgxFs/s400/avg_unempl_duration_by_president.JPG" style="border: 1px solid rgb(0, 0, 0); cursor: pointer; display: block; height: 291px; margin: 0px auto 10px; padding: 4px; text-align: center; width: 400px;" /></a>These are even worse than might be expected from our recent growth in GDP; see for example the <a href="http://www.frbsf.org/publications/economics/letter/2010/el2010-07.html" style="color: #990000;">analysis</a> by the Federal Reserve Bank of San Francisco. High unemployment, and high duration, and how they are now driving foreclosures, are subjects my colleagues and I have discussed <a href="http://www.bus.wisc.edu/realestate/wi-fur/" style="color: #990000;">elsewhere</a>.<br /><br />Debate will continue on the efficacy of the policies of the Administration and Congress; between Republicans and Democrats; and the debate that’s always on within the parties.<br /><br />Despite my PhD in economics, I’d never argue that elections are only about my favorite subject.<br /><br />But objective data, and past research on elections, show that the state of the economy has an important effect on the electoral fortunes of the party in power. Fairly or not, economic conditions favor the Republicans this time around.<br /><br /><br /><span style="font-weight: bold;">More "<a href="http://wisconsinviewpoint.blogspot.com/search/label/%22Reading%20for%20Life%22" style="color: #990000;">Reading for Life</a>"</span><br /><ul><li>Fair, Ray C. <a href="http://www.amazon.com/exec/obidos/ASIN/0804745099/ref=pd_ecc_rvi_1/002-6107553-7387234" style="color: #990000;">Predicting Presidential Elections, and Other Things</a>. Stanford University Press, 2002.</li><li>Gelman, Andrew. <a href="http://www.amazon.com/Red-State-Blue-Rich-Poor/dp/0691143935/ref=sr_1_1?ie=UTF8&s=books&qid=1288638825&sr=1-1" style="color: #990000;">Red State, Blue State, Rich State, Poor State</a>. Princeton University Press, 2008.</li><li>Tim Besley's 2002 Lindahl Lecture, <a href="http://www.amazon.com/Principled-Agents-Political-Government-Lectures/dp/019927150X/ref=sr_1_1?s=books&ie=UTF8&qid=1288638860&sr=1-1" style="color: #990000;">Principled Agents</a>.</li><li>William Easterly, Michael Kremerb, Lant Pritch and Lawrence Summers, <a href="http://www.nber.org/papers/w4474.pdf" style="color: #990000;">Good policy or good luck? Country growth performance and temporary shocks</a>. <span style="font-style: italic;">Journal of Monetary Economics</span>, 32(3) December 1993, pp. 459-483.</li></ul></div></div></div></div>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com0tag:blogger.com,1999:blog-3258035236231564227.post-69276241884326199832020-10-26T22:05:00.003-07:002021-04-21T07:38:36.833-07:00Cities and the Pandemic: Observations and Scenarios<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4LaWrURSECtbQ090bEMt7mAxg4d-U39EdgGOhP1yYSb_nhe2ZmVEM7kUDKiw3F0EYVSazZ0VDFsEodrfOjagtXUqdhLLGmVa7nJDXFXTEvRDY86nS6QN65xtmeB_AtNFY2lrf7JhBDRDF/s2048/iStock-1217435231.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1365" data-original-width="2048" height="416" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4LaWrURSECtbQ090bEMt7mAxg4d-U39EdgGOhP1yYSb_nhe2ZmVEM7kUDKiw3F0EYVSazZ0VDFsEodrfOjagtXUqdhLLGmVa7nJDXFXTEvRDY86nS6QN65xtmeB_AtNFY2lrf7JhBDRDF/w627-h416/iStock-1217435231.jpg" width="627" /></a></div><h4 style="clear: both; text-align: center;">Times Square, New York City: April 2020</h4><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><div class="separator" style="clear: both;">Regular readers of my blog -- both of you? -- know that in March of 2020, I began a <a href="http://reudviewpoint.blogspot.com/2020/03/a-small-posting-on-big-problem.html">“teaching library” </a>of PowerPoint slides, with notes, and other materials, about the SARS-CoV-2 pandemic. I update that rather large set of materials about once a month. Since the PowerPoint slides currently number somewhere over 1200, it's easy to get a little lost (though as you'll see, they are organized by topics).</div><div><br /></div><div>As an urban economist, who's focused quite a bit on housing as well as real estate, transportation, finance, and governance, the future of cities after the pandemic is of intense interest. Recently I gave two related presentations on this topic. I've combined those two presentations, and originally it came in at a very manageable 200 slides or so. It's grown just a bit when I added some slides that had a bearing on some of our discussions during and after the presentations, and some resources and references.</div><div><br /></div><div><a href="https://drive.google.com/file/d/1xqgYE8RyTkSzUZ1GPvIeab9-_ZJz9QR1/view?usp=sharing">You can download the combined presentation here.</a></div><div><br /></div><div>The PowerPoint version clocks in at about 100 MB. If you are using a phone or a slow connection, or have any other difficulties, <a href="https://drive.google.com/file/d/1xEUWdeD10dVTZQLPFAfiFc7TttUjBQ8b/view?usp=sharing">here's a pdf version</a>. The PowerPoint version is much preferred, since it has a number of explanatory notes, and lots of references, attached, that do not appear in the pdf.</div></div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">Like the larger aforementioned "teaching library," this is a work in progress. I have already received a number of comments from colleagues, which will be reflected in future versions. This version, dated October 27, 2020, will be updated from time to time.</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">To be specific, these slides are based on presentations to the 1818 Society’s Transport Thematic Group and Urban Thematic Group. (<a href="https://www.wbgalumni.org/">The 1818 Society</a> is the alumni organization of the <a href="https://www.worldbank.org/">World Bank Group</a>.) The presentation is organized as follows:</div><div class="separator" style="clear: both; text-align: left;"><div class="separator" style="clear: both;"><ul style="text-align: left;"><li>Urbanization, economic development</li><li>The COVID-19 pandemic</li><li>How will the pandemic affect cities?</li><li>Discussion: possible interventions</li><li>What does the future hold?</li><li>A few slides touching on our comments and discussion</li><li>Going deeper: some resources</li></ul></div><div class="separator" style="clear: both;">As always, comments and criticisms, and especially corrections, are always welcome.</div><div class="separator" style="clear: both;"><br /></div><div class="separator" style="clear: both;">By the way, the photo of Times Square nearly empty during New York's lockdown is <i>not</i> my vision of the future of New York, or other large cities. We see "through a glass, darkly" on several points, and there will be some significant changes, but I argue that cities like New York or Paris or San Francisco or Seoul will not be emptying out.</div></div><div class="separator" style="clear: both; text-align: left;"><br /></div><p></p>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com3tag:blogger.com,1999:blog-3258035236231564227.post-53292869775908228382020-10-19T10:29:00.002-07:002020-10-19T10:29:55.889-07:00The Coronavirus at the University of Wisconsin: Two Presentations<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKd-xWY2BFXd9m0fUMopoLTrI3ZqgpoDs0f6M5tqfYg-wuwZk8QeiYSESW1FAGwKLqOCW5_1jRStGpR1SqWuq7bvHf8pcbaPG00YWAsst_ZALlrOCRNbcKwI-F0uKcmzKxsd0Dw68pLq4t/s750/bucky+masked.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="558" data-original-width="750" height="362" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKd-xWY2BFXd9m0fUMopoLTrI3ZqgpoDs0f6M5tqfYg-wuwZk8QeiYSESW1FAGwKLqOCW5_1jRStGpR1SqWuq7bvHf8pcbaPG00YWAsst_ZALlrOCRNbcKwI-F0uKcmzKxsd0Dw68pLq4t/w487-h362/bucky+masked.jpg" width="487" /></a></div><br /><p></p><p>As regular readers of this blog know, since March 2020 I've been updating a large <a href="http://reudviewpoint.blogspot.com/2020/03/a-small-posting-on-big-problem.html">"teaching library" on the coronavirus pandemic</a>, including how it affects cities and real estate markets. This material is updated every 2 or 3 weeks.</p><p>That library is well over a thousand slides, and a bit much for some readers, so from time to time I'll post some more focused selections from the library.</p><p>I've already posted a presentation to Wisconsin's Graaskamp Center graduate students on <a href="http://reudviewpoint.blogspot.com/2020/09/thinking-about-thinking-are-you-bayesian.html">Bayesian thinking,</a> in general and as applied to analyzing the outcomes from a coronavirus test.</p><p>At the end of August I provided some UW colleagues a selection of slides focused on some of the problems the coronavirus poses for universities in general, and Wisconsin in particular. On October 19 I made a virtual presentation to UW's <a href="https://news.wisc.edu/sifting-and-winnowing-turns-125/">"Sifting and Winnowing"</a> fall panel on <a href="https://www.facebook.com/events/336529747577337/">"Urban Development under COVID-19."</a></p><p>You can download the PowerPoint versions of the notes on <a href="https://drive.google.com/file/d/1vvtVEluLbQIq0kj4JOojHMRQLGShqCvZ/view?usp=sharing">university challenges here</a>; and the slides from my presentation to the <a href="https://drive.google.com/file/d/1tNXZL3s3dq8J62vymHy_1XgcKQ2xfE3X/view?usp=sharing">Sifting and Winnowing panel here</a>.</p><p>For those with limited download capacity, here are some lower-resolution pdf versions <a href="https://drive.google.com/file/d/1-JwVqlB-Hxlr_DO3lAKx47l8FRlFomUS/view?usp=sharing">here</a> and <a href="https://drive.google.com/file/d/1eLrIgBr6sPiHp3NwYfUHX_HyybckSERd/view?usp=sharing">here</a>. The PowerPoint slides have a number of associated notes and links that aren't in the pdf version.</p><p>My policy is to make these and other teaching materials freely available for others to use in their own classes and presentations. A brief acknowledgement is always appreciated, as are comments or corrections.</p><p><br /></p>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com2tag:blogger.com,1999:blog-3258035236231564227.post-72209274917781481352020-09-21T15:52:00.006-07:002020-09-25T08:00:21.027-07:00Thinking about Thinking: Are You a Bayesian?<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEig_oGTPpc8alWWiQbrs5GBlq0bRmi5MSrGkIXTC-I9R0hv8CXID4dwG9jk7CeT2Vy2eXXOBHcUDMYMspM1lB2OnukIuma5WVb-neERNrtf5cYp4iHUQY1ImiBdzkEKm3OPWO6JCn31sNJ1/s2048/iStock-678860566.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1365" data-original-width="2048" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEig_oGTPpc8alWWiQbrs5GBlq0bRmi5MSrGkIXTC-I9R0hv8CXID4dwG9jk7CeT2Vy2eXXOBHcUDMYMspM1lB2OnukIuma5WVb-neERNrtf5cYp4iHUQY1ImiBdzkEKm3OPWO6JCn31sNJ1/w540-h360/iStock-678860566.jpg" width="540" /></a></div><br /><p></p><p><br /></p><p>Are you now, or have you ever been -- a Bayesian???</p><p>One of my long-time teaching tropes has been "thinking about thinking," in which I discuss how economists think, how normal people think (by normal, I mean non-economists of course), some tricks and traps in economic thinking, some lessons from psychology. But one of the best-loved segments, according to a scientific sample of both students who've come to my office to tell me this, is my discussion of how to be a (mostly "informal") Bayesian.</p><p>By popular demand, and by that I mean one person, my friend and colleague <a href="https://wsb.wisc.edu/directory/faculty/joseph-walsh">Joe Walsh</a>, I'm posting my notes on Bayesian thinking here, for students and others who might be interested.</p><p>In this Power Point deck I discuss very briefly, and informally, the relationship between probability and "truth;" and review some basic material from your first stats course on Type 1 and Type 2 errors.</p><p>Armed with these tools, we then delve into the three kinds of people in the world:</p><p></p><ul style="text-align: left;"><li>People who divide the world into three kinds of people;</li><li>People who don't do that; and</li><li>People who don't care, one way or another.</li></ul><p></p><p>Then we tackle another tripartite division:</p><p></p><ul style="text-align: left;"><li>"Classical" thinkers, a.k.a. "frequentists;</li><li>Ideologues; and</li><li>Bayesians.</li></ul><p></p><p>Most of our discussion of Bayesian approaches is very loose and informal. However I do go through the basics of Bayes' rule for decision making. In teaching, for years I used examples from medicine, i.e. how to think about test results for breast or prostate cancer, in light of Bayes' rule.</p><p>Bayes' rule leads to some results that initially appear counterintuitive to many people, e.g. that a woman who gets a positive test for a mammogram using a test with 20 percent false positives may be somewhat unlikely to have cancer. (Though she's maybe 8 times more likely than someone who tested negative!)</p><p>Having gone through that example, traditionally I then went back to discussing the importance of the broader Bayesian approach to problems, namely:</p><p></p><ul style="text-align: left;"><li>Starting with an explicit statement of one's prior belief;</li><li>Discussion (with oneself as well as maybe others) of how strong this prior is, and where it came from;</li><li>Whether the strength of your prior is really justified, given its source;</li><li>And how you choose to update your prior, in light of new information.</li></ul><p></p><p>Getting back to Bayes' rule, before I posted this, I reflected on the fact that this rule is extremely relevant today, when we are all thinking about the coronavirus, including who should be tested, how often, and what it means to get a positive or a negative test. So I added a discussion of testing for COVID-19 in this framework. For no extra charge, I built a little spreadsheet model that allows you to calculate the probabilities that you have the virus, if your test is positive, or negative. </p><p>You will find that the results depend on three things: the specificity of the test (Type 1 error to a statistician), the sensitivity of the test (Type 2 error), and (often most critically) on your prior belief on how prevalent the virus is within the population under study. Don't believe me? </p><p><a href="https://drive.google.com/file/d/1nj8r0EzWguEku9M2VB8QMA0SlGHrmOso/view?usp=sharing">Click here for the PowerPoint presentation</a>.</p><p><a href="https://drive.google.com/file/d/1jxKc5HUeMAhkSxd0uQkgJzPJQi36mY0f/view?usp=sharing">Click here for the spreadsheet model.</a></p><p>And as many readers of this blog know, I've been obsessively collecting detailed teaching notes about the virus, <a href="http://reudviewpoint.blogspot.com/2020/03/a-small-posting-on-big-problem.html">which you can find here.</a></p><p>One more thing -- a short discussion of the coronavirus at UW, created in late August, <a href="https://drive.google.com/file/d/1ObrI8DTxZn-0fJg1pFAZonG8XdemNTyP/view?usp=sharing">can be found here.</a></p><p><br /></p>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com2tag:blogger.com,1999:blog-3258035236231564227.post-79845208410613285392020-06-18T09:16:00.002-07:002020-06-18T09:16:52.861-07:00Cost-Benefit Analysis: Some Notes for Urban Projects<br />
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In July 2019, the Marron Institute of the New York University hosted a workshop on cost-benefit analysis (CBA) for 25 urban officials from around the world<br />
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I was pleased to be asked to meet with this diverse group and discuss how cost-benefit analysis could be used in decision-making about urban projects.<br />
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You can <a href="https://drive.google.com/file/d/1spv80WiTqNQyWnM3mNYdkYp42QlTsn2v/view?usp=sharing">download the PowerPoint from the sessions here</a>.<br />
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These slides cover the basics -- time value of money, investment criteria etc. -- as well as applications to housing, and transportation. The geographic focus is broad, as befits the interests of our group.<br />
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References and readings for further study are also included.<br />
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<br />Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com29tag:blogger.com,1999:blog-3258035236231564227.post-21766237368824790032020-06-03T11:20:00.002-07:002023-02-03T13:07:10.327-08:00Global Perspectives on Real Estate and Urban Development in a Time of Stress<br />
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The 2020 John M. Quigley Medal Lecture to the American Real Estate and Urban Economics Association</h3>
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In January 2020 I was honored, and humbled, to receive <a href="http://www.areuea.org/index.phtml">AREUEA</a>'s <a href="http://www.areuea.org/about/quigley_medal.phtml">John M. Quigley Medal</a>. I've described the award, and other awardees to date, <a href="http://reudviewpoint.blogspot.com/2020/05/the-greatest-professional-honor-i-will.html">in a previous post</a>. Yet another post describes some of <a href="http://wisconsinviewpoint.blogspot.com/2012/05/in-memoriam-john-quigley.html">John's life and work</a>, and will explain to anyone not in our field why this award bears his name.<br />
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One reason the Quigley Medal is such an honor is that the recipient is provided the opportunity to make a presentation to the members of AREUEA at the <a href="http://www.areuea.org/conferences/details.phtml?id=118">National Meeting</a>, held in late May, normally in Washington DC. This year, because of the coronavirus, the physical meeting had to be cancelled. Fortunately, through the efforts of meeting chairs <a href="https://www.philadelphiafed.org/consumer-finance-institute/researchers/lauren-lambie-hanson">Lauren Lambie-Hanson</a>, <a href="http://www.cba.uc.edu/faculty/erikseml/">Mike Eriksen</a>, and <a href="https://www.federalreserve.gov/econres/karen-m-pence.htm">Karen Pence</a>, and many others, AREUEA was able to use the teleconferencing facilities of the <a href="https://www.philadelphiafed.org/">Philadelphia Federal Reserve Bank</a> to hold a virtual meeting of some 400 AREUEA members, many of whom attended the Quigley Medal presentation.<br />
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When I began work on the presentation, I quickly determined that it would have a global focus. While I've done plenty of work on U.S. urban development, especially <a href="https://www.amazon.com/Primer-Housing-Markets-Policy-Monograph/dp/0877667020">housing markets and policy</a>, it was doubtless<a href="http://unassumingeconomist.com/2017/03/steve-malpezzi-on-housing-markets/"> my international work</a> that prompted colleagues to seriously consider me for this award. Plus, among many other accomplishments, John Quigley was one of the early driving forces in expanding AREUEA's horizons beyond the United States.<br />
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The next decision was about framing the substance of the talk. For some time the following "eight big ideas" has served as a useful framework:<br />
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<li>Stylized facts about urbanization and development around the world</li>
<li>Why cities exist; trade, economies of scale, agglomeration</li>
<li>Location within cities</li>
<li>Key assets: housing (the “real side”); housing finance; and commercial real estate</li>
<li>Transportation and other infrastructure</li>
<li>Local governance and finance</li>
<li>Environmental problems</li>
<li>The urban economy and the aggregate economy</li>
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In addition to the "big ideas," the Quigley presentation is an opportunity to make a few observations about how we work, who we work for, and where.</div>
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As I filled in the presentation, two further challenges presented themselves. First, by the time March rolled around it was clear that I couldn't ignore the elephant in the room, the coronavirus pandemic. <a href="http://reudviewpoint.blogspot.com/2020/03/a-small-posting-on-big-problem.html">That's been addressed in many other places</a>, of course, but it had to be brought into the discussion. Second, even superficial discussion of all eight "big ideas" would take us far over time for any such presentation. So I chose to highlight just two, a look at some global patterns in urbanization and development; and location within cities.</div>
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The decision to use the phrase "time of stress" in the title instead of "pandemic" was deliberate. The pandemic -- and possible future pandemics -- is not the only thing that could shock our economies and markets and societies in profound ways. In other work, with <a href="https://www.business.rutgers.edu/faculty/morris-davis">Morris Davis</a> and <a href="https://www.macropolicyperspectives.com/team">Julia Coronado</a> on "The Future of Real Estate," we are examining a number of risks that could shock cities and our real estate markets. Here's a "prescient" slide from our 2018 presentation to the <a href="https://www.areuea.org/conferences/details.phtml?id=107">AREUEA/AsRES</a> <a href="http://www.asres2018.or.kr/asres2018/">conference</a> in <a href="https://www.citylab.com/life/2018/06/sleepy-in-songdo-koreas-smartest-city/561374/">Songdo</a>, Korea:</div>
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<tr><td class="tr-caption" style="text-align: center;">Slide from 2018 presentation to AREUEA/AsRES, Songdo Korea</td></tr>
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Well, weren't we special -- we managed to squeeze "pandemics" in as the last bullet point on the slide, with little more to say about it. Were we truly prescient? Or were we the <a href="https://en.wikipedia.org/wiki/Jeane_Dixon">Jeane Dixons</a> of real estate economics -- <a href="https://en.wikipedia.org/wiki/Jeane_Dixon">make enough predictions and maybe one of them will come to pass</a>?</div>
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If the coronavirus was one elephant in the room, by the time of the presentation, there was another source of stress. Three days before our virtual meeting, <a href="https://www.nytimes.com/2020/05/31/us/george-floyd-investigation.html">George Floyd was killed by a Minneapolis policeman</a>, and by the time of the presentation, <a href="https://www.nytimes.com/article/george-floyd-protests-timeline.html">demonstrations against his killing</a>, and against a wide range of racial disparities and injustices, had <a href="https://www.economist.com/united-states/2020/06/02/the-violence-in-american-cities-reflects-the-fury-of-polarisation">begun around the U.S</a>. and, eventually, <a href="https://www.cnn.com/2020/06/01/world/george-floyd-global-protests-intl/index.html">the world</a>.</div>
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Racial (and ethnic) disparities, discrimination, segregation, and a host of related issues can be examined under each of the eight "big ideas." My own modest work in this area has focused mainly on housing. It could certainly be argued that the topic is worthy of separate recognition as a ninth "big idea." And it fits into the global perspective of the presentation, since <a href="http://cw.routledge.com/ref/minorities/index.html">issues of race and ethnicity are hardly unique to the United States</a>, although our history has produced some outcomes that are unique to this country. The issues are large and require more than brief discussion. Therefore I've abstracted from them in this presentation. In due course I'll have more to say in this blog about some of them, separately.</div>
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The Links You've Been Waiting For</h3>
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Shortly after I made the presentation, AREUEA posted a <a href="https://www.dropbox.com/s/iahqu4zpfjyrfy5/SHORT%20Global%20Perspectives%20in%20a%20Time%20of%20Stress%20Malpezzi%20May%202020.pdf?dl=0">pdf version of the slides here</a>.</div>
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The native PowerPoint contains notes attached to many (not all) of the slides, which will help decipher some of the material. <a href="https://www.dropbox.com/scl/fi/6ycuuca1sd5q7z5w30eph/SHORT-Global-Perspectives-in-a-Time-of-Stress-Malpezzi-May-2020.pptx?dl=0&rlkey=iw22jdl6hmkxuwxlr8ew7zm3h">Download the PowerPoint slides here.</a> Anyone interested in using some of these slides in their own teaching or presentations can easily pull them out and add to your own PowerPoint. Feel free to do so, though attribution is always appreciated.</div>
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Thanks to the good offices of the Philadelphia Fed, we have a video of the original presentation, <a href="https://www.youtube.com/watch?v=wYwVDlLyVA0&feature=youtu.be">which you can download here.</a> Haircut during a pandemic? Not for me! Also, you can see I'm a bit out of practice, since I insert an "uh" about every other sentence. Students: be warned, learn to excise these kinds of tics from your presentations. Do as I say, not as I do!<br />
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More to Come</h3>
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I will, in due course, add an expanded version that touches on all eight of the "big ideas. Watch this space!<br />
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<br />Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com11tag:blogger.com,1999:blog-3258035236231564227.post-75514377807076227962020-05-23T15:51:00.001-07:002020-06-03T11:23:36.880-07:00The Greatest Professional Honor I Will Ever Receive<span style="background-color: white; color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Regular readers of my blog will know my admiration for the late <a href="http://wisconsinviewpoint.blogspot.com/2012/05/in-memoriam-john-quigley.html">John Quigley</a>, longtime stalwart of Berkeley's economics department and real estate programs, esteemed scholar who I was proud to call a friend.</span><br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgN1b-FkXKNZA_UrrGIR2i37OTEyz5vmYzi8_fBgOU9ctshc82QzwMon7ZT5VbY7pZpnUXbNqvM4o4wNevpNCoDqoaucxNZZulGhJsDM3-Y_Pt2VFb2qog1BLKtrHgozgBXOfFoXDPIzCFr/s1600/quigley_john.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-family: "verdana" , sans-serif; font-size: large;"><img border="0" data-original-height="546" data-original-width="375" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgN1b-FkXKNZA_UrrGIR2i37OTEyz5vmYzi8_fBgOU9ctshc82QzwMon7ZT5VbY7pZpnUXbNqvM4o4wNevpNCoDqoaucxNZZulGhJsDM3-Y_Pt2VFb2qog1BLKtrHgozgBXOfFoXDPIzCFr/s640/quigley_john.jpg" width="436" /></span></a></div>
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<span style="font-family: "verdana" , sans-serif; font-size: medium;"><span style="color: #222222; font-family: "arial" , "helvetica" , sans-serif; font-size: large;"><br /></span><span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222;">Shortly after John passed away, the leading academic association in our field, the American Real Estate and Urban Economics Association (AREUEA) decided to honor him by creating the John Quigley Medal. You can read more about John at the <a href="http://wisconsinviewpoint.blogspot.com/2012/05/in-memoriam-john-quigley.html">appreciation I posted on the occasion of his untimely death in 2015</a>.</span> </span></span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif;">In January I received surprising and humbling news, at the San Diego ASSA meeting; AREUEA chose me for this year's John Quigley medal. </span></span><br />
<span style="font-family: "verdana" , sans-serif;"><span style="font-size: large;"><span style="color: #222222; font-family: "verdana" , sans-serif;"><br /></span><span style="color: #222222; font-family: "verdana" , sans-serif;"><a href="https://www.areuea.org/about/quigley_medal.phtml">From the AREUEA website</a>:</span></span></span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222;">"The John M. Quigley Medal for Advancing Real Estate and Urban Economics is to be </span><span style="color: #222222;">awarded to the individual who best represents the many ways in which John significantly advanced the academic fields that span his collective works. These fields include real estate, urban economics, public finance, regional science and others.</span></span></blockquote>
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">"The medal will recognize the many dimensions in which John contributed to these fields. Specifically, candidates for the John M. Quigley Medal may have produced a record of scholarship that opens up new avenues of inquiry, have a demonstrated record of mentorship of young scholars, have supported institutional advances within these fields, or have been particularly effective at dissemination of these fields to public and professional practices. </span></blockquote>
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<span style="color: #222222;"><span style="font-family: "verdana" , sans-serif; font-size: large;">I'm humbled to receive this award, first, because of my regard for John; second, because it's the highest award to which I could ever aspire, and from peers; and third, because of the list of terrific scholars who've preceded me in receiving this award. Fourth, because it's not false modesty to mention that there are a number of outstanding scholars who are sure to join our list in due course.</span></span></div>
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Let me briefly introduce the other Quigley medal awardees, to date.</span><br />
<span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222;"><br /></span><span style="color: #222222;">The first recipient of the Quigley Medal is <a href="http://reudviewpoint.blogspot.com/2016/06/chip-case-top-housing-economist-and.html">somebody very familiar</a> to regular readers of this blog.</span></span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Chip Case, Innovator in the Measurement of House Prices, and Teacher Extraordinaire</span></h3>
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222; font-family: "verdana" , sans-serif;">Karl "Chip" Case was Professor of Economics at Wellesley College, and, with his friend Bob Shiller, creator of the eponymous Case-Shiller repeat-sale housing price indexes. </span></span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222; font-family: "verdana" , sans-serif;">Like his good friend John Q, Chip passed away too young, in 2016. Too soon, but not too soon to be awarded the first-ever Quigley medal, and deservedly so.</span></span></div>
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Sadly, a few years after I had written my appreciation of John, Chip Case passed away. I wrote about Chip’s passing, and his research and teaching <a href="http://reudviewpoint.blogspot.com/2016/06/chip-case-top-housing-economist-and.html">here</a>. </span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif;">Even though I’m the brother of a <a href="https://www.malpezzifuneralhome.com/">funeral director</a> and have posted memorials of a few other late colleagues, such as <a href="https://bus.wisc.edu/mba/current-students/mba-specializations/real-estate/blog/2009/12/18/remembrance-for-arthur-goldberger">Art Goldberger</a> and <a href="http://reudviewpoint.blogspot.com/2019/05/remembering-austin-jaffe-i-am-one-of.html">Austin Jaffe</a>, I haven’t written about any other John Quigley medal winners. Not because they aren’t worthy – far from it. It’s because they are all, thankfully, still with us. </span></span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif;">So, having already written about John and Chip, let me pen brief notes about the other four scholars who proceeded me. I’m proud to know each of them, great researchers who have taught me much over the years.</span></span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Jan Brueckner, Versatile Leader in Urban Economics</span></h3>
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222;"><a href="https://www.socsci.uci.edu/~jkbrueck/">Jan Brueckner</a> of UC Irvine's Department of Economics has written many seminal works in urban economics and related fields. </span><span style="color: #222222;">He’s graced Irvine for a decade and a half, after two decades at the University of Illinois (Champaign-Urbana) as well as serving as a visiting scholar at dozens of other institutions over the years. </span></span></div>
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<span style="color: #222222; font-family: "verdana" , sans-serif;">For the better part of two decades Jan helped shaped our field as the editor of our leading journal, the <i><a href="https://www.journals.elsevier.com/journal-of-urban-economics">Journal of Urban Economics</a></i>. <a href="https://scholar.google.com/citations?user=nQoMIN4AAAAJ&hl=en&oi=ao">Jan’s own research</a> spans of both theory and empirics. I have long admired Jan's approach to theory as he clearly follows Einstein’s dictum: “everything should be as simple as possible. But not more so.” The breadth of topics Jan has researched is extraordinary. His research spans housing, commercial real estate, urban models, public finance, mortgage design, and transportation. In the latter field he's especially known for his work on airlines. It’s hard to pick favorites from someone who hit the century mark in publications over 50 papers </span></span><span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">ago, but let me mention a few.</span></span><br />
<span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222; font-family: "arial" , "helvetica" , sans-serif;"><br /></span><span style="font-family: "verdana" , sans-serif;"><span style="color: #222222;">I’m intensely interested in global urbanization patterns. Since its publication in 1970, John Harris and Michael Todaro’s paper “Migration, Unemployment and Development: A Two Sector Analysis,” and its progeny, have influenced academic research on migration and the growth of cities. Their findings of also influenced many government policymakers’ view of the urbanization process in countries undergoing migration from rural areas to cities.</span></span></span><br />
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<span style="font-family: "verdana" , sans-serif;"><span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222; font-family: "verdana" , sans-serif;">The essence of the <a href="http://faculty.washington.edu/danby/todaro/Todaro.htm">Harris-Todaro model</a>, is that urban workers in such countries – “less developed in the jargon of 1970” – are bifurcated into to separate markets. One is a high wage formal sector in which wages are set artificially high by minimum-wage and other regulations and institutions. Most workers labor in the other market, an informal sector with a much lower productivity-determined wage. In the Harris-Todaro model, the possibility of obtaining a high wage in the formal sector job attracts migrants from the countryside. But there are more such migrants than such jobs in their model, because of the presumed large gap between formal and informal sector wages. So there is therefore “too much” migration to the city, a wage gap that is not bid away in equilibrium, and an increase in structural unemployment.</span></span></span><br />
<span style="font-family: "verdana" , sans-serif;"><span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span><span style="font-family: "verdana" , sans-serif;"><span style="font-size: large;"><span style="color: #222222;">As my <a href="https://www.sciencedirect.com/journal/journal-of-housing-economics/vol/10/issue/3">late friend</a> <a href="https://www.sciencedirect.com/journal/journal-of-housing-economics/vol/10/issue/2">Steve Mayo</a> used to say, “it would be a good story if it were true.” </span></span><span style="color: #222222; font-size: large;">Research by Ian Scott; Jeff Williamson; and Sangeepta Pratap and Erwan Quintin represent many studies that show the assumption of strongly segmented labor markets with large wage gaps don’t hold up to empirical verification. </span></span></span><br />
<span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222; font-family: "verdana" , sans-serif;"><br /></span><span style="font-family: "verdana" , sans-serif;"><span style="color: #222222;">Despite these results, Harris-Todaro remains a "zombie theory." Despite having been <a href="https://www.youtube.com/watch?v=xbE8E1ez97M">largely killed</a> by number of empirical studies, <a href="https://www.youtube.com/watch?v=muys0ULZzqc">it still walks the earth</a>. Professor Brueckner and his co-author Hyun-A Kim drive a new <a href="https://www.youtube.com/watch?v=FQwv6AGpdus">stake into its heart</a>, with their paper "<a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/0022-4146.00228">Land Markets in the Harris‐Todaro Model: A New Factor Equilibrating Rural‐Urban Migration</a>." As their paper's title suggests, they show that once you introduce a land market, even granting segmented labor markets, urban residents take steps to smooth their consumption between periods of employment and unemployment; any formal-informal wage differentials will be capitalized in land prices, throttling the <a href="https://www.youtube.com/watch?v=qJDoGccjZis">excess migration to the city</a>.</span></span><span style="font-family: "verdana" , sans-serif;"><span style="color: #222222; font-family: "arial" , "helvetica" , sans-serif;"><br /></span></span></span><br />
<span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222; font-family: "verdana" , sans-serif;">Professor Brueckner has also helped me in my teaching. I taught urban economics since 1990, mainly to business students; most of those were <a href="https://wsb.wisc.edu/faculty-research/academic-departments/real-estate">real estate majors</a>. Perhaps 20 percent of my urban econ students, on average, came from outside the business school. The majority of these were from <a href="https://dpla.wisc.edu/">urban planning</a>; others came from <a href="https://lafollette.wisc.edu/">public affairs</a> and <a href="https://geography.wisc.edu/">geography</a>. <a href="https://econ.wisc.edu/">Economics</a> students were very welcome, whether from the <a href="https://econ.wisc.edu/">economics department </a>or from <a href="https://aae.wisc.edu/">agriculture and applied economics</a>. These combined econ majors were often outstanding participants, but maybe 5 percent of my urban students over the long run.</span><br /><span style="font-family: "verdana" , sans-serif;"><span style="color: #222222; font-family: "arial" , "helvetica" , sans-serif;"><br /></span></span></span><br />
<span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222; font-family: "verdana" , sans-serif;">Because I teach many more business students than economics students, I spend much less time on formal modeling than most teachers of the subject. Of course I expose my students to the basic models – <a href="http://reudviewpoint.blogspot.com/2018/01/housing-supply-and-demand-some-basics.html">supply and demand</a>, the <a href="https://www.rba.gov.au/publications/rdp/2011/2011-03/alonso-muth-mills-model.html">Alonso-Muth-Mills model</a>, <a href="http://www.nyu.edu/projects/corcoran/papers/Tiebout%20Sorting.pdf">Tiebout equilibrium</a>, regional models such as <a href="https://en.wikipedia.org/wiki/Input%E2%80%93output_model">input-output analysis</a>, and so on. </span><br /><span style="font-family: "verdana" , sans-serif;"><span style="color: #222222; font-family: "arial" , "helvetica" , sans-serif;"><br /></span></span></span><br />
<span style="font-family: "verdana" , sans-serif;"><span style="font-size: large;"><span style="color: #222222; font-family: "verdana" , sans-serif;">Why spend less time on models than I would if I were teaching in econ department? The majority my students will, for better for worse, never write down a formal model, algebraic or geometric, once they leave my class. But they will work with data, constantly. So I spend a lot more time than is normal in such a class on data analysis and applied statistics. I sneak in a little bit of <a href="https://www.ssc.wisc.edu/~bhansen/econometrics/Econometrics.pdf">econometrics</a> and I make sure they understand some <a href="https://towardsdatascience.com/almost-everything-you-need-to-know-about-time-series-860241bdc578">basic properties of time series</a>, ideas about <a href="http://people.bu.edu/tsimcoe/code/Endog-PDW.pdf">endogeneity</a>, and so on. I even try to talk them into being <a href="https://www.austincc.edu/mparker/1342/bayes/BayesianEst9.pdf">informal Bayesians</a>. But for econ students and anyone else desiring a bit more of the traditional approach, I tell them to straightaway get a copy of Jan’s admirable little book, <i><a href="https://mitpress.mit.edu/books/lectures-urban-economics">Lectures on Urban Economics</a></i>, and work through the mostly geometric models in that volume. For advanced students I go a little further and recommend a work through <a href="https://sites.tufts.edu/yioannides/">Yannis Ioannides</a>' excellent book <i><a href="https://press.princeton.edu/books/hardcover/9780691126852/from-neighborhoods-to-nations">From Neighborhoods to Nations: The Economics of Social Interactions</a></i>.</span></span><span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222; font-family: "arial" , "helvetica" , sans-serif;"><br /></span></span></span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222;">If space permitted, we could delve into many other topics Jan has investigated, including the economics of airlines and other transport-related topics. Other favorites, which I'll refer to in later posts, include his work with Alain Bertaud on the effects of development regulations ("floor space index" in Mumbai, or "floor area ratio" as it's known in the U.S.), and a terrific paper Jan wrote with Yves Zenou on how the canonical Alonso-Muth-Mills model (see below) can be fruitfully modified to incorporate location-specific amenities. Jan and Yves use the model to explain why amenities-rich central Paris looks so very different from the downtowns of many U.S. cities.</span> </span><br />
<span style="font-size: large;"><span style="font-family: "verdana" , sans-serif;"><span style="color: #222222;"><br /></span></span><span style="font-family: "verdana" , sans-serif;"><span style="color: #222222;">In addition to his contributions to urban and regional economics, </span><span style="color: #222222;">Jan is also an <a href="https://www.socsci.uci.edu/~jkbrueck/TWO%20BOOKS.htm">accomplished photographer</a>.</span></span></span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Don Haurin, A Housing Economist's Housing Economist</span></h3>
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><a href="https://economics.osu.edu/people/haurin.2">Don Haurin</a> is Professor Emeritus of Economics at Ohio State University. (Excuse my mistake, <a href="https://www.osu.edu/">THE Ohio State University</a>. As a <a href="https://bus.wisc.edu/mba/current-students/mba-specializations/real-estate/news/2016/02/29/stephen-malpezzi-to-retire-after-26-years-of-distinguished-service">long-time Wisconsin prof</a>, I sometimes forget myself. Joking aside, whether you are in the Big 10 or not so lucky, even <a href="https://www.buckys5thquarter.com/2019/9/13/20861913/why-your-mascot-sucks-university-of-wisconsin-bucky-badger-buckingham-u-badger-we-love-you-bucky">Badgers</a> acknowledge that Ohio State has also married top scholarship to a great football program).</span></div>
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<span style="color: #222222; font-family: "verdana" , sans-serif;">For many years I was skeptical of the proposition that it made much difference to household welfare whether someone owned or rented their home, beyond certain subsidies homeowners received through the tax code, and built into U.S. financial policy (Fannie Mae, Freddie Mac, FHA, etc. See <a href="http://webarchive.urban.org/publications/210785.html">Green and Malpezzi</a> for a summary of these subsidies. The <a href="http://reudviewpoint.blogspot.com/2018/01/a-first-look-at-tax-cut-and-jobs-act.html">Tax Cut & Jobs Act 2017</a> has greatly reduced, though not completely eliminated, tax preferences for homeownership.) </span></span><br />
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<span style="font-family: "verdana" , sans-serif;"><span style="color: #222222;">The tail wags the dog I thought, since these subsidies are usually justified by the purported existence of other, more general social benefits to homeownership. See for example, arguments from the <a href="https://www.nar.realtor/newsroom/real-estate-story-ideas/why-home-ownership-matters">National Association of Realtors</a>, </span><span style="color: #222222;">or <a href="http://www.freddiemac.com/blog/homeownership/20180604_national_homeownership_month.page?">Freddie Mac</a>. Note that these links are recent, but the interest in homeownership goes back many decades; see, for example a statement on the subject from <a href="https://www.presidency.ucsb.edu/node/207591">Herbert Hoover</a>.</span>
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<span style="font-family: "verdana" , sans-serif; font-size: large;">So about 25 years ago my friend Richard Green, who then shared my skepticism of wide-ranging homeownership external benefits, teamed with Michelle White to investigate whether there was any support in the data for such benefits to homeownership. Of course, correlation is not causality, and homeowners are very different than renters. To begin with everyone knows that American homeowners on average have significantly higher incomes than renters; they are also more likely to be white, even after controlling for income differences. We could list a number of other demographic and financial differences that could make it hard to cleanly estimate the effects of homeownership <i>per se</i> on household outcomes and characteristics. Thus the first problem <a href="http://archive.realtor.org/sites/default/files/Measuring%20the%20Benefits%20of%20Homeowning.pdf">Green and White </a>had to tackle was this possibility of a spurious correlation between social outcomes and homeownership. </span><br />
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<span style="font-family: "verdana" , sans-serif;">To keep our discussion here brief, suffice it to say that Green and White examined several data sets and controlled for a number of other independent variables that could have driven social outcomes. Social outcomes could include, for example, how long children stayed in school, whether they later had contact with the criminal justice system, and so on. They also used econometric methods (described in more detail in their paper) to mitigate problems from real-world imperfect specifications. To their surprise they found that homeownership mattered even after controlling for as many other determinants as they could muster and adopting the best available methods for sample selection bias.</span></span><br />
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<span style="font-family: "verdana" , sans-serif;">Green and White’s paper touched off a flurry of additional research on this topic. In a series of papers Don Haurin and co-authors have greatly extended and enriched this literature. A good example is <a href="https://www.sciencedirect.com/science/article/abs/pii/S0094119003000809">Dietz and Haurin’s (2003) survey paper</a>, in which they examine homeownership’s possible effects on:</span></span><br />
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<span style="font-family: "verdana" , sans-serif;">•</span><span style="white-space: pre;"><span style="font-family: "verdana" , sans-serif;"> H</span></span><span style="font-family: "verdana" , sans-serif;">ousehold wealth and portfolio choice</span></span><br />
<span style="font-family: "verdana" , sans-serif; font-size: large;">•<span style="white-space: pre;"> H</span>ousehold mobility</span><br />
<span style="font-family: "verdana" , sans-serif; font-size: large;">•<span style="white-space: pre;"> L</span>abor force participation</span><br />
<span style="font-family: "verdana" , sans-serif; font-size: large;">•<span style="white-space: pre;"> U</span>rban structure and segregation</span><br />
<span style="font-family: "verdana" , sans-serif; font-size: large;">•<span style="white-space: pre;"> H</span>ome maintenance</span><br />
<span style="font-family: "verdana" , sans-serif; font-size: large;">•<span style="white-space: pre;"> P</span>olitical and social participation</span><br />
<span style="font-family: "verdana" , sans-serif; font-size: large;">•<span style="white-space: pre;"> H</span>ealth</span><br />
<span style="font-family: "verdana" , sans-serif; font-size: large;">•<span style="white-space: pre;"> D</span>emographic outcomes </span><br />
<span style="font-family: "verdana" , sans-serif; font-size: large;">•<span style="white-space: pre;"> S</span>elf-esteem</span><br />
<span style="font-family: "verdana" , sans-serif; font-size: large;">•<span style="white-space: pre;"> C</span>hild outcomes</span><br />
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<span style="font-family: "verdana" , sans-serif;">Dietz and Haurin provide a critique of the many studies that lack sufficient control variables, both variables that affect the outcome of interest (e.g. child outcomes) and the key intervening variable of homeownership. In addition to garden-variety omitted variable bias, we may be confounding the effect of the homeownership rate with the missing variable, so that observed results may be spurious.</span></span><br />
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<span style="font-family: "verdana" , sans-serif;">These and other econometric problems are reviewed in Dietz and Haurin. They also examine how choice of model and the type of data can mitigate these problems. Best practices are described.</span></span><br />
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<span style="font-family: "verdana" , sans-serif;">Their critical review of data, and econometric methods, suggest pre-1990 findings can be suspect. More recent studies with better data and methods, like Green and White, attacked the endemic sample selection problem full on, although it’s only mitigated, never completely defeated. The evidence reviewed by Dietz and Haurin support the idea that the desire for eventual homeownership is an important motive for increased household savings. Other mooted effects on labor supply, fertility and consumption are “not proven.” </span></span><br />
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<span style="font-family: "verdana" , sans-serif;">Homeownership lowers mobility, as is well established, but potential spillovers into labor markets are harder to find. Positive ceteris paribus effects of homeownership on child outcomes such as education and lack of contact with the criminal justice system have been repeatedly documented. Many knowledge gaps remain, including but not limited to analysis by type of structures, and differential impacts by race and ethnicity. Despite a number of research papers, evidence on the relationship between housing tenure and support for restrictive regulations and housing market – William Fischel’s famous Homevoter Hypothesis – is still somewhat fragmentary. Much remains to be done.</span></span><br />
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<span style="font-size: large;"><span style="font-family: "verdana" , sans-serif;">Some of these findings are commonly accepted, notably that homeowners move much less often than renters, and that homeowners often have very unbalanced wealth portfolios. For many Americans, particularly the middle-class, the equity in a single house is their main financial asset. This opens the middle class up to risk, since those prices are correlated with the health of the same market (metropolitan area) in which they sell their labor. Of course, renting may reduce exposure to this risk, but in fact low- and moderate-income renters invest less in other non-housing financial assets, too, as Grinstein-Weiss et al. (2013) demonstrate. </span></span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">Other often cited, superficially plausible in the data, have not been carefully tested for example links between homeownership and political participation, urban form, or support for restrictive zoning. Solid studies find that homeownership affects a number of child outcomes such as school completion rates.</span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">Further, Dietz and Haurin point out that the majority of the studies they review frame possible outcomes as positive effects of homeownership. Studies of <a href="https://bus.wisc.edu/centers/james-a-graaskamp-center-for-real-estate/publications/wi-fur">stresses on households who are underwater</a> and/or in default on their mortgages are one example of negative outcomes that remain fertile fields for future research.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Prof. Haurin has studied a wide range of other topics on housing and urban issues. He and his co-authors, often former students, have undertaken studies of fluctuations in the rate of homeownership; how to construct improved real estate price indexes, and use them to study house price volatility. He’s undertaken some of the earliest research on Hispanic experiences in housing markets, as well as more technical work on the prediction of turning points in house prices. More recent research has focused on rigorous modeling of how sellers set list prices for houses, and how expectations are best modeled in the housing market.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><a href="https://news.uga.edu/james-kau-quigley-medal/">James Kau</a>, C. Herman and Mary Virginia Terry Professor Emeritus of Business Administration at the University of Georgia, has made many contributions to urban economics; housing; but he's best known for his work in real estate finance, especially rigorous models of mortgage default and prepayment.</span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;">Professor Kau’s research interests are especially broad, spanning public finance and governance as well as real estate and finance. In my world he’s best known for his work on mortgage analytics. </span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><br /></span><span style="font-family: "verdana" , sans-serif; font-size: large;">A good place to start is his 1995 survey of “Option Theoretic Pricing of Mortgages,” with Donald Keenan. Mortgages of all kinds, like most loans, are subject to default and subsequent losses. The majority of U.S. residential mortgages are made at fixed rates, but are prepayable without significant penalty. Thus, when rents fall, rational borrowers prepay, and refinance at the new lower rate. Since the prior lender loses a formerly profitable cash flow stream and must now reinvest in a less favorable rate, this prepayment risk is of considerable interest, along with more common default risks. Furthermore, these twin risks are not necessarily independent. Falling rates presumably increase the probability of prepaying; the new lower rate after refinance may forestall some defaults, to give but one example.</span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><br /></span><span style="font-family: "verdana" , sans-serif; font-size: large;">Most U.S. mortgages are nonrecourse, which reduces but does not eliminate the cost of rational default, i.e. default when the value of the mortgages exceeds the value of the house.</span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><br /></span><span style="font-family: "verdana" , sans-serif; font-size: large;">It’s conventionally accepted, and perfectly logical, that falling rates can raise housing values and thus make defaults less likely. (See evidence here that it’s capital flows, more than rates, that drive prices; but there’s ample evidence that rates still matter.)</span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;">So, what’s special about the option theoretic approach to mortgage termination? Consider an example of prepayment. A borrower currently has a mortgage, and is contemplating prepaying the old mortgage and taking out a new loan for the existing balance. Supposed to keep it very simple we assume the transaction costs of prepaying and taking out of new mortgage (points, fees, the value of time spent) is some fixed amount; say $500. Suppose the borrower knows that they will move in 10 years, terminating the mortgage at that time. Both old and new mortgages are standard fixed-rate self-amortizing designs. </span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">Suppose that rates are falling. In one model of default, based on a “razor’s edge” decision, the borrower computes the present value of 10 years of payments at the old and new rates; and as soon as the present value of the savings exceeds $500, they refinance. But if they refinance immediately, they give up the option to refinance later with still lower rates. Of course rates could rise instead of fall, which makes the modeling a little interesting. </span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">Nevertheless, any time an agent takes a decision that commits them to a course of action for a period of time, an option is involved. Dixit and Pindyk is an excellent introduction to the structure of several kinds of options and how to price them.</span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><br /></span><span style="font-family: "verdana" , sans-serif; font-size: large;">Kau, Keenan and Munneke analyze mortgages as a type of option on an underlying asset, namely a house. Many analysts faced with options turn immediately to the workhorse Black-Scholes option pricing model for a simple stylized asset, specifically the short run call option on a security with a fixed return. Kau and colleagues point out that mortgage contracts are, of course, more complex. </span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><br /></span><span style="font-family: "verdana" , sans-serif; font-size: large;">Specifically, Kau et al. survey how to set up models that can be used to price several alternative mortgage designs. Mortgages can be characterized by fixed payments or adjustable rates with experiments or graduated payments. They do not limit themselves to housing markets. We have already noted that residential mortgages in the U.S. are generally nonrecourse with inexpensive prepayment. Commercial mortgages generally have recourse and pre-payment penalties and lockout provisions that require a different model. The black Scholes model is of little direct utility here. Kau et al. review and explain solution methods for applicable models, using both continuous and discrete time variants.</span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;">The Kau and Keenan paper is one of several places to begin the rigorous study of mortgages. See Green (2013) and Fabozzi (2016) for example. As Kau and Keenan note there many extensions possible and sometimes required, for example how the state variables of interest rates and house prices are modeled, and introducing explicit transaction costs into the models. And of course of mortgages are derivative securities written on real estate assets the events of the 2000’s remind us that we began to commonly write derivatives on derivatives – and sometimes derivatives on the second derivatives – which could get us into some wicked hard problems when trying to evaluate and price these instruments. Kau and Kennan provide a good entry point to those problems.</span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;">A particularly interesting 2011 paper by Kau Keenan and Munneke investigates an oft-debated issue, “Racial Discrimination and Mortgage Lending.” This is a complex and fraught topic; the Green and Malpezzi Primer on U.S. Housing Markets and Policy provides a nontechnical if dated review. As noted above, an important strand of Jim Kau’s research involves rigorous simulation modeling of both major types of mortgage termination, namely prepayment and default. In this paper Kau and co-authors bring their analytic technology to bear on testing for racial discrimination in the mortgage process.</span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">Unconditionally, minorities have higher rates of default and foreclosures (see e.g. Gerardi and Willen, Subprime Mortgages Foreclosures and Urban Neighborhoods). By itself this factoid tells us little. Minorities (most studies have focused on black-white differences) tend to have lower and more volatile incomes, (Ziliak, Hardy and Bollinger), lower credit scores, and perhaps a dozen other systematic differences that confound the relationship between race and mortgage default.</span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">One understudied effect comes from racial differences in prepayment behavior. Black borrowers are less likely to prepay when rates decline, as Kau et al. document. Ceteris paribus, such behavior should make black borrowers more attractive to lenders. There are several ways lenders might treat attractive (or unattractive) borrowers differently. The first of course is whether they lend at all. A second is whether loans are offered on the same terms – including but not limited to loan-to-value ratios, and of course interest rates. The latter is the focus of Kau et al.</span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">Using the framework developed by Deng, Quigley and Van Order, Professor Kau and colleagues found that once they controlled for prepayment, as well as loan-to-value and other contract terms, borrowers in predominantly black neighborhoods significantly were offered higher contract rates than the full model predicts for color-blind competitive markets.</span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">Professor Kau’s study is of course not the last word. Among other issues, as laid out clearly in the review paper by Anthony Yezer, a clear understanding and clean estimates of true mortgage discrimination require studying the entire process, from application through mortgage termination. Data requirements are hard to meet, and such studies have not yet been done.</span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">Many questions remain. Kau et al. did not have credit score data, to point out one shortcoming; and neighborhood variables are useful but imperfect proxies for household circumstances. Taking the results at face value, competing hypotheses remain for why such differentials might exist, as Kau et al. note. Is it straight racism? Unconscious bias? Ignorance of the true model of prepayment and default? The authors suggest another logical possibility, a potentially perverse explanation that in making loans truly race-blind lenders could be failing to credit minority borrowers with the benefits of their lower propensities to prepay. Whenever the underlying cause, Professor Kau and his colleagues provide an interesting twist on the standard stories of and debates about racial discrimination in mortgage behavior.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><a href="https://www.kellogg.northwestern.edu/faculty/directory/mills_edwin.aspx">Edwin Mills</a> is Professor Emeritus of Real Estate at Northwestern. Before his tenure at Northwestern, he was a long-time Professor of Economics at Princeton. Mills is the author of some 20 books and 130 papers. For many years he was the sole editor of the <a href="https://www.journals.elsevier.com/journal-of-urban-economics">Journal of Urban Economics</a>, the leading journal of our field; and he has served as co-editor and editorial board member of many other journals.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">My simple introduction to him in class: the father of urban economics. I think the other Medal recipients would point to Professor Mills' deep influence on all of us. Even John Quigley would give Ed pride of place, along with John's own mentor, the late John Kain; William Alonso; and Richard Muth. We often refer to the canonical model of land use within a monocentric city as the "Alonso-Muth-Mills model" or simply "AMM."</span></div>
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<span style="font-size: large;"><span style="color: #222222; font-family: "verdana" , sans-serif;">Ed was the third recipient of the Quigley medal. His career is so distinguished that we are not dissing Chip or Jan in the least if we ask, “what took us so long?” (In fairness, there are a couple people coming after me who might ask the same question.) One measure of the esteem in which Ed is held is that for two decades AREUEA has awarded the Edwin Mills Best Paper Award for the top research presented at our annual meeting.</span></span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">My first textbook, as a student, and again as a teacher, was Edwin Mills and Bruce Hamilton’s <a href="https://www.jstor.org/stable/3146371?seq=1">Urban Economics</a>. (Bruce Hamilton, one of a legion of outstanding Mills PhD students over the years, served as co-author in later editions.) Now out of print, Mills and Hamilton has been largely superseded by Jan Brueckner’s fine introduction to the theory (see above), Arthur O’Sullivan’s wide-ranging undergraduate textbook, John McDonald and Dan McMillen’s excellent foray tying urban economics and real estate together, and a classic if somewhat older text on real estate and urban from Denise DiPasquale and Bill Wheaton. (Denise and Bill are currently updating their fine text, so watch that space). While each of these fine textbooks has extended Mills’s original textbook, I think these authors will all acknowledge a debt to Ed Mills and his co-author Hamilton. With 1600 citations in Google scholar, it’s long been viewed as a standard. </span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">I eventually migrated from Mills and Hamilton to other texts, but I long continued assigning his <a href="http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.504.4316&rep=rep1&type=pdf">beautiful review of the field</a> published by the Brookings Institution.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Along with Alonso’s Location and Land Use, and Muth’s Cities and Housing, Edwin Mills’ Studies in the Structure of the Urban Economy was one of the foundational works in urban economics, and along with some classic “second generation” works like Kain and Quigley’s Housing Markets and Racial Discrimination formed the basis of my own early education in the field. </span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">A follow-on paper by Mills and Tan on population density set the stage for my own work on international comparisons with Alain Bertaud. Mills and Tan relate flattening population density gradients to rising incomes and growing cities. Again Mills used simple data, the best available, and they were careful to make mainly qualitative comparisons. In our study, thanks to Alain’s careful work over several decades, we have the advantage of comparable data collected and analyzed for over 50 large metropolitan areas around the world.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">My colleague and good friend <a href="http://kyungkim.sogang.ac.kr/kyungkim/3668.html">Kyung-Hwan Kim</a> was one of dozens of Mills PhD students; as I’ve remarked elsewhere, Mills work with Kim and other co-authors was instrumental in opening my eyes to the economies of Seoul and other fascinating Korean cities.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Ed is one of several scholars whose interest in land use and development regulation inspired my own -- <a href="https://www.dartmouth.edu/~wfischel/">Bill Fischel</a> and <a href="http://www.economics.hawaii.edu/history/faculty/rose.html">Lou Rose</a> also come to mind, among others, and of course I built some of my domestic U.S. work on data collection by Peter Linneman and Anita Summers. My international work in this area was inspired by Alain Bertaud and Ramgopal Agarwala, among others.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">I was especially taken with Mills’ simple but elegant analysis of urban population density gradients in Studies in the Structure. The monograph applied simple but clever techniques to the limited set of historical data then available. Mills’ results provided a number of insights that were later confirmed as we developed more detailed small area data and better technology for analysis (geographical information systems, advances in spatial econometrics). </span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">One of my first papers with Jim Follain tested some of Mills’s predictions. I often paired Follain and Malpezzi with a related paper by Mills and Price to teach students how simple, not terribly realistic urban models could nevertheless tell us a lot about urban decentralization (later referred to as “sprawl”). By comparing the two papers I could also explain to students how some results (for example the effects of income on decentralization) could be robust to different studies and methods; while others (is race or poverty a stronger driver of decentralization?) are more fragile than we’d like. Our classroom review highlighted how you can learn a lot from empirical work; but how you should also never put too much stock in any single study, whatever its care and/or prominence. </span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">This paper jogs my memory of an early formative experience. Follain and I had recently published our paper on tests of the standard urban model of Mills and others, when I then moved from the Urban Institute to the World Bank. In grad school at the same time, I’d recently shifted from international affairs to economics. I hadn’t yet taken my field exams, much less finished my Ph.D. Doug Keare, my new division chief, invited me, as the literal new kid on the block, to present my paper with Follain in a lunchtime seminar. Okay. </span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Entering the room, I found my new friend and colleague Steve Mayo, and a number of accomplished World Bank urban economists including Keare, Kyu Sik Lee, Andy Hamer, Greg Ingram and others. Also in the room were several visiting scholars: Vern Henderson, Jeff Williamson, Charlie Becker, and Ed Mills. I gulped because that’s quite a lineup and I was still a lowly graduate student. I felt pretty overmatched. </span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Nevertheless, I proceeded to present my paper, arguing at one point Greg Ingram’s sophisticated simulation models with John Kain and others hadn’t fully superseded the simpler monocentric model. Before long I was explaining how, in our view, the Mills model nevertheless needed to incorporate a number of variables that could be described as – gasp – sociological.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">I awaited my shredding. It never exactly came. I think Ed and the rest must’ve recently all read Portia’s famous speech about “the quality of mercy.” </span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">They gave mercy and I took it, with gratitude. There was a spirited discussion, and plenty of healthy criticism of my work. But I learned the value of, in today’s jargon, disagreeing without being disagreeable. There was never a hint of anyone’s rank or reputation, just the quality of data and method an argument, and a collegial search for truth, or as close to truth is we could come. I was presenting, and they did me the honor of treating me as an equal for the duration, though I was anything but.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Over the years, Ed Mills, and the others in that room, and several others taught me a shortcut to evaluating someone’s character. How do they treat those below them in the food chain? With respect, evaluating their ideas and work on the merits, without condescension? How do they treat those nominally above them? Evenhandedly, again appropriately respectful, but exhibiting the integrity and sense of self and yes occasional courage to offer their honest criticisms, without regard to their own popularity or consequence? This integrity is something I saw early and deeply in Ed Mills, in John Quigley for whom this medal is named, and I’m pleased to say in each of my preceding award winners.</span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">Nobody Gets a John Quigley Model Without a Lot of Help</span></h3>
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="font-family: "verdana" , sans-serif;">The secrets of my success? As Hall of Fame pitcher <a href="https://en.wikipedia.org/wiki/Lefty_Gomez">Lefty Gomez</a> would put it, "Is it better to be lucky or to be good?" My usual answer is "yes," though along with <a href="https://www.theatlantic.com/magazine/archive/2016/05/why-luck-matters-more-than-you-might-think/476394/">Robert H. Frank</a> and B<a href="https://www.quotes.net/quote/3921">enjamin Franklin</a>, I put a lot of weight on luck. I come from a family that spent the last century or so moving from tenant farmers in Italy, to coal miners in Western Pennsylvania, to small scale (and small profits) tile and terrazzo installation. Like Warren Buffett, I "<a href="https://givingpledge.org/Pledger.aspx?id=177">won the ovarian lottery</a>;" it's still an advantage, <i>ex ante</i>, but in 1952 to be born a white male in the United States was a huge leg up. I was one of about 1.7 million 1952 claimants of that particular prize in the lottery, out of about 98 million global births; roughly 1 out of 60. And with the help of family, good teachers, and some more luck, I was well educated. To my knowledge I am the second in my family to <a href="https://www.lasalle.edu/">finish a BA</a>, and <a href="https://www.gwu.edu/">the first graduate degree</a>, although many others have followed. </span></span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">I've continued the string of good luck, especially when it comes to colleagues and co-authors. I</span><span style="font-family: "verdana" , sans-serif; font-size: large;">f I've had one talent over the years, it's been to find great people to work with.</span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">Here's a photo of me with GW</span><span style="font-family: "verdana" , sans-serif; font-size: large;">U Economics Professor <a href="https://economics.columbian.gwu.edu/anthony-yezer">Tony Yezer</a>, who was my PhD advisor. Tony was and is a great teacher, and has been a great supporter in many other ways over the years.</span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;">From the <a href="https://www.urban.org/">Urban Institute</a> to the <a href="https://www.worldbank.org/">World Bank</a> to the <a href="https://www.wisc.edu/">University of Wisconsin</a>, I've had at least 40 coauthors and hundreds of other supportive colleagues, from whom I've learned a lot. And that doesn't even begin to count literally hundreds of others I could name over the past 40 years, AREUEA members and many others, from dozens of countries. Obviously I can't do justice to all those colleagues and friends here, but in addition to Tony, I have to mention a few by name here. </span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;">Of many colleagues at the Urban Institute -- <a href="https://www.linkedin.com/in/raymond-struyk-50305a6">Ray Struyk</a>, who got me started, Larry Ozanne and <a href="https://www.colorado.edu/business/leeds-directory/faculty/thomas-g-thibodeau">Tom Thibodeau</a>, a dozen more come to mind -- I have to give my friend <a href="https://www.lincolninst.edu/publications/articles/faculty-profile-38">Jim Follain</a> credit for giving me the opportunity to move from working as an assistant to becoming a full partner in research and to generously sharing credit for our joint work. </span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;">At the World Bank, I learned so much from colleagues like <a href="https://marroninstitute.nyu.edu/people/bertrand-renaud">Bertrand Renaud</a>, Jim Wright, <a href="https://marroninstitute.nyu.edu/people/robert-buckley">Bob Buckley</a>, <a href="https://www.ihcglobal.org/about/board-and-staff/larry-hannah/">Larry Hannah</a>, and of course <a href="http://reudviewpoint.blogspot.com/2019/07/reading-for-life-one-of-best-books-ever.html">Alain Bertaud</a>; again far too many to name. And the Bank gave me to learn from dozens of colleagues, <a href="https://www.business-standard.com/article/news-ani/urban-planning-experts-doubtful-about-govt-s-smart-city-mission-116020901188_1.html">Vinod Tewari</a>, <a href="http://www.csap.cam.ac.uk/network/duncan-maclennan/">Duncan Maclennan</a>, <a href="https://real-estate.wharton.upenn.edu/profile/mhoek/">Marja Hoek-Smit</a>, <a href="https://marroninstitute.nyu.edu/people/shlomo-solly-angel">Solly Angel</a>, Kyung-Hwan Kim are the tip of that iceberg. But one person stands out among that large list, my late friend and colleague Steve Mayo. When the late <a href="https://www.legacy.com/obituaries/bostonglobe/obituary.aspx?n=douglas-keare&pid=191269658">Doug Keare</a> and others organized a research project on "Housing Demand and Finance in Developing Countries," they hired Steve to direct the project, and me as the directee. But again, like Jim Follain, Steve was quick to share responsibilities and credit, and to mentor me through a critical stage in my career.</span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;">Plus, it was through Steve that I came to know John Quigley as a friend as well as a remarkable source of insight and knowledge.</span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222;">When he hired me, Doug suggested it would be a good place to work for a couple of years while I did my graduate work at GWU with Tony. But a couple of years passed; I finally finished my PhD; but I forgot to leave and ended up staying for nine years. Later, as I came up on a decade of "service to the Bank," as the phrase is tossed around there, I began to look elsewhere for the next stage of my career. <a href="https://merage.uci.edu/research-faculty/faculty-directory/Kerry-Vandell.html">Kerry Vandell</a> had recently moved to Wisconsin to rebuild the real estate program after the untimely death of master teacher <a href="http://reudviewpoint.blogspot.com/2016/06/wisconsin-real-estate-century-of.html">James Graaskamp</a>. Kerry's first personnel move was a great one, to hire <a href="https://business.depaul.edu/faculty/faculty-a-z/Pages/james-shilling.aspx">Jim Shilling</a>. With Kerry and Jim in place, I knew it was a place I'd like to be, so I jumped at the chance when they offered me the opportunity to join them.</span></span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222;">My 26 years at Wisconsin were a wonderful opportunity, with many colleagues both within the Graaskamp Center as well as elsewhere in the Wisconsin School of Business and throughout the University. I could quickly name a hundred. Wisconsin was also a point of entry for a wide range of real estate and urban development professionals, some of them <a href="https://www.wreaa.org/">UW alums</a>, some <a href="https://bus.wisc.edu/centers/james-a-graaskamp-center-for-real-estate">Graaskamp Center</a> <a href="https://bus.wisc.edu/centers/james-a-graaskamp-center-for-real-estate/board-of-advisors/board-membership">Board members</a>, far too many to name here. And don't forget the 3,000 students I taught there over the years. More than a few of those students taught me back, to be sure.</span></span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="color: #222222;">But of all those marvelous Wisconsin connections I'd have to give pride of place to my friend, colleague and co-author <a href="https://priceschool.usc.edu/people/richard-k-green/">Richard Green</a>. Richard joined up in 1990, the same year as Jim Shilling and myself. Richard had recently completed his Ph.D. in economics, writing on international trade under famed UW <a href="https://www.researchgate.net/scientific-contributions/7320859_Robert_E_Baldwin">Professor Robert Baldwin</a>. While Richard's wife, <a href="https://www.uclahealth.org/patricia-harris">Patricia Harris</a>, completed her medical education at UW, Richard took a temporary job as the Chief Economist of the <a href="https://www.wra.org/">Wisconsin Realtors Association</a>. I might go even further, but no one could question that no other state real estate trade group has ever had such an accomplished economist grace their staff. Together Richard and I wrote half a dozen papers and our <a href="http://webarchive.urban.org/publications/210785.html">Primer on U.S. Housing Markets and Housing Policy</a>; we could have, should have, written a dozen more. (Though we're not done, yet.)</span></span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><span style="font-family: "verdana" , sans-serif;">I blog, but I don't do Facebook or other places where you'll find photo galleries. So here are a few photos of colleagues whom I've learned from and collaborated with over the years; these are primarily friends I've also coauthored with at one time or another. If you want to see more, I've been collecting more photos within the presentation I gave a few years ago when I retired from Wisconsin, <a href="https://drive.google.com/open?id=1oOUww1H_wH2IlXQupHfngICTe6WI06yl">click here</a> for the current version. If you're a glutton for punishment, and want to read more of those papers, you can find a (slightly dated) CV <a href="http://smalpezzi.marginalq.com/">here</a>, and my entries at Google Scholar <a href="https://scholar.google.com/citations?user=zkdR4lYAAAAJ&hl=en&oi=ao">here</a>. But of course now that I'm blogging, well, check out my other blog entries <a href="http://reudviewpoint.blogspot.com/2018/05/a-guide-to-some-of-my-blog-posts-hither.html">here</a>.</span></span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">As an Emeritus Professor, I remain connected to the Graaskamp Center and to the University of Wisconsin more generally. I've long been connected to the <a href="http://hoytgroup.org/homer-hoyt-institute/">Homer Hoyt Institute</a>, and for the last several years I've been honored to serve as the Dean of the Hoyt Group's Weimer School Academic Fellows. <a href="https://www.business.rutgers.edu/faculty/morris-davis">Morris Davis</a>, formerly a colleague at UW, and now Paul V. Profeta Professor of Real Estate at Rutgers, has recruited me to help out with their Center from time to time. </span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">And it's great to live in the Boston area. We moved here in 2014 after retirement for the temperate climate. On arrival, we found one of our grandsons lived here, what a coincidence! With his parents, too, that's OK. Another great coincidence is that it turns out there are several universities in the area, and many friends at MIT, Harvard, Boston College, Tufts, and the Boston Fed have been very welcoming and generous with their time. And of course I remain an active member of AREUEA.</span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">I'm working on several projects at the moment, some with long-time coauthors (see above), some with some new ones. <a href="https://www.linkedin.com/in/yongping-liang-951ab4a">Yongping Liang</a> and I are undertaking some new research on the metro-level analysis of housing supply and pricing. <a href="https://www.escpeurope.eu/index.php/luque-jaime">Jaime Luque</a>, <a href="https://wsb.wisc.edu/directory/faculty/antonio-mello">Antonio Mello</a>, <a href="https://www.ucl.ac.uk/bartlett/construction/people/dr-stanimira-milcheva">Stani Milcheva</a> and I are writing a monograph on housing affordability, building on work we did for Stani's <a href="https://www.ucl.ac.uk/bartlett/construction/events/2019/sep/case-affordable-housing-global-perspective-financing-and-institutional-ownership">conference on the topic</a> at UCL two years ago. <a href="https://global.upenn.edu/perryworldhouse/person/kyung-hwan-kim">Kyung-Hwan Kim</a> and <a href="https://www.hhs.se/en/houseoffinance/about/people/people-container/peter-englund/">Peter Englund</a> and I are revising a long-dormant paper on tenure choice across countries. Jay Sa-Aadu and I are r<a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/1540-6229.00684">evisiting urban policies in Africa</a>, with our colleague <a href="https://priceschool.usc.edu/people/moussa-diop/">Moussa Diop</a>. And someday Richard Green and I will finally finish the second edition of the Housing Primer, with some help from <a href="https://economics.columbian.gwu.edu/paul-carrillo">Paul Carrillo</a>.</span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">The Quigley Medal is a very special honor both because it's from an Association I've learned much from and made many friends in; but also because it is named for John. You might have seen what I wrote about him several years ago, <a href="http://wisconsinviewpoint.blogspot.com/2012/05/in-memoriam-john-quigley.html">here</a>.</span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;">As a further honor I'll be asked to deliver an address to AREUEA when we meet online again in DC at the end of May. (Yikes! That's next week!) <strike>Another blog post, coming soon, will tell you more about that address and provide some links for interested readers.</strike></span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;"><a href="http://reudviewpoint.blogspot.com/2020/06/global-perspectives-on-real-estate-and.html">UPDATE: You can now find that presentation -- in PowerPoint, pdf, and a YouTube video -- here</a>.</span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">In the meantime, you can find out more about the <a href="https://www.areuea.org/conferences/details.phtml?id=118">Virtual National AREUEA Conference here.</a> If you register by the end of May 27, you'll receive an email with instructions on how to sign into the conference along with links to papers and slides.</span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">The AREUEA webpage notes that the conference is free to AREUEA members, but as I understand it, the conference is actually free to anyone who registers.</span><br />
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<span style="font-family: "verdana" , sans-serif; font-size: large;">Here's the Conference Schedule:</span><br />
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May 28</div>
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<tr><td style="font-size: 10pt; text-align: right; width: 100px;">11:30-11:35</td><td style="font-size: 10pt; padding-left: 10px;">Welcome and Logistics</td></tr>
<tr><td style="font-size: 10pt; text-align: right; width: 100px;">11:35-1:15</td><td style="font-size: 10pt; padding-left: 10px;">Commercial Real Estate (4-Paper Session)</td></tr>
<tr><td style="font-size: 10pt; text-align: right; width: 100px;">1:30-2:15</td><td style="font-size: 10pt; padding-left: 10px;">Quigley Medal Lecture (Steve Malpezzi)</td></tr>
<tr><td style="font-size: 10pt; text-align: right; width: 100px;">2:35-4:15</td><td style="font-size: 10pt; padding-left: 10px;">Urban Economics (4-Paper Session)</td></tr>
<tr><td style="font-size: 10pt; text-align: right; width: 100px;">4:30-5:15</td><td style="font-size: 10pt; padding-left: 10px;">WREN Panel "Demystifying the Journal Publication Process"</td></tr>
<tr><td style="font-size: 10pt; text-align: right; width: 100px;">5:15-6:00</td><td style="font-size: 10pt; padding-left: 10px;">WREN Networking Event</td></tr>
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May 29</div>
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<tr><td style="font-size: 10pt; text-align: right; width: 100px;">10:00-11:40</td><td style="font-size: 10pt; padding-left: 10px;">Household Finance (4-Paper Session)</td></tr>
<tr><td style="font-size: 10pt; text-align: right; width: 100px;">12:00-1:40</td><td style="font-size: 10pt; padding-left: 10px;">Housing (4-Paper Session)</td></tr>
<tr><td style="font-size: 10pt; text-align: right; width: 100px;">1:40-3:00</td><td style="font-size: 10pt; padding-left: 10px;">Industry Panel on Housing and Mortgage Markets</td></tr>
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<span style="font-family: "verdana" , sans-serif; font-size: large;"> I hope to "see" you at the conference on Thursday!</span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: large;">References</span></h3>
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Agarwala, Ramgopal. Price Distortions and Growth in Developing Countries. World Bank Washington, DC, 1983.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Alonso, William. Location and Land Use: Toward a General Theory of Land Rent. Harvard University Press, 1964.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Bertaud, Alain. Order without Design. MIT Press, 2018.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Bertaud, Alain, and Jan K Brueckner. "Analyzing Building-Height Restrictions: Predicted Impacts and Welfare Costs." Regional Science and Urban Economics 35, no. 2 (2005): 109-25.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Bertaud, Alain, and Stephen Malpezzi. "The Spatial Distribution of Population in 52 World Cities." Madison, WI: James A. Graaskamp Center for Real Estate, 2013.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Brueckner, Jan K. "Lectures on Urban Economics." MIT Press Books 1 (2011).</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Brueckner, Jan K. "Slums in Developing Countries: New Evidence for Indonesia." Journal of Housing Economics 22, no. 4 (December 2013 2013): 278-90.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Brueckner, Jan K., and Hyun-A Kim. "Land Markets in the Harris-Todaro Model: A New Factor Equilibrating Rural-Urban Migration." Journal of Regional Science 41, no. 3 (2001): 507-20.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Brueckner, Jan K., J.F. Thisse, and Yves Zenou. "Why Is Central Paris Rich and Downtown Detroit Poor?: An Amenity-Based Theory." European Economic Review 43, no. 1 (1999): 91-107.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Croce, Roberto M., and Donald R. Haurin. "Predicting Turning Points in the Housing Market." Journal of Housing Economics 18, no. 4 (2009): 281-93.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Davis, Morris A., Stephen Malpezzi and François Ortalo-Magné. "The Wisconsin Foreclosure and Unemployment Relief Plan (Wi-Fur)." James A. Graaskamp Center for Real Estate, http://www.bus.wisc.edu/realestate/wi-fur/.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Deng, Yongheng, John M Quigley, and Robert Van Order. "Mortgage Terminations, Heterogeneity and the Exercise of Mortgage Options." Econometrica 68 (2000): 275-308.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">DiPasquale, Denise, and William C. Wheaton. Urban Economics and Real Estate Markets. Prentice Hall Englewood Cliffs, NJ, 1995.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Dixit, Avinash K, and Robert S Pindyck. Investment under Uncertainty. Princeton university press, 1994.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Fabozzi, Frank J, ed. The Handbook of Mortgage-Backed Securities. Seventh Edition ed: Oxford University Press, 2016.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Fischel, William. The Homevoter Hypothesis: How Home Values Influence Local Government Taxation, School Finance, and Land-Use Policies. Harvard University Press, 2001.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Fischel, William A. "Do Growth Controls Matter?". Lincoln Institute of Land Policy, Cambridge Massachusetts (1990).</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Follain, James R., Jr., and Stephen Malpezzi. "The Flight to the Suburbs: Insights Gained from an Analysis of Central-City Vs Suburban Housing Costs." Journal of Urban Economics 9, no. 3 (May 1981): 381-98.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Frank, Robert H. Success and Luck: Good Fortune and the Myth of Meritocracy. Princeton University Press, 2016.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Franklin, Benjamin. The Autobiography of Benjamin Franklin. PF Collier, 1817.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Gatzlaff, Dean H, and Donald R Haurin. "Sample Selection and Biases in Local House Value Indices." Journal of Urban Economics 43, no. 2 (1998): 199-222.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Gerardi, Kristopher, and Paul Willen. "Subprime Mortgages, Foreclosures, and Urban Neighborhoods." The B. E. Journal of Economic Analysis & Policy 9, no. 3 (2009): 2232.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Green, Richard K. Introduction to Mortgages & Mortgage Backed Securities. Academic Press, 2013.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Green, Richard K., and Stephen Malpezzi. A Primer on U.S. Housing Markets and Housing Policy. American Real Estate and Urban Economics Association Monograph Series. Washington, D.C.: Urban Institute Press, 2003.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Grinstein-Weiss, Michal, Clinton Key, Shenyang Guo, Yeong Hun Yeo, and Krista Holub. "Homeownership and Wealth among Low-and Moderate-Income Households." Housing Policy Debate 23, no. 2 (2013): 259-79.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Hannah, Larry, Alain Bertaud, Stephen Malpezzi, and Stephen K Mayo. "Malaysia: The Housing Sector; Getting the Incentives Right." World Bank Sector Report 7292 (1989).</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Hannah, Larry, Kyung Hwan Kim, and Edwin S Mills. "Land Use Controls and Housing Prices in Korea." Urban Studies 30, no. 1 (1993): 147-56.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Harris, John R, and Michael P Todaro. "Migration, Unemployment and Development: A Two-Sector Analysis." The American economic review 60, no. 1 (1970): 126-42.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Haurin, Donald R., Toby L. Parcel, and R. Jean Haurin. "Does Homeownership Affect Child Outcomes?" Real Estate Economics 30, no. 4 (2002): 635-66.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Ingram, Gregory K, John F Kain, and J Royce Ginn. "The Detroit Prototype of the NBER Urban Simulation Model." NBER Books (1972).</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Ioannides, Yannis Menelaos. From Neighborhoods to Nations: The Economics of Social Interactions. Princeton University Press, 2013.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Kain, John F, and John M Quigley. Housing Markets and Racial Discrimination: A Microeconomic Analysis. National Bureau of Economic Research, 1975.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Kau, James B, Donald C Keenan, and Henry J Munneke. "Racial Discrimination and Mortgage Lending." The Journal of Real Estate Finance and Economics 45, no. 2 (2012): 289-304.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Kau, James B, and Cheng F Lee. "Capital-Land Substitution and Urban Land Use." Journal of Regional Science 16, no. 1 (1976): 83-92.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Kim, Kyung-Hwan, and Edwin S Mills. "Korean Development and Urbanization: Prospects and Problems." World Development 16, no. 1 (1988): 157-67.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">McDonald, John F, and Daniel P McMillen. Urban Economics and Real Estate: Theory and Policy. Wiley. com, 2010.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Mills, Edwin S. "Is Land Taxation Practical." Illinois Real Estate Letter 12, no. 4 (1998): 1-5.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">———. Studies in the Structure of the Urban Economy. Johns Hopkins, 1972.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">———. "A Thematic History of Urban Economic Analysis [with Comments by Dennis Epple and Wallace Oates]." Brookings-Wharton Papers on Urban Affairs (2000): 1-52.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">———. "Welfare Aspects of National Policy toward City Sizes." Urban Studies 9, no. 1 (1972): 117.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">———. "Why Do We Have Urban Density Controls?". Real Estate Economics 33, no. 3 (2005): 571-86.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Mills, Edwin S, and David M de Ferranti. "Market Choices and Optimum City Size." American Economic Review 61, no. 2 (1971): 340-45.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Mills, Edwin S, and Bruce W Hamilton. Urban Economics. Addison Wesley, 1994.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Mills, Edwin S, and Richard Price. "Metropolitan Suburbanization and Central City Problems." Journal of Urban Economics 15, no. 1 (1984): 1-17.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Mills, Edwin S, and Jee-Peng Tan. "A Comparison of Urban Population Density Functions in Developed and Developing Countries." Urban Studies 17, no. 3 (1980): 313-21.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Muth, Richard F. Cities and Housing: The Spatial Pattern of Urban Residential Land Use. University of Chicago Press, 1969.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">O'Sullivan, Arthur. Urban Economics. McGraw Hill, 2009.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Pratap, Sangeeta, and Erwan Quintin. "Are Labor Markets Segmented in Developing Countries? A Semiparametric Approach." European Economic Review 50, no. 7 (2006): 1817-41.</span><br />
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;"><br /></span>
<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Rose, Louis A. "Urban Land Supply: Natural and Contrived Restrictions." Journal of Urban Economics 25, no. 3 (1989): 325-45.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Scott, Ian. "Urban and Spatial Development in Mexico." (1982).</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Williamson, Jeffrey G. "Migration and Urbanization." Handbook of development economics 1 (1988): 425-65.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Yezer, Anthony M.J. "A Review of Statistical Problems in the Measurement of Mortgage Market Discrimination and Credit Risk." Research Institute for Housing America and the Mortgage Bankers Association, 2010.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Yun, Lawrence, and Nadia Evangelou. "Social Benefits of Homeownership and Stable Housing." National Association of Realtors, 2016.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Zhang, Jing, Robert de Jong, and Donald Haurin. "Are Us Real House Prices Stationary? New Evidence from Univariate and Panel Data." Studies in Nonlinear Dynamics & Econometrics 20, no. 1 (2016): 1-18.</span><br />
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<span style="color: #222222; font-family: "verdana" , sans-serif; font-size: large;">Ziliak, James P, Bradley Hardy, and Christopher Bollinger. "Earnings Volatility in America: Evidence from Matched Cps." Labour Economics 18, no. 6 (2011): 742-54.</span><br />
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Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com20tag:blogger.com,1999:blog-3258035236231564227.post-86325357628956511492020-04-20T08:39:00.003-07:002021-05-25T09:05:25.729-07:00Introduction to Global Urban Indicators<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikBWD6e3O0QQWR5Xq7UzfXVBOAMMdyDQtPxDoOO94Pzwp_gX6_QAhyphenhyphen9mbHXqMWV3yghLxaYD5iSrRFIa5bFeKQsLnyKJqBcEkQWk8ka3ovYdH5PAGLtSkr_UAzkOLjm0S-9oDSb9YT6NEo/s1600/iStock-904482360.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="1043" data-original-width="1600" height="416" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikBWD6e3O0QQWR5Xq7UzfXVBOAMMdyDQtPxDoOO94Pzwp_gX6_QAhyphenhyphen9mbHXqMWV3yghLxaYD5iSrRFIa5bFeKQsLnyKJqBcEkQWk8ka3ovYdH5PAGLtSkr_UAzkOLjm0S-9oDSb9YT6NEo/s640/iStock-904482360.jpg" width="640" /></a></div>
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The guiding philosophy we adopt is well encapsulated by a famous quote from <a href="https://en.wikipedia.org/wiki/William_Thomson,_1st_Baron_Kelvin">Lord Kelvin</a>: “Knowledge that is not quantifiable is of a meager and uninteresting kind.”<br />
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But another, slightly less well known quote, should also be kept firmly in mind: “Any figure that looks interesting is probably wrong.” (<a href="https://en.wikipedia.org/wiki/Claus_Moser,_Baron_Moser">Sir Claus Moser</a>, Presidential Address to the Royal Statistical Society).<br />
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The purpose of this post is not to be exhaustive or even particularly analytical. The main purpose is to help students, and others with an interest, find some useful data sources on the economies and real estate markets for a wide range of countries.<br />
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This page is still under construction. I'm posting it in rough form so that students from several courses can use these first links without delay. Check back later in May for a much improved version.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhygpwFhthAEWk_XISpLy8AEN_S0bKR3R8puiyuTxASS1lfuWfuQkpVhMZvFs-h-T9yVxhe2LB2wfQnYoEIjglTbkzT8rldQL0gmgtKZ1UBGVDe3uayYNQlVlH_cts4BeMBf2FXgIe2yyXl/s1600/shutterstock_360391952.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1200" data-original-width="1600" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhygpwFhthAEWk_XISpLy8AEN_S0bKR3R8puiyuTxASS1lfuWfuQkpVhMZvFs-h-T9yVxhe2LB2wfQnYoEIjglTbkzT8rldQL0gmgtKZ1UBGVDe3uayYNQlVlH_cts4BeMBf2FXgIe2yyXl/s320/shutterstock_360391952.jpg" width="320" /></a></div>
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It's hard to say when it's going to be appropriate to remove the "Work in Progress" sign. A complete accounting of all available housing, urban and real estate data is beyond the scope of any blog entry, even one as long as this one. The world of data is fast moving; you'll see I've spent a lot of time describing some older data sources, with less attention to recent data sources and the emerging world of real time "big data." I do have some introductory comments and hope to expand on these in future posts. Please feel free to use the comments section to present your suggestions for additions, as well as other comments and corrections.<br />
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In due course, this page will be your point of entry to several related pages on international indicators. And eventually we'll post similar links and information on domestic U.S. indicators.<br />
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This "first edition" begins with a few pages on global urban indicators. We begin with an overview of an important international effort. But first..<br />
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An Important Caveat</h3>
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In this post we’ll present a number of two-way plots of data. Remember that car causality in correlation not the same thing. Consider these simple exploratory data analyses and don’t make too much of them.</div><div class="MsoNormal"><br /></div><div class="MsoNormal">On the other hand, simple plots and correlations can motivate more careful modeling and econometric efforts, get us thinking:</div><div class="MsoNormal"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEif-kaz4fpw-snSoj99KCBwXimeb9qGnsPIOOKy13FOnG93Gw4j4XrbubgNzdn-3W-F-6kQnWreXRA7V8mrKe6w_leHVHrO6WPdWbT4dt_2T84w6CnYC31iIrz1gMzuXiNJGLq7J9T3Z87w/s2017/early+bird+worm.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1462" data-original-width="2017" height="363" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEif-kaz4fpw-snSoj99KCBwXimeb9qGnsPIOOKy13FOnG93Gw4j4XrbubgNzdn-3W-F-6kQnWreXRA7V8mrKe6w_leHVHrO6WPdWbT4dt_2T84w6CnYC31iIrz1gMzuXiNJGLq7J9T3Z87w/w500-h363/early+bird+worm.jpg" width="500" /></a></div><div class="MsoNormal"><br /></div><div class="MsoNormal"><br /></div><div class="MsoNormal"><br /></div><div class="MsoNormal"><br />
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Housing and Urban Development Indicators</h3>
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Circa 1990, an international group of researchers focused on housing and urban development undertook to develop a set of comparable indicators on urban development across countries. Early efforts focused on housing and housing finance; these were later expanded to include other aspects of urban development.<br />
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Some History</h3>
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Urban indicators have been around for many years, but there was a real impetus given circa 1990 by a partnership among the <a href="https://www.worldbank.org/">World Bank</a>, the <a href="https://unhabitat.org/">United Nations Centre for Human Settlements (Habitat)</a>, and numerous local partners. Spearheaded by World Bank economist <a href="https://drive.google.com/open?id=1UruCLs23AK-9av2q89ew2kvygEY3SG1x">Steve Mayo</a>, with urban planner <a href="https://marroninstitute.nyu.edu/people/shlomo-solly-angel">Shlomo Angel</a>, the program had many antecedents including empirical analyses of housing markets under the <a href="http://documents.worldbank.org/curated/en/301321468776700357/pdf/multi-page.pdf">Housing Demand research project</a>.<br />
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Circa 1990, the World Bank and UN Habitat (a.k.a. UNCHS not to be confused with <a href="https://www.habitat.org/">Habitat for Humanity International</a>) began a data collection project called Housing and Urban Development Indicators (HUDI). Wave I, carried out under the direction of Mayo and Angel at the World Bank, with UNCHS, examined 52 cities, one city per country (usually the capital city). Mayo and Angel developed a questionnaire and instructions and recruited a team of researchers from over 50 countries to carry out the survey. Most data were dated 1990, but the basic publications began to appear in 1993, so this is sometimes referred to as HUDI Wave I and sometimes HUDI 1993.<br />
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HUDI came out of two ideas. The first was a realization of the importance of careful international comparisons, as demonstrated by the success of the World Bank's <a href="http://datatopics.worldbank.org/world-development-indicators/">World Development Indicators</a> (WDI). (NB: "careful" and "success" does not imply "perfect." WDI and other international comparisons are always subject to error.)<br />
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The second inspiration for HUDI was an increase in comparative research on housing markets, initially that carried out by a group of World Bank affiliated researchers. The aforementioned Housing Demand project was the most direct progeniture but several others deserve mention. One of the first studies at scale was the "City Study" of Bogota and Cali, directed by Greg Ingram and carried out by a large team of World Bank and Columbian researchers. The best single introduction to the City Study is a summary book by Rakesh Mohan. Another important influence was World Bank research on housing finance spearheaded by Bertrand Renaud and later Robert Buckley. Comparative work on rental markets, focusing on rent controls, was another result.<br />
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The HUDI effort in turn fed into a number of housing market and policy products, some of which will be discussed later. But first and perhaps foremost would be the World Bank's 1993 policy paper, Housing: Enabling Markets to Work, coauthored by Mayo and Angel.<br />
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Let us now turn to some details of the various "waves" of the Housing and Urban Development Indicators data collection.<br />
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Wave I HUDI</h3>
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Data, again mainly from circa 1990, were collected and first published circa 1993. The first wave collected some 50 variables, comprising data on, among other things, demographic basics, incomes, housing rents and prices, size and quality of housing, financing, and transportation. The variables described in more detail in the documentation below.<br />
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A good starting point is to examine this <a href="https://drive.google.com/open?id=1aoLs0EUhnyMWlPLZKMZs4JQrpc7RR7_j">short list of 10 key indicators</a> from 52 countries (mainly the capital city, often also the largest). These ten key indicators are briefly defined in Table 1, below. They are described more fully in Malpezzi, Stephen and Stephen K. Mayo. <a href="https://drive.google.com/open?id=1mWjIRE7NiN_W6-J94E9yEO8v1k2sCmLT">Housing and Urban Development Indicators</a>: A Good Idea Whose Time Has Returned.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifey-0SJyH6GItCLDiUSE3x9lML-iulFiJl9934tcfKltFj3JP1xixwGQXACEMEe0V4O3Kw0a3_28A10DZ_P1oM-_x2YlgU0WhT3eiHEEsp_hXbL_8UN0XpOQ84DIaLN_4up3Hq599vcj2/s1600/tenkey.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="655" data-original-width="559" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifey-0SJyH6GItCLDiUSE3x9lML-iulFiJl9934tcfKltFj3JP1xixwGQXACEMEe0V4O3Kw0a3_28A10DZ_P1oM-_x2YlgU0WhT3eiHEEsp_hXbL_8UN0XpOQ84DIaLN_4up3Hq599vcj2/s640/tenkey.png" width="545" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 1: From Malpezzi and Mayo, using data from Angel and Mayo and many country level team members.</td></tr>
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But this short list of ten indicators, and the Malpezzi-Mayo paper, only scratch the surface. A more complete listing of final variables from Wave I, and descriptions, can be <a href="https://drive.google.com/open?id=1oplgy_S8oYbwY__BUD2XvdUqjIxWl1nY">found here</a>.<br />
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The most complete analysis of the Wave I 1993 version of the indicators is by Shlomo Angel, <a href="http://sollyangel.com/books/housing-policy-matters-a-global-analysis/">Housing Policy Matters: A Global Analysis</a> (Oxford University Press, 2000, available from fine bookstores everywhere).<br />
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See also the <a href="https://drive.google.com/open?id=1g-eWwRIG6hPzPpCTO1CWoz_vrNuEMDXP">detailed review of Angel's book</a> by Michael Murray, Journal of Housing Economics, June 2001. Murray provides a number of suggestions for applied research that could be undertaken with such data.<br />
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There are many analyses that can be made of these indicators, here's a taste. How does floorspace consumed vary with income, as proxied by GDP per capita?<br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhIY29mKOLLM03aopYC2Jhw4XvFS9fNFMs42Cn4xqBltL5uGvFLnRGOaCcHXDuowGflTjZJXXQBjA4fOxSFInFQJnIGC0zoGtOnAD_mfpTvLwX9rRSTiT9T5lAL3uWE1PKvdKNUAtrcS56F/s1600/HUDI+1990+Floor+Space+PC+01.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1237" data-original-width="1600" height="492" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhIY29mKOLLM03aopYC2Jhw4XvFS9fNFMs42Cn4xqBltL5uGvFLnRGOaCcHXDuowGflTjZJXXQBjA4fOxSFInFQJnIGC0zoGtOnAD_mfpTvLwX9rRSTiT9T5lAL3uWE1PKvdKNUAtrcS56F/s640/HUDI+1990+Floor+Space+PC+01.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 2, from Wave 1 Urban Indicators</td></tr>
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Exhibit 2 presents the Wave 1 city-specific estimates of average floor space per person, in square meters, for a large city (usually the capital city) in each of 52 countries. The horizontal axis is country level GDP per capita in $1990; HUDI Wave 1 did not succeed in collecting reliable city-specific GDP or income measures in many cities, so think of these as a rough proxy for income.<br />
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The vertical axis is of course space per person in m². (For readers use to the English system, i.e. you are from the <a href="https://www.statista.com/chart/18300/countries-using-the-metric-or-the-imperial-system/">U.S., Liberia or Myanmar</a>, 1 m² is 10.7 ft.²) GDP per capita is presented using a log scale; moving along that horizontal axis represents percentage changes in that variable. Space per capita is linear; if I used logs for the vertical axis also, you’d see a stronger linear correlation between the two logarithms; but I left the vertical axis linear to highlight how much variance there is in space per capita, especially among richer countries.<br />
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The U.S. (represented with data from Washington DC) is the most spacious at 70 m² per person followed by Melbourne, Australia at 50 m² and Oslo, Toronto and Stockholm at around 40 m². But Tokyo, about as rich as Washington DC by this measure, has space per capita of 15 m², less than poorer cities like Santiago (Chile), Caracas (Venezuela), Bangkok (Thailand) and Istanbul(Turkey).<br />
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Hong Kong is another country that “punches below its weight” in housing space; with 1990 GDP per capita of about $20,000 of GDP per capita in 1990, Hong Kong’s 7 m² per capita puts it below much poorer cities like Dakar (Senegal), New Delhi (India) and Bogota (Colombia).<br />
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Thus the countries with the most space per person are all rich countries; but the relationship is not linear; and there some rich countries with remarkably low space per capita. Economists call this pattern of data “<a href="http://www.statsmakemecry.com/smmctheblog/confusing-stats-terms-explained-heteroscedasticity-heteroske.html">heteroskedastic</a>,” that is, the variance of the dependent variable is changing with the level of the independent variable.<br />
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There’s much more we can do to understand International differences in space per capita. We might examine how this varies with the overall population density of the country, the urbanization level, and various policy measures among many other possible determinants.<br />
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And of course it goes without saying that 1990 data, and rankings, can give us some interesting information about structural relationships, but are not reliable guides to current conditions. To give one outstanding example, space per capita in Beijing <a href="https://www.rba.gov.au/publications/bulletin/2012/sep/3.html">has more than doubled since 1990</a>.<br />
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Each one of the indicators included in the data set can be similarly plotted and analyzed. Shlomo Angel’s book provides a good starting point on these analyses. Murray provides a guide to extending Angel’s work.<br />
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Many other interesting variables include rents asset prices and all of our top 10 at least a dozen more from the date full data set which <a href="https://drive.google.com/open?id=1aoLs0EUhnyMWlPLZKMZs4JQrpc7RR7_j">you can download conveniently here</a>. The data set is also replicated in Angel’s book, as an appendix.<br />
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Here are a few of the original data collection protocols developed by Steve Mayo, Solly Angel and others for the Wave I effort.<br />
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Housing Indicators Program Extensive Survey: <a href="https://drive.google.com/open?id=1cBOtWJmQgZ9bn029sRXiTYK0ZpDHxg5B">Part I Introduction</a><br />
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Housing Indicators Program: <a href="http://housing%20indicators%20program/">Volume II: Indicator Tables</a><br />
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Wave II and Wave III HUDI</h3>
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After this first effort HUDI were taken over by UN Habitat, as the World Bank reduced its support for urban research. Two additional waves of data collection were carried out and collated under Habitat's umbrella, in 1996 and 1998. Advantages of these waves include a larger sample size (more countries, and especially multiple cities from many of the countries). A number of variables were also added. But the second and third waves did not present useful data on household income, which is important for many analyses.<br />
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Also, the second and third waves concentrated on housing characteristics and outcomes, largely to the exclusion of housing policies. Research from the first wave, and much other research including the precursor housing market research at the World Bank, demonstrated the importance of understanding the policy environment.<br />
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As of this writing, I have not been able to successfully link to the correct pages to download at the UN site. But I have access to the data from past research.<br />
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Here is my modified version of the <a href="https://drive.google.com/open?id=14NubqrQNRjGCRuLD91yaEgws5t1E2ekU">Wave II (Habitat Version 1) data</a><br />
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Here is my modified version of the <a href="https://drive.google.com/open?id=1G_-Bn-SRHtotsH7s93hWiWU57mAMvepT">Wave III (Habitat Version 2) data</a><br />
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Here are some related pdf documents.<br />
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Global Urban Indicators <a href="https://drive.google.com/open?id=1UoGwRXOW4f5qnk4rA9CkFxYJd6xwumSv">Selected Statistics</a> includes a number of indicators, mainly demographic and public health, comparing Wave II (circa 1993 data) and Wave III (circa 1998 data).<br />
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Global Urban Indicators <a href="https://drive.google.com/open?id=1rPyUuQx04YN3EMo0K3oU6MsNq9e5OqoP">Database Version 2</a> is based on the same data as the preceding publication, but with a bit more analysis and regional and city comparisons.<br />
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<br /><h3 style="text-align: left;">The Original Indicators Effort Seems to Have Run Out of Gas</h3><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQ4-zs1Nce-2lUT5rAZHBKTBjhRX7SB0DMf4BTR0zeYmSqyQXLND02Hg1XDfLNGfAtWAyZxlV-GxoCa3r0Tfy3wLHywT4PYCYG_uuSxcRu8LedbyXOFB1jcXTKR3sPMrI1txfFniuRJ8a0/" style="margin-left: 1em; margin-right: 1em;"><img alt="" data-original-height="1364" data-original-width="2048" height="366" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQ4-zs1Nce-2lUT5rAZHBKTBjhRX7SB0DMf4BTR0zeYmSqyQXLND02Hg1XDfLNGfAtWAyZxlV-GxoCa3r0Tfy3wLHywT4PYCYG_uuSxcRu8LedbyXOFB1jcXTKR3sPMrI1txfFniuRJ8a0/w550-h366/shutterstock_178655798.jpg" width="550" /></a></div><br /><br />So, in brief -- the original Housing and Urban Development Indicators project lost World Bank institutional support when Steve Mayo and Solly Angel left the Bank. For some time the project continued under the aegis of UN Habitat, but eventually that support also waned.</div><div class="MsoNormal"><br /></div><div class="MsoNormal">The original Waves I, II and III were themselves preliminary in many respects, with numerous issues raised and some lessons learned about how best to collect and organize such data. But the vision of an eventual analytically sound, repeated data collection effort that would provide researchers, policymakers and others with a basis for cross-city and cross-country comparisons of economic and social outcomes related to cities has, sadly, not been realized.</div><div class="MsoNormal"><br /></div><div class="MsoNormal">From time to time there is discussion of reviving the effort, at one institution or another. Perhaps I'll be able to revise this entry at some point with better news. In the meantime, there are some sources of urban data that can be useful. Let's examine some of those below.<br /><br /><h3>Future Prospects for UN Urban Indicators May Be Linked to "Sustainable Development Goals"</h3>
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In 2000, 189 countries agreed to support a set of objectives called Millennium Development Goals. The aim was to develop a set of goals with corresponding indicators. A year later, the UN Secretary General unveiled a set of specific goals, The Millennium Development Goals (MDGs)<br />
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For further details of this first Development Goals effort, including links to the indicators, <a href="https://datacatalog.worldbank.org/dataset/millennium-development-goals">click here</a>.</div>
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If 8 are good, 17 are better? UN Sustainable Development Goals (2015 to 2030). For the official line, <a href="https://www.un.org/sustainabledevelopment/sustainable-development-goals/">click here.</a><br />
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During the transition from the MDGs to the longer SDGs, I wrote a short critique of the approach, <a href="https://drive.google.com/file/d/109mrXjLRmi3wnape6Ktfj79eyHWaX55k/view?usp=sharing">available here.</a><br />
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Maybe I shouldn't throw too many stones. I too have written some long lists of things I thought needed to be done to improve housing markets, the growth and fairness of cities. Mea culpa, I admit I've gotten carried away. Recently, partly inspired by an interesting book by Dani Rodrik, I've tried to switch metaphors, from "checklists" to "recipes." If you want to see an early effort, focusing on recipes for China housing policy, <a href="https://drive.google.com/open?id=1ywRTDGnUbX5KUAyvPeBiTJZ-6BOEp8Pi">click here</a>.<br />
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Of the 17 goals, one is focused on cities and housing:<br />
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Goal 11: Make cities and human settlements <a href="https://www.un.org/sustainabledevelopment/cities/">inclusive, safe, resilient and sustainable.</a><br />
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Each goal comes with targets. Specifically, the targets for UN SDG 11: Sustainable Cities and Communities Targets are (in brief):</div>
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<ol>
<li>Adequate, safe and affordable housing, upgrade slums</li>
<li>Safe, affordable, accessible and sustainable transport</li>
<li>Inclusive and sustainable urbanization, sustainable human settlement planning and management</li>
<li>Safeguard the world’s cultural and natural heritage</li>
<li>Reduce deaths and other losses from disasters</li>
<li>Reduce the adverse environmental impact of cities, paying special attention to air quality and waste management</li>
<li>Provide universal access to green and public spaces</li>
<li>Strengthen national and regional development planning</li>
<li>Tackle climate change and resilience to disasters, improve risk managements</li>
<li>Provide financial and technical assistance for building sustainable and resilient buildings utilizing local materials</li>
</ol>
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<div>
So far, the UN's data collection on this is rudimentary at best. On housing, there's nothing approaching the HUDI data on rents, asset prices, and other details, merely a map from "Our World in Data" of country estimates of slum populations. You can see that and other <a href="https://sdg-tracker.org/cities">first cut tracking data here.</a></div>
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By the way, the term "slums," like "sustainable," "sprawl," "resilient" and so on is one that is vague and ambigous on a good day, and poorly and inconsistently measured as well. Full disclosure: I've used the word "slum" myself more than I should in the past, and probably will in the future. But see <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1468-2427.2007.00754.x">this trenchant comment</a> by Alan Gilbert for one of many critiques.<br />
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Here are a few other UN publications regarding the collection and analysis of urban indicators.<br />
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<a href="https://drive.google.com/open?id=1DHZyzsD7dxqFIqVFOIY22mPgolJRKrny">Urban Indicators Guidelines</a>: Monitoring the Habitat Agenda and the Millennium Development Goals<br />
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</h3>
<a href="https://sustainabledevelopment.un.org/content/documents/194452018_HLPF_Thematic_Review_of_SDG_11_UNHabitat_12_June_2018_original.pdf">Accelerating SDG11 Achievement</a><br />
<a href="https://sustainabledevelopment.un.org/content/documents/194452018_HLPF_Thematic_Review_of_SDG_11_UNHabitat_12_June_2018_original.pdf"><br /></a>
Solomon Greene and Brady Meixell, "<a href="http://www.urban.org/sites/default/files/publication/92946/hacking-the-sustainable-development-goals_0.pdf">Hacking the Sustainable Development Goals</a>: Can the U.S. Measure Up? (Urban Institute)<br />
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<h3>
Other Notable Indicator Efforts</h3>
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Future posts will discuss other sources of indicators in more detail. But we can't wait -- let's link to a few key sources here.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhPpeYgcHbCcSZhfxSrBfs6xisYG3lJtc6zkIHC4RLF8ZjTIYlQ-J_k-3HqgtaJ8d0aVhaGnlCsSP4VWI9NQt74DLrgyLET5j9PanGofeTzWXREFNi9cuUb13rm5rgdVbDhyrM_kOCdkV_Y/s1600/shutterstock_290831636.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1600" data-original-width="1600" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhPpeYgcHbCcSZhfxSrBfs6xisYG3lJtc6zkIHC4RLF8ZjTIYlQ-J_k-3HqgtaJ8d0aVhaGnlCsSP4VWI9NQt74DLrgyLET5j9PanGofeTzWXREFNi9cuUb13rm5rgdVbDhyrM_kOCdkV_Y/s400/shutterstock_290831636.jpg" width="400" /></a></div>
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<i>First, some general sources, that include some urban data and a lot of important contextual data (demographics, GDP, and so on). Then we'll look at some of the available sources for housing and related data.</i><br />
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<i>This is a "first edition;" future versions will include some additional links and sources.</i><br />
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<i><br /></i>
<i><br /></i>
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<h3>
Basic Data on Demographics, Economies, and Urbanization</h3>
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The United Nations has a <a href="https://data.un.org/">handy webpage</a> that provides links to a few dozen key international databases from a number of UN agencies (including World Bank and IMF, which are specialized agencies of the UN).<br />
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We have already mentioned the World Bank's <a href="https://datacatalog.worldbank.org/dataset/world-development-indicators">World Development Indicators</a> as a source of basic country-level data.<br />
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Angus Maddison, (1926-2010) University of Groningen has compiled the most widely used comparative data on historical GDP (purchasing power parity) as well as ancillary data like population. His website, including links to his publications and data, <a href="http://www.ggdc.net/Maddison/content.shtml">can be found here</a>.<br />
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The Groningen Growth and Development Centre carries on Maddison’s work, updating his historical data etc. <a href="https://www.rug.nl/ggdc/">Click here</a> to go to that source.<br />
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<a href="https://ourworldindata.org/">Our World in Data</a> is a data aggregator, based at Oxford University, that pulls together data from a large number of national and international sources; creates terrific and informative charts, along with documentation and explanation. Highly recommended! BTW, Our World in Data is carried out by a small team headed by German economist <a href="https://www.maxroser.com/">Max Roser</a>.</div>
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Hans Rosling was a physician and professor of public health, from Uppsala, Sweden, who fronted the <a href="https://www.gapminder.org/">Gapminder</a> and <a href="https://www.gapminder.org/dollar-street/matrix">Dollar Street</a> websites. Collaboratorson the posthumously published <a href="https://www.gatesnotes.com/Books/Factfulness">Factfulness</a>, his son Ola Rosling and daughter-in-law Anna Rosling Ronnlund, are very good at programming innovative graphics. Go to YouTube and you can easily find some of his talks.<br />
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<a href="http://worldcitypop.com/index.html">World City Pop</a>, a database of city populations around the world over time, including a lot of historical data, is maintained by Dr Andrea Biguzzi.<br />
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But the mother of all urban population data is the United Nation's regularly updated <a href="https://population.un.org/wup/">World Urbanization Prospects.</a> Vern Henderson's <a href="https://urbanisation.econ.ox.ac.uk/papers/world-cities-database">World Cities Database</a> is another source.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjApm9UE5k7I-A0T3Krf2-Lwcu-pJwJxuFMF3u7DhZLzDkhiEtmlTo4NTHYNf80xhJVDoNY0JLp6ZD7XKheuwgAnlbrG5a7OfpSxWkYdC5VThS8Zcfq4nbNiXpdHIZsITfpQ3rIVnnO7m61/s1600/urban+gdppc+2017.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="860" data-original-width="1175" height="466" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjApm9UE5k7I-A0T3Krf2-Lwcu-pJwJxuFMF3u7DhZLzDkhiEtmlTo4NTHYNf80xhJVDoNY0JLp6ZD7XKheuwgAnlbrG5a7OfpSxWkYdC5VThS8Zcfq4nbNiXpdHIZsITfpQ3rIVnnO7m61/s640/urban+gdppc+2017.PNG" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 3: From World Bank World Development Indicators and UN World Urbanization Prospects</td></tr>
</tbody></table>
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Exhibit 3 presents the well-known correlation betwen urbanization and economic output, discussed in many studies such as <a href="https://drive.google.com/open?id=18t5psQZugVeqGj3MylS01TofrOfC6vFZ">Malpezzi (2006)</a>, <a href="https://drive.google.com/open?id=1jNYuW5WVVvc2vlvSmYQ64NexNbW6X--g">World Bank (1993)</a> and <a href="http://down.aefweb.net/AefArticles/aef040203.pdf">Henderson (2003)</a>, to give but three of hundreds of possible references. This literature provides the underlying theory of urban development, caveats about data, and more than a few puzzles.<br />
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<h3>
Land Use and Density</h3>
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Land use is another key urban indicator. <a href="https://marroninstitute.nyu.edu/people/shlomo-solly-angel"> Shlomo (Solly) Angel</a> and colleagues have developed the <a href="http://www.atlasofurbanexpansion.org/">Atlas of Urban Expansion</a>. Solly and still more colleagues extended this work and are carrying it out under the rubric of the Marron Institute <a href="https://marroninstitute.nyu.edu/papers/monitoring-the-quantity-and-quality-of-global-urban-expansion">Land and Housing Survey in a Global Sample of Cities</a>.<br />
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This effort focuses on 200 cities rigorously selected from a universe of 4231 cities (metro areas) with populations over 100,000. The sample is stratified by region, city population size, and number of cities in each country. There are actually two related surveys. One focuses on the regulatory environment, and the other focuses on housing market conditions (rents, prices, tenure type, household mobility…). Angel and colleagues have also calculated the percent of each country's total land area apparently covered by urban development, according to their satellite data. This figure shows their country-level estimates of this percentage.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0DyTMtYMYBsmImrK975v_TJCky3slwYdZHz-ScvcBkkRfI5MouEOAdu6SxSNLwy1O92KTLJdsrdJc6DMBKeqdHwYhs8kwomY-TXg5xqNADs5KIGYbzKpI6CSLSL9cd7eJg7OrBpAm8S3r/s1600/Angel+Land+Cover.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="807" data-original-width="1101" height="468" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0DyTMtYMYBsmImrK975v_TJCky3slwYdZHz-ScvcBkkRfI5MouEOAdu6SxSNLwy1O92KTLJdsrdJc6DMBKeqdHwYhs8kwomY-TXg5xqNADs5KIGYbzKpI6CSLSL9cd7eJg7OrBpAm8S3r/s640/Angel+Land+Cover.PNG" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 4, from Solly Angel and colleagues</td></tr>
</tbody></table>
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<div>
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Angel et al.'s data focuses on average densities for metro areas. For density patterns within cities, see <a href="http://alainbertaud.com/">Alain Bertaud's</a> data on density. I've been honored to work with Alain on some of this project; a presentation that reviews our joint work to date, and presents some of the data, can be found here.<br />
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Primary density data have been collected by Bertaud, over 2+ decades. The primary unit of observation is the city's census tracts, or closest equivalent. The data are processed in GIS by Alain along with his collaborator Marie-Agnes Bertaud. Bertaud's method measures density in built-up areas only.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQzHm_WrG5eXRnFAt1VCj5vwDn3EQgs18NQ5XDvw3ncbvN6d_hFVXvSLV9AQ3guhbkUgEe9BaXsNlzaG7QfTtIog00f_3YxDgeTF_ylJjtzdZ691-FowyLoUjkwyJcy-yH0Cs2A19JKURS/s1600/paris_Mosc_gs13d.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="868" data-original-width="1600" height="346" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQzHm_WrG5eXRnFAt1VCj5vwDn3EQgs18NQ5XDvw3ncbvN6d_hFVXvSLV9AQ3guhbkUgEe9BaXsNlzaG7QfTtIog00f_3YxDgeTF_ylJjtzdZ691-FowyLoUjkwyJcy-yH0Cs2A19JKURS/s640/paris_Mosc_gs13d.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 5: Tract average densities at identical scales, Paris and Moscow, from Alain Bertaud</td></tr>
</tbody></table>
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Exhibit 5 presents three-dimensional representations of Bertaud's analysis for two cities of then-similar size (10 million), Paris and Moscow. Each small polygon within a city represents the average density of a census-tract-like unit. The data are to the same scale horizontally, and the same scale vertically. With some exceptions (near La Defense), the densest locations in Paris are near the center of the city; in Moscow, the densest locations are near the periphery.<br />
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<div>
We can see this even more clearly with a re-expression of the data, Exhibit 6. Bertaud computes average density in each 1km annulus from the center of the city. There are a few data decision rules and tricks of the trade that are explained in the PowerPoint deck of an ongoing study Alain and I are undertaking, <a href="https://drive.google.com/open?id=1CjpqPxRyqE8uKoidBHl3WOVWQeZhz-Qt">available here</a>. We then compute several measures, including traditional density gradients. And don't forget our previous discussion of Alain's instant classic, <a href="http://reudviewpoint.blogspot.com/2019/07/reading-for-life-one-of-best-books-ever.html">Order Without Design</a>.</div>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYY43Ej98uTQaW8bX9lSg0RS9uV6eGlWAdvAkyYM7V3LifTHEj_HB_SanKXIs0yBF-mHbNoQFeL9BSvkpTUbnpoQhbsbuqmMn5g8c-2Dl4tGuEkdZkgl6yw7upBIdWztcxXVSfwfEsfRR_/s1600/Paris+and+Moscow+pop+density+smoothed.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="493" data-original-width="1276" height="246" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYY43Ej98uTQaW8bX9lSg0RS9uV6eGlWAdvAkyYM7V3LifTHEj_HB_SanKXIs0yBF-mHbNoQFeL9BSvkpTUbnpoQhbsbuqmMn5g8c-2Dl4tGuEkdZkgl6yw7upBIdWztcxXVSfwfEsfRR_/s640/Paris+and+Moscow+pop+density+smoothed.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 6: Average population densities from Ex. 5, at each 1km annulus</td></tr>
</tbody></table>
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Paris is not exactly the pure laissez-faire city! There’s a lot of regulation (including height restrictions) that could reduce central density; and public development in the suburbs that could raise it farther out. Nevertheless, Paris looks reasonably close to the “standard urban model” of Alonso, Muth and Mills.<br />
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But by American standards, Paris is very dense. The peak density is half again that of New York, over four times that of Chicago, six times L.A.<br />
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Moscow, analyzed more deeply by <a href="http://documents.worldbank.org/curated/en/991331468757791794/pdf/multi-page.pdf">Bertaud and Renaud (1997)</a>, shows the outcome when there is no real land market, but rather housing development by Soviet kombinats operating with no market information to guide them. Each vintage of Soviet housing in Moscow was simply put up at the then-edge of the city. On top of that, old housing, obsolete factories from the twenties, and so on, were never taken down, so land was never recycled as the city grew. </div>
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Several papers by Alain Bertaud, and Bertaud and Malpezzi, discuss how these population patterns aren't simply academic curiosities, but place large welfare costs on individuals, especially transport costs, as well as costs born by city governments.<br />
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<h3>
Mortgages and Finance, including HOFINET</h3>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgt-4uRQ02H9DCsgTBjrKio538irr3kJrvJnWGoYqc9NeWv7TNmPzNHxcvOPSCm8yvIsYNGbiKcZddbouY-j5aNJHB0-3fxhTReamXfP42URET4u5nEV8rZixMTYXZ3966J0aF9cYvoUgHX/s1600/Ex+1+Cross+Country+Mortgages+Outstanding.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1237" data-original-width="1600" height="494" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgt-4uRQ02H9DCsgTBjrKio538irr3kJrvJnWGoYqc9NeWv7TNmPzNHxcvOPSCm8yvIsYNGbiKcZddbouY-j5aNJHB0-3fxhTReamXfP42URET4u5nEV8rZixMTYXZ3966J0aF9cYvoUgHX/s640/Ex+1+Cross+Country+Mortgages+Outstanding.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 7: Country Level Mortgage Data from HOFINET and GDP Per Capita from WB WDI</td></tr>
</tbody></table>
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<a href="https://real-estate.wharton.upenn.edu/profile/mhoek/">Penn's Marja Hoek-Smit </a>has spearheaded a fantastic resource,<a href="http://hofinet.org/"> Housing Finance Network, or HOFINET.</a> HOFINET is a web portal with access to a wide range of research on data on international housing finance, and related topics. Data are organized by both topic and country. This is my go-to site when I want to learn about housing finance around the world, as well as in-depth discussion of many social and economic aspects of housing.<br />
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Specifically, HOFINET's objective is to provide a wide variety of global housing and financial information, focusing on:<br />
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<ul>
<li> A standardized set of initial housing market, housing finance and policy measures that is tested internationally and can be expanded and adjusted over time.</li>
<li>Housing finance laws and regulations for each country and pertinent research and consulting reports provided copyright laws allow posting.</li>
<li>Short country assessments that focus on the unique features of each country’s system.</li>
<li>A data download and analysis capability to facilitate research.</li>
<li>Up-to-date international housing sector scholarship through theme pages.</li>
<li>An ongoing forum for discussion with international experts.</li>
</ul>
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Exhibit 7 presents some basic data gleaned from HOFINET. The vertical axis is the ratio between mortgage debt and GDP, the standard way of measuring the overall size of financial markets across countries. It’s unsurprising that this measure of mortgage market depth increases with per capita output. Richer countries tend to have more developed financial markets in general, and mortgage markets are of course an important segment of those financial markets. Further discussion, and references, can be found at a three-part set of blog posts I've published at Rutgers' Center for Real Estate, headed by Morris Davis: <a href="https://realestate.business.rutgers.edu/news/what-does-all-worlds-housing-have-common">Part 1</a>, <a href="https://realestate.business.rutgers.edu/news/why-do-global-housing-prices-vary-so-much">Part 2</a>, <a href="https://realestate.business.rutgers.edu/news/what-can-world-teach-us">Part 3</a>. I've also published a companion piece on the <a href="https://realestate.business.rutgers.edu/news/its-wonderful-mortgage">U.S. mortgage market here.</a><br />
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<h3>
Housing Prices and Rents</h3>
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Before we examine data sources, let us discuss all too briefly and important and somewhat complex question: What do we mean by the “price” of housing, anyway? Every house is more or less unique, in terms of its size, quality, associated services, and of course its location.<br />
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Consider a simple thought experiment. If I pay $1,000/ month rent and you pay $1,200, who’s paying a higher price? If our units are nearly identical, you do. If your apartment is 1500 square feet and mine is 500, maybe I do. If your apartment is in midtown Manhattan and mine is in Madison, maybe I do.<br />
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Other questions arise, e.g. how do we handle many characteristics at once? Are we looking at “flow” prices (per unit of time) or “stock” (“asset”) prices? And just to keep us on our toes, the way economists usually define "price" is different from common usage, especially in the housing market. Exhibit 8 presents a brief summary.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEitMQNrkg4D32VsmqnYHLGed-w5gXlj1Hgyk2etu5mcB-PEdlRWkeqrZVgd9Yx5WUWBjeoLi2dolYvh_vMroDSjuyXkBk4ZYEZWd2RtDcg0eOHaq8X0RfpjGZLM7H-H3CW3ko_w20KI-JWA/s1600/Housing+Price+Terminology.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEitMQNrkg4D32VsmqnYHLGed-w5gXlj1Hgyk2etu5mcB-PEdlRWkeqrZVgd9Yx5WUWBjeoLi2dolYvh_vMroDSjuyXkBk4ZYEZWd2RtDcg0eOHaq8X0RfpjGZLM7H-H3CW3ko_w20KI-JWA/s640/Housing+Price+Terminology.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 8: Economists' and Industry Terminology for Real Estate</td></tr>
</tbody></table>
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Even economists misuse these terms on occasion. I try to remember to say “value” or “asset price” when I mean the value of a unit. I try to say “price” when I’ve somehow controlled for the quantity of housing services produced by a unit. But I often fail, especially in casual conversation, or when speaking to a real estate audience, where one often needs to adapt to common usage.<br />
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There is a large literature on how housing economists grapple with these measurement issues. Green and Malpezzi (2003) present a review of the basic methods, including:<br />
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<ul>
<li>Simple medians, averages</li>
<li>“Traditional” Laspeyres, Paasche price indexes</li>
<li>Hedonic price models</li>
<li>Repeat sales models</li>
<li>User cost models</li>
<li>Hybrid methods</li>
</ul>
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Further discussion is beyond the scope of this already long post, here we simply want to note the issue. See Green and Malpezzi or other sources that discuss these issues in greater detail.<br />
<div>
<br /></div>
<br />
A good starting point for studying housing prices across countries is the IMF's <a href="https://www.imf.org/external/research/housing/">Global Housing Watch.</a> Spearheaded by <a href="https://blogs.imf.org/bloggers/prakash-loungani/">Prakash Lougani </a>and now run by <a href="https://blogs.imf.org/bloggers/hites-ahir/">Hites Ahir</a>, Global Housing Watch provides quarterly data on house prices as well as metrics used to assess valuation in housing markets, such as house price‑to‑rent and house-price‑to‑income ratios. Global Housing Watch also contains many informative analyses of recent price trends, and links to relevant research.<br />
<div>
<br />
See also the excellent blog where Hites and Prakash provide commentary on housing as well as a wider range of issues, <a href="http://unassumingeconomist.com/">The Unassuming Economist</a>.<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8XA_TVL3qFg6JAWVkiVgOHKBRKoo1guGdmB-3n4QG59jM9zgZo7ECfyh6vgaegxPeVq9_uLeuFqY1VOL5fP-zxT1EQJJnqmUy97NzrZB0emswe6PnrvR6poiWzqu88-CBDxGEEG-eUD-8/s1600/International+House+Prices.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="859" data-original-width="1170" height="468" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8XA_TVL3qFg6JAWVkiVgOHKBRKoo1guGdmB-3n4QG59jM9zgZo7ECfyh6vgaegxPeVq9_uLeuFqY1VOL5fP-zxT1EQJJnqmUy97NzrZB0emswe6PnrvR6poiWzqu88-CBDxGEEG-eUD-8/s640/International+House+Prices.PNG" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 9: Malpezzi chart of real house price indices, annual country level data collected by Dallas Fed</td></tr>
</tbody></table>
<br />
<br /></div>
The Federal Reserve Bank of Dallas <a href="https://www.dallasfed.org/institute/houseprice/">International House Price Database</a> provides quarterly house price and personal disposable income (PDI) series by country, beginning Q1 1975. They are provided as index numbers (2005=100), as well as income per working age population. The Dallas Fed also produces an aggregate global index weighted by 2005 purchasing power parity GDP. Detailed description of the sources and methodology can be found in <a href="https://www.dallasfed.org/~/media/documents/institute/wpapers/2011/0099.pdf">Mack and Martínez-García</a> (2011).<br />
<br />
Exhibit 8 presents a chart I created using the Dallas Fed database, and <a href="https://rutgersrealestate.com/blog-re/why-do-global-housing-prices-vary-so-much/">discussed briefly here</a>. National real house price indexes are rebased to 1980=100. Notice the U.S. "average" boom and bust is evident in this index, but France, Ireland and the UK are among countries that are more volatile still. In contrast, notice how flat Japan and Germany are over this period. There's much to discuss about sources and technical details of measuring prices, but first and foremost we note that national indexes, however constructed, typically conceal large within-country variances in prices. Consider the last few decades of house price behavior in, say, Newcastle compared to London; or Detroit compared to San Francisco.<br />
<br />
<div>
<br /></div>
OECD has a <a href="https://data.oecd.org/price/housing-prices.htm">database of housing price data</a>, city populations and other related data. Limited to OECD countries, but a useful source nevertheless. Data are annual, for 45 countries. Data for the most complete countries can go back as far as 1970. Documentation can be found at the <a href="https://www.oecd.org/publications/handbook-on-residential-property-price-indices-9789264197183-en.htm">OECD Handbook on Residential Property Prices </a>.<br />
<div>
<br /></div>
<div>
<br /></div>
<div>
<a href="https://www.globalpropertyguide.com/faq">Global Property Guide</a> is a data and analytics site created by journalist Matthew Montagu-Pollock in 2005. Rent and price data are based on web scans for offerings of good quality houses and apartments. Thus they can be expected to over-estimate actual transactions prices/rents for the overall broader market. But many users (e.g. foreign investors) are interested in this market segment, and trends can still be indicative. They collect and present aggregates, and significant collateral data (financing terms, elements of the regulatory environment) for free at their website; more detailed data are offered for sale.</div>
<div>
<br /></div>
<div>
<a href="https://www.bis.org/statistics/pp.htm">Bank for International Settlements Property Price Statistics</a>. BIS is sometimes called "the central bank's central bank," and plays an important role in setting global standards for bank supervision and regulation. Given the well-known role housing and real estate plays in business cycles and the transmission of monetary policy to the real economy, it is no surprise that BIS has long collected both housing and commercial real estate prices.</div>
<div>
<br /></div>
<div>
<a href="https://www.bis.org/publ/qtrpdf/r_qt1309i.htm">BIS Database on Housing Policies</a> A new database for policy actions on housing markets covers 60 economies worldwide from January 1990 (or earliest date available) to June 2012.</div>
<div>
<br /></div>
<div>
<a href="http://www.demographia.com/db-dhi-index.htm">Demographia International Housing Affordability Survey</a> is led by Wendell Cox. Demographia focuses on data from upper income countries, and China, specifically Australia, Canada, China, Ireland, Japan, New Zealand, Singapore, UK, USA. Demographia presents metropolican housing price data for 92 cities over 1 MM population. Data are annual, 2005 through 2018.</div>
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<div class="separator" style="clear: both; text-align: center;">
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgkB3ewPMcsEKteWwuDc72B3cHZWpXVGVmoiwS2ywDJlvfOew5pOjcVjUlBuMelqGb3qJEtiKRZbWoUBTT0e6EJQhFhycXXGxjobh4fEt_ib5TuRniBW_JQiMo1r4pOEwYpEddVZHrI4hII/s1600/Economist+Daily+HP.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="870" data-original-width="1172" height="474" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgkB3ewPMcsEKteWwuDc72B3cHZWpXVGVmoiwS2ywDJlvfOew5pOjcVjUlBuMelqGb3qJEtiKRZbWoUBTT0e6EJQhFhycXXGxjobh4fEt_ib5TuRniBW_JQiMo1r4pOEwYpEddVZHrI4hII/s640/Economist+Daily+HP.PNG" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 10: Screenshot of The Economist's House Price Database Chart</td></tr>
</tbody></table>
<br />
<br />
<br />
The <a href="https://www.economist.com/graphic-detail/2019/06/27/global-house-price-index?date=2000-03&index=real_price&places=USA&places=GBR">Economist Global House Price Database</a> presents housing price indexes, normalize by rent (price-to-rent) and by income (price-to-income) ratios for 28 countries and 40 large cities. Exhibit 10 highlights London and New York against the background of other city trends. Data duration varies but goes back 30 years for a number of locations.<br />
<br />
<br />
A more recently available but longer run data source is due to several economists from Bonn. Katharina Knoll, Moritz Schularick and Thomas Steger present very long run global house price indexes from 14 countries. The data are described in their paper appearing in the <a href="https://www.aeaweb.org/articles?id=10.1257/aer.20150501">American Economic Review</a> (107(2), 2017, pp. 331-53); the data are also downloadable from that site. Exhibit 11 presents their basic country data. The shaded bars represent the two world war periods.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjRL44TF_hT3G5hgJ5kqQmiHj3iL9vFF7h_6bY2mR1gh-uKbZ5NwZokXJ6jhOAyACH8TwLYWUS5jC2to-ADinGv937qSOWQ7iA_4JwWLX8-VTroCfLgVIf7xBVfaSKmzWrD8qsxDebepsOg/s1600/Knoll+et+al+long+run+global+house+prices.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjRL44TF_hT3G5hgJ5kqQmiHj3iL9vFF7h_6bY2mR1gh-uKbZ5NwZokXJ6jhOAyACH8TwLYWUS5jC2to-ADinGv937qSOWQ7iA_4JwWLX8-VTroCfLgVIf7xBVfaSKmzWrD8qsxDebepsOg/s640/Knoll+et+al+long+run+global+house+prices.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 11: Long-run house price indexes for 14 countries from Knoll et al.</td></tr>
</tbody></table>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYVXHqvRoBCh46qOtHAkvu-QBIEQN4fuk9ipccsYMV9sk4v8JZSpyHnx-bkksNCLQcCfWM6cfOeB8PWl4UPIpwb6okqsjQteGAwXWfxorXLZhJDl-KL2sLBvt7I_t-bfPuCALe3pTmuE3a/s1600/Deloitte+residential+rents+prices+Europe.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYVXHqvRoBCh46qOtHAkvu-QBIEQN4fuk9ipccsYMV9sk4v8JZSpyHnx-bkksNCLQcCfWM6cfOeB8PWl4UPIpwb6okqsjQteGAwXWfxorXLZhJDl-KL2sLBvt7I_t-bfPuCALe3pTmuE3a/s640/Deloitte+residential+rents+prices+Europe.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="font-size: 12.8px;">Exhibit 12: European residential data from Deloitte</td></tr>
</tbody></table>
<br />
Exhibit 12 presents some of the house price and rent data from the <a href="https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/realestate/lu-property-index-2019.pdf">Deloitte Property Index</a>.<br />
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<br />
<br />
<h3>
Commercial Real Estate</h3>
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<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4P4T8LI17ajs6ubfv_MwW9VMj2jLQ_QtKeHq-QrodFHj7WPA3SwZULW1m_BHX02mCJNlfEPp1aUR9QLCsqqjunjHBEp9H1GbIFhIscgWdXvarmluBvVNyAmN9jfy7A2d_61FHVYq4m-ik/s1600/1911-GCT-overview-heatmap-MAIN-01.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="783" data-original-width="1334" height="374" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4P4T8LI17ajs6ubfv_MwW9VMj2jLQ_QtKeHq-QrodFHj7WPA3SwZULW1m_BHX02mCJNlfEPp1aUR9QLCsqqjunjHBEp9H1GbIFhIscgWdXvarmluBvVNyAmN9jfy7A2d_61FHVYq4m-ik/s640/1911-GCT-overview-heatmap-MAIN-01.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 13: Mapping Q3 2019 real estate transactions from RCA</td></tr>
</tbody></table>
<br />
<br />
<br />
<a href="https://www.rcanalytics.com/our-data/data-overview/">Real Capital Analytics</a> is a leading data source for commercial real estate prices, capital flows and other basic data. Since 2000, RCA records individual transaction-level data on most property types, in 172 countries:<br />
<br />
<ul>
<li>Office</li>
<li>Industrial</li>
<li>Retail</li>
<li>Hotel</li>
<li>Multifamily Residential</li>
<li>Senior Housing/Healthcare</li>
<li>Self Storage</li>
<li>Development Sites</li>
</ul>
<br />
<br />
Exhibit 13 presents RCA's map of late 2019 commercial real estate transactions around the world. Exhibit 14 presents some representative data on commercial real estate price changes in 20 major metro areas. RCA aims to cover all transactions involving properties valued north of $2.5 million, in real time, both and pending deals of all types: sales, recapitalizations, partial interests; financing, defaults, and foreclosures.<br />
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<div>
<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAdaWMkwoPPEIK1gmd1IJBbHezCBSX0ITyBvfBEEIeBSsZx0j6DdlwxVduq90CUc6ocyOOVfOQf2Jlv3NRGUO-6Z1Ob2LZkO1Y-sY2KhLR9IYk2jGbjbW8l5I-kTanKD7T5xVA_XPOlA-K/s1600/RCA+CRE+price+bar+chart.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="470" data-original-width="825" height="364" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAdaWMkwoPPEIK1gmd1IJBbHezCBSX0ITyBvfBEEIeBSsZx0j6DdlwxVduq90CUc6ocyOOVfOQf2Jlv3NRGUO-6Z1Ob2LZkO1Y-sY2KhLR9IYk2jGbjbW8l5I-kTanKD7T5xVA_XPOlA-K/s640/RCA+CRE+price+bar+chart.PNG" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 14: RCA changes in CRE prices for selected global cities</td></tr>
</tbody></table>
<br />
<br />
<br />
<a href="https://www.lasalle.com/">Jones Lang Lasalle</a> (JLL) is another leading source of global real estate data and analysis. Exhibit 15 presents some representative data from their <a href="https://www.lasalle.com/isa">end-2019 report</a> on global real estate markets on 16 major countries.<br />
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<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtJch5_FFd6Reso8s7b-ge-z0rCwB1pxVW4NjkfdeT8-TlPd5DqNA22tOhbdoiHSuWbIrOhzhuUm4QzmQB8HrL3JyRtomGyycfsEwN9twhY6UmuKGLTI6PcpmuuX7_hkcDz4yob1TYNQKF/s1600/JLL+real+estate+returns.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtJch5_FFd6Reso8s7b-ge-z0rCwB1pxVW4NjkfdeT8-TlPd5DqNA22tOhbdoiHSuWbIrOhzhuUm4QzmQB8HrL3JyRtomGyycfsEwN9twhY6UmuKGLTI6PcpmuuX7_hkcDz4yob1TYNQKF/s640/JLL+real+estate+returns.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 15: Real estate return summary from JLL Investment Strategy Annual 2020</td></tr>
</tbody></table>
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<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLZFaktU_JwlyiIOkcb_wB_kiSC7kWux-l5vfMPh3TpXazDG0YWwX7B6uCHKC1doUPc13Q5zICyT-R1XsbRUirwL7YyItWuKP4yoQnjCocmYrhSpFISuM11oUmEpdjKLSo3F71OubCa9JW/s1600/global+reit+info.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="431" data-original-width="988" height="278" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLZFaktU_JwlyiIOkcb_wB_kiSC7kWux-l5vfMPh3TpXazDG0YWwX7B6uCHKC1doUPc13Q5zICyT-R1XsbRUirwL7YyItWuKP4yoQnjCocmYrhSpFISuM11oUmEpdjKLSo3F71OubCa9JW/s640/global+reit+info.PNG" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 16: Basic data on global REIT-like vehicles</td></tr>
</tbody></table>
<br />
<a href="https://www.reit.com/investing/global-real-estate-investment">Global REIT associations</a> provide information on listed public real estate markets. These are more or less similar to U.S. Real Estate Investment Trusts. Currently about 38 countries have adopted such vehicles, with perhaps 10 considering future adoption. Exhibit 16 presents some summary data on the global scope of these vehicles. Real Estate Equity Securitization Alliance (REESA) members include:<br />
<br />
<ul>
<li>National Association of Real Estate Investment Trusts (<a href="https://www.reit.com/">NAREIT</a>)</li>
<li>Asian Pacific Real Estate Association, (<a href="https://www.aprea.asia/">APREA</a>)</li>
<li>Association for Real Estate Securitization (<a href="https://www.ares.or.jp/en/">ARES</a>)</li>
<li>British Property Federation (<a href="https://www.bpf.org.uk/">BPF</a>)</li>
<li>European Public Real Estate Association (<a href="https://www.epra.com/">EPRA</a>) </li>
<li>Property Council of Australia (<a href="https://www.propertycouncil.com.au/">PCA</a>)</li>
<li>Real Property Association of Canada (<a href="https://www.realpac.ca/">Realpac</a>) </li>
</ul>
Basic return data for many global REITs and similar vehicles can be found at FTSE EPRA Nareit <a href="https://www.ftserussell.com/products/indices/epra-nareit">Global Real Estate Index</a> Series.<br />
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<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDYu8duUHmm8fqFhs-fnH23ZIpn4ihvAIBpOmVcP4pnEM_zUkUBHZ0UweQTSsxBkeAYuuoKxIdo9Fwe852n-H1z4z8WT3FPmepw_C74RGeJqBtWG2FiWXhsu1oWIQw09lO9dqvIzZF2VQ0/s1600/CREDA+participants.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDYu8duUHmm8fqFhs-fnH23ZIpn4ihvAIBpOmVcP4pnEM_zUkUBHZ0UweQTSsxBkeAYuuoKxIdo9Fwe852n-H1z4z8WT3FPmepw_C74RGeJqBtWG2FiWXhsu1oWIQw09lO9dqvIzZF2VQ0/s640/CREDA+participants.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 17: CREDA participants as of 2019</td></tr>
</tbody></table>
<br />
<br />
<br />
The <a href="https://kenaninstitute.unc.edu/event/commercial-real-estate-data-alliance-creda-conference/">Commercial Real Estate Data Alliance (CREDA)</a> is a consortium of leading real estate academics and professionals; the name is somewhat self-explanatory.<br />
<br />
One lens through which to see the consortium’s motivation is through their repeated reference to the desire to put real estate on an even footing with traditional financial markets. Analysis of equity markets in particular was greatly enhanced when the University of Chicago’s CRSP (<a href="http://www.crsp.org/">Center for Research in Security Prices</a>) data became available. CRSP made a large variety of equity pricing data available on a timely, consistent basis, pre-cleaned and ready for analysis.<br />
<br />
So one way of thinking of CREDA is CRSP for real estate. Headquartered at the University of North Carolina’s Wood Center for Real Estate Studies and UNC’s Institute for Private Capital, CREDA involves leading academics as well as private firms and professional organizations (Exhibit 17).<br />
<br />
To date, the focus of CREDA has been primarily on US commercial real estate data. But we include it here because many of the participating academics in organizations are also internationally focused, and none of the data issues CREDA attacks are unique to the United States. I would speculate that CREDA’s efforts will eventually “go global,” whether formally or informally, to help improve the standardization and availability of data across countries.<br />
<br />
CREDA is sponsoring several pilot studies that focus on the U.S. at the moment but that will have utility to global providers. One project is developing a platform to merge and scrub multiple property level data sources including providing an open source property address matching methodology as well as a one-stop shop for documenting commercial real estate data sources. Another CREDA sponsored study involves mapping permit data to capital expenditure data. CapEx data is not currently widely available; but most capital improvements require a building permit, which are available. To date this data is not well matched and of inconsistent quality so the research project is analyzing statistical relationships between permit data and actual CapExs which will allow extrapolation to any property or portfolio.<br />
<br />
CREDA also sponsors an annual research symposium at UNC bringing together academic industry and government researchers, investors, and data providers. In addition to data issues the forums provide panels that discuss current policy issues such as housing affordability in light of new data.<br />
<div>
<br /></div>
<br />
<br />
<h3>
Measuring Institutions and Policies</h3>
<br />
Another strand of international urban indicators revolves around measuring the urban policy environment. We begin with an early effort at measuring the general economic policy environment. Ramgopal Agarwala created a <a href="https://drive.google.com/open?id=1WzxT3-eQNdgK_HkbLjkVqRgDsSUgFEFl">classic index of economic policies</a> for 32 "developing countries" for the <a href="http://documents.worldbank.org/curated/en/997591468322730301/World-development-report-1983">1983 World Development Report</a>. The index is based on policies re:<br />
<br />
<ul>
<li>Exchange rates</li>
<li>Interest rates</li>
<li>Labor pricing (e.g. minimum wages)</li>
<li>Trade (tariffs, etc.)</li>
<li>Agricultural pricing</li>
<li>Infrastructure pricing</li>
<li>Inflation</li>
</ul>
<br />
<div>
Agarwala and team surveyed a range of studies and data, put each country into one of three “buckets:”</div>
<ul>
<li>“Do the right thing,” more or less (e.g. market exchange rate), score 1.</li>
<li>Significant price distortion, e.g. exchange rate overvalued by 10 percent, score 2.</li>
<li>Serious price distortion, e.g. Ghana’s exchange rate overvalued by several multiples, score 3.</li>
</ul>
<br />
They then constructed a simple additive index. Minimum (best) score is 7, maximum (worst) score is 21. In practice: Malawi scored 8, Thailand 10, Cameroon, Korea, Malaysia, Philippines, Tunisia scored 11. At the other extreme, Argentina and Chile scored 17, Tanzania and Bangladesh scored 18, Nigeria scored 19, Ghana scored 20. (Of course, these policy indexes are 40 years old. There is substantial serial correlation in policies. But policies do and have changed substantially over time.) Exhibit 18 presents the basic Agarwala data.<br />
<div>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXXsR55DKpJ5ITbOxRklL7wor_23LGB9_VLm_1otWKeeKbr9JGvhofUCOWdI1R2gRhRebTWEmEyxJm4UkyUv_i1CjItA2fJL0l3OG99m4SoPqFSDYJLYE8knGDcknIJDWHGxFaFjDK96iv/s1600/agarwala-01.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="704" data-original-width="550" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXXsR55DKpJ5ITbOxRklL7wor_23LGB9_VLm_1otWKeeKbr9JGvhofUCOWdI1R2gRhRebTWEmEyxJm4UkyUv_i1CjItA2fJL0l3OG99m4SoPqFSDYJLYE8knGDcknIJDWHGxFaFjDK96iv/s640/agarwala-01.jpg" width="500" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 18: Agarwala's (1983) coding of economic policies</td></tr>
</tbody></table>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjqG7IsWTVIUL7VFXFS7RgIm3hWe7yLQR5OMFPVgyARuEN9-9fNjNI5RN14ejoF53xWKOraGtxUurT9amRqD7OWUjHa0htSw9GpqSPygLWGwHwTncE3iHH9d-D_1aEQCJTLLK-43L9JNgXZ/s1600/Malpezzi+1990+HPI+and+Agarwala+Index.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjqG7IsWTVIUL7VFXFS7RgIm3hWe7yLQR5OMFPVgyARuEN9-9fNjNI5RN14ejoF53xWKOraGtxUurT9amRqD7OWUjHa0htSw9GpqSPygLWGwHwTncE3iHH9d-D_1aEQCJTLLK-43L9JNgXZ/s640/Malpezzi+1990+HPI+and+Agarwala+Index.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 19</td></tr>
</tbody></table>
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Research by Angel and Mayo (described below) finds that house prices-to-income don’t vary terribly systematically with income. But that does not mean there are no systematic patterns. Exhibit 19, from Malpezzi (1990) compared housing prices, normalized by income, to the Agarwala index. At the time we had no purpose-build index of urban policies, but Malpezzi (1990) argued that countries that distorted their labor and financial markets in general terms would likely be following policies that would also distort the housing market. The data are consistent with such an interpretation of the Agarwala index as a proxy for a general policy environment. Circa 1990, countries that "did the right thing" in economic policies experienced house price-to-income ratios averaging 4 or 5, while those with distorted policies averaged 7 or 8.<br />
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More data became available in the early 90s from reforming socialist economies after the breakup of the Soviet Union, and the imposition of post-Mao reforms in China. Other analyses (not shown here, see Buckley and Malpezzi, and Buckley and Tsenkova) found that in the early days of reform, back-of-the-envelope applications of the Agarwala framework and data on house prices found that many of these countries, placed closer to Ghana on the policy framework, with prices even more distorted that we observe in Exhibit 19.<br />
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The correlation of the Agarwala Index with various housing market outcomes motivated several attempts to construct measures that were more directly based on urban and housing policies. One of the first efforts focused on rent controls, motivated in part by research by Richard Arnott among others on the importance of analyzing specific features of rent regulation regimes. (Arnott's original paper with Nigel Johnston dates from 1981; a later, more readily accessible version is <a href="https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.9.1.99">available here</a>). A survey of some 50 countries was undertaken as part of a World Bank research project on rent control described in Malpezzi and Ball (1991, 1993).<br />
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Countries which have no controls receive a zero rating. Other countries are rated as follows. There are nine elements; for all but one, each element receives a rating of 0 (permissive), 1 (medium), 2 (restrictive). The first two elements are:<br />
<ul>
<li>Enforcement: if controls are not enforced or rarely enforced, the country receives a zero score. Selective or partial enforcement scores a point; strict enforcement, two points.</li>
<li>Coverage: if coverage is restricted to a very small part of the market, the country receives a zero score. If a significant part of the market is covered, the country receives a score of 1. If more than half the market is covered, the country receives a score of 2.</li>
</ul>
If a country has controls which are at least selectively enforced and which cover a significant part of the market, additional points are awarded as follows:<br />
<ul>
<li>Fair Rents: Countries which do not set rent levels for units receive a zero rating; those with some units so covered or no information, 1; those with stringent rent setting, 2.</li>
<li>Indexation: If rents are indexed and closely tied to inflation, the country receives a zero rating. If rents are partially indexed or no information, 1; if rents are frozen or rarely revalued, 2.</li>
<li>Cost Pass-Through: Are upgrading, maintenance, and tax increases passed through to tenants? If often, 0; if some items are passed through, or no information, 1; if no or little pass through, 2.</li>
<li>Treatment of New Construction: If newly constructed units are exempt, score zero. If newly constructed units have a temporary exemption, or some other differential treatment, or there is no information, score 1. If new construction is controlled as other rental housing, score 2.</li>
<li>Rents Reset On New Tenancy: If rents reset to market on new tenancy, 0; if revalued but below market, or no information, 1; if no change, 2.</li>
<li>Tenure Security: If tenure security is more or less covered by private agreement (leases) and normal grounds for eviction, 0; if more stringent security of tenure or no information, 1; if strict security of tenure, 2.</li>
</ul>
The final element, which is open ended, is the Average Annual Inflation Rate from 1965 to 1985, divided by 10. Capturing such interaction with market conditions, even crudely, is essential; a rent freeze in (say) Switzerland would be reduce real rents much less than indexing rents up to 90 percent of inflation in (say) Argentina.<br />
<br />
Some countries, such as the United States, and Canada, have many rent control regimes which vary greatly from place to place. In such cases, when there was substantial divergence from place to place in an element, we graded the element 1.<br />
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Key findings, which can be found in Malpezzi and Ball, include the following.<br />
<br />
First, consistent with priors, the rent control index was correlated with the Agarwala index and other measures of general economic policies, such as contemporaneous measures of the overvaluation of a nation's currency.<br />
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Second, while many countries had some form of rent regulation in the late 1980s, the most stringent regulations were usually found in poor countries. Other research, described in the research project's final report, found that there were often ways both households and landlords evaded the rules, including illegal side payments (key money) and accelerated depreciation of units. Nevertheless, there was evidence, unsurprisingly, that rent burdens were lower, on average, in countries with the most stringent controls. On the other hand, asset prices were higher, relative to incomes, in those distorted markets, plausibly because stringent controls were present in markets that had other distortions on the supply side of the market. And markets with the most stringent controls had lower rates of housing investment, ceteris paribus.<br />
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So circa 1990, findings using the Agarwala index, on the one hand, and the rent control index, on the other, gave us confidence that such "policy indexes" could be informative. It was, and is, however, important to remember the limitations of any such index. In brief.... Any policy index perforce contains information on only a small fraction of interventions that affect housing, or any other urban market under consideration. Taken with the observed correlation among a number of diverse such indexes, both across countries and across cities within a country, we should never interpret any coefficient literally. For example, "the coefficient of my regulatory index is 0.1 in a logarithmic housing price model -- so if we change a regulation that theoretically reduces our index by a value of 1, we expect a 10 percent reduction in housing prices...." Well, maybe not, because that regulation, zoning or FAR or whatever, may well represent itself but also represent some other regulations that are not included in the index but which are correlated with the included measures. The problem is analogous to the interpretation of individual coefficient estimates in a hedonic regression model, as explained in papers by Butler and by Ozanne and Malpezzi.<br />
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In the event, some of us think of such regulatory indexes as akin to the "stupid pet tricks" readers of a certain age will remember from a popular late night comedy show. It's surprising, really, that they work at all.<br />
<div>
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Attempts to improve on these early efforts led to their inclusion in the Angel-Mayo World Bank-Habitat Urban Indicators Project, described generally near the beginning of this post. Wave I did the most thorough job of attempting to measure the policy environment. Angel and Mayo constructed policy indexes in six areas: property rights, housing finance, housing subsidies, residential infrastructure, the regulatory regime, and the industrial organization of the housing market. Subindexes were constructed for each area, and they were also combined in an overall "enabling index." Exhibit 20 presents a schematic summary of the effort.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjs8eEPXCshH8d6ylOqwGqcFZbiDXKwjs-7Undon6vz-ooLsh_nNDCbzlvI5b27OSgppnuFSRKI22KuwbykehHd7TYeV6-0gw_6DvCVFglqHpDjKcPv0lFAyXqfKWCfKKedocOIoYw0ttOV/s1600/enabling+01.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1067" data-original-width="1600" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjs8eEPXCshH8d6ylOqwGqcFZbiDXKwjs-7Undon6vz-ooLsh_nNDCbzlvI5b27OSgppnuFSRKI22KuwbykehHd7TYeV6-0gw_6DvCVFglqHpDjKcPv0lFAyXqfKWCfKKedocOIoYw0ttOV/s640/enabling+01.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 20: Schematic of the Angel-Mayo Housing Enabling Policy Index</td></tr>
</tbody></table>
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Details of the indexes and their construction can be found in Angel and Mayo (1996) and especially in Angel (2000). Exhibit 21 presents the six subindexes, and the aggregated enabling index. Higher values of the indexes represent better policy environments.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjjdsVRHRmJ4PFdAZNLEprTmw9iidD7_3RPLp3v8X6gW6IIY7Tmwd3lMaywZYSm04lPr_1m9Zljm91wfn532lTBeH1mZRaHrXCcV6mo5ohXUQjUUOashLEcoGEF0-AnMRWB-v_xcD75am3/s1600/enabling+02.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1479" data-original-width="1505" height="628" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjjdsVRHRmJ4PFdAZNLEprTmw9iidD7_3RPLp3v8X6gW6IIY7Tmwd3lMaywZYSm04lPr_1m9Zljm91wfn532lTBeH1mZRaHrXCcV6mo5ohXUQjUUOashLEcoGEF0-AnMRWB-v_xcD75am3/s640/enabling+02.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 21: Six housing policy sub-indexes, and the aggregated Enabling Index from Angel and Mayo</td></tr>
</tbody></table>
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A number of analyses were carried out by Angel and Mayo in the aforementioned publications, examining a range of incomes including rents, asset prices, investment levels, and housing tenure. Here we will present two simple graphics that can motivate a more careful reading of their original research.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKJLd3B7Ps0sMhMwGK7fsW6F-9HTu6bLendgp9J6rURfBtTDQOvlOVwmtL_rX0jcFkzXq9cjiGl9-CmOn3oVmsErLQ6GMjoDM2D-lu_mLH6Rmfsc_TJA-b4qZmViNvds9kOwRhILfQBbh2/s1600/enabling+03.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="845" data-original-width="827" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKJLd3B7Ps0sMhMwGK7fsW6F-9HTu6bLendgp9J6rURfBtTDQOvlOVwmtL_rX0jcFkzXq9cjiGl9-CmOn3oVmsErLQ6GMjoDM2D-lu_mLH6Rmfsc_TJA-b4qZmViNvds9kOwRhILfQBbh2/s640/enabling+03.jpg" width="626" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 22: Average supply curves for countries grouped by values of the Enabling Index</td></tr>
</tbody></table>
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Angel and Mayo (1996) group countries into three categories: low enablers, medium enablers, and high enablers, depending on the level of the overall enabling index. Exhibit 22 presents the supply elasticities they estimated by group. As expected, estimated supply elasticities were neatly ordered by the level of the enabling index.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0IFqnplb6qgYVy7zCYQR8OAs90vLfHPoA0sIilbfYBqsnE1ZBNUeyYC1Qt8LKsBH4ooXyzjt1agsoxwzenF2yhH5VQjG7xUdV3QGUx2gtFJL_fAV_lcCxfp4GiXIAr_WkdHp0VS9qggPU/s1600/Angel+Mayo+HPI+RI+tables.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="717" data-original-width="601" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0IFqnplb6qgYVy7zCYQR8OAs90vLfHPoA0sIilbfYBqsnE1ZBNUeyYC1Qt8LKsBH4ooXyzjt1agsoxwzenF2yhH5VQjG7xUdV3QGUx2gtFJL_fAV_lcCxfp4GiXIAr_WkdHp0VS9qggPU/s640/Angel+Mayo+HPI+RI+tables.jpg" width="536" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 23: Angel and Mayo (1996) House Price-to-Income (HPI) and Rent-to-Price (RPI) ratios</td></tr>
</tbody></table>
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<br />
Exhibit 23 presents to more data elements from Angel and Mayo: each capital citiy’s house price to income ratio, and the corresponding rent to income ratio. Exhibit 24 plots the house price to income ratio by the enabling index. Taking the plot at face value, better enablers (lower values)) perform better, though results are hardly tight. The regression line through the city specific points shows the expected positive relationship but is heavily influenced by China and the fit is not particularly impressive.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQ03NDtIQOYTT3HY5mY-2cz2Qu0ogjjvkacd4q5s8w4HUOTNJapDY-NIdt6gcS8RYr__GnH56aFzJfgChyLKtUc1UdrDc6pFsTcWfJhGWOgjs81FTuWgNZa7YWOZoCzyaGbNJW5MZC5Zvb/s1600/Angel+Mayo+1996+HPI+and+Housing+Policy+Index.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQ03NDtIQOYTT3HY5mY-2cz2Qu0ogjjvkacd4q5s8w4HUOTNJapDY-NIdt6gcS8RYr__GnH56aFzJfgChyLKtUc1UdrDc6pFsTcWfJhGWOgjs81FTuWgNZa7YWOZoCzyaGbNJW5MZC5Zvb/s640/Angel+Mayo+1996+HPI+and+Housing+Policy+Index.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 24</td></tr>
</tbody></table>
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<br />
Let’s wrap up our discussion of the classic urban indicators of Angel and Mayo and their associates by noting that in addition to the World Bank’s 1993 housing policy paper Enabling Housing Markets to Work, they produced several examples separately and together of country and regional discussions of housing policy reforms that brought indicators data in as diagnostic tools. See for example Angel’s study of Panama, and Mayo’s study of South Africa.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhgs1YUV9W9k9TfMTpPlS4dhHwzRNEAgNxY1dmLB7cE1p-k-dEMA9K5CLRY0YKRxy6sao0BUwwiMGdjocqeKVbJToHSQSfDGCni0dVQoNACwmnV1mPE4SXUsZcNk8q3Rq-UXJnnRn2UVXlN/s1600/KMK+regulation+questions.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="596" data-original-width="405" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhgs1YUV9W9k9TfMTpPlS4dhHwzRNEAgNxY1dmLB7cE1p-k-dEMA9K5CLRY0YKRxy6sao0BUwwiMGdjocqeKVbJToHSQSfDGCni0dVQoNACwmnV1mPE4SXUsZcNk8q3Rq-UXJnnRn2UVXlN/s640/KMK+regulation+questions.png" width="434" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 25 Kim Malpezzi and Kim survey questions on housing policy</td></tr>
</tbody></table>
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<br />
Another effort at measuring the urban policy environment was carried out for Korea’s Center for Private Enterprise by Kim Malpezzi and Kim. Exhibit 25 presents a summary of their data collection for regulatory elements; with help from local experts they collected these for some 20 cities. In the event, Kim Malpezzi Kim found that housing rents and prices were correlated in the expected manner with the regulatory index and Kim found that in Asia supply elasticities were lower in markets with more restrictive environments. But in both cases the results were far from robust. A recurring bottom line of this and other studies is that it’s often difficult to get consistent information even with carefully designed questionnaires using a range of partners in countries with very different institutional environments and development traditions. Such indexes seem to work better (provide more reliable information) within countries than across them.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgkb35OfpgfXcaTUtWbmgOLigl10UtlF4CTykggFI7ysludExnm6bVrAy-_eAkgH6Hx_u6NkmK2bXFy6v98CWwj95DoN7TOLXFuH_NWhqDqxEXsj2UBE3iv39V6eKbTSpWxZln_1ODTwsOZ/s1600/KMK+City+Data.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="344" data-original-width="399" height="548" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgkb35OfpgfXcaTUtWbmgOLigl10UtlF4CTykggFI7ysludExnm6bVrAy-_eAkgH6Hx_u6NkmK2bXFy6v98CWwj95DoN7TOLXFuH_NWhqDqxEXsj2UBE3iv39V6eKbTSpWxZln_1ODTwsOZ/s640/KMK+City+Data.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 26: Kim-Malpezzi-Kim key data for 15 cities including Regulation Index</td></tr>
</tbody></table>
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<br />
We’ve discussed Hernando’s De Soto’s pathbreaking (no pun intended) analysis of Peruvian development timelines detailed in his book El Otro Sendero (The Other Path) in our previous post on the so-called Malaysia model. Exhibit 27 presents De Soto’s original schematic for the procedures required to formalize a legally obtained home in Peru. As reviewed in our previous post on the Malaysia model e Malaysian developer MK Sen independently provided us with a very similar analysis for the Malaysian market, as detailed in Hannah Bertaud Malpezzi and Mayo (1989).<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjyexzu-fLJosP41KH1XEE0vMayjJgP5qlf0LTabj9RveiCaBeFVUAqS15-pRsyFFAP2OzRni-If-2cGaa-bwoqagj1JaasPECN_sZ3X-RFrBrQ48rnzMYmB5yPmO6vaSWIN6IEDjXgEEL9/s1600/De+Soto+Peru.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="721" data-original-width="876" height="526" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjyexzu-fLJosP41KH1XEE0vMayjJgP5qlf0LTabj9RveiCaBeFVUAqS15-pRsyFFAP2OzRni-If-2cGaa-bwoqagj1JaasPECN_sZ3X-RFrBrQ48rnzMYmB5yPmO6vaSWIN6IEDjXgEEL9/s640/De+Soto+Peru.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 27: De Soto's original study of the timeline to formalize a home in Peru</td></tr>
</tbody></table>
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<a href="https://www.lexmundi.com/lexmundi/Construction_and_Infrastructure.asp">Lex Mundi project</a>. This network has been used to collect indicators of the legal framework for real estate and other economic activities for range of countries. A series of papers by Simeon Djankov and several associates details these efforts.<br />
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Collects data from a network of law firms on the nature of property rights and contract enforcement procedures across countries. See Djankov, La Porta, Lopez-de-Silanes and Shleifer (2004)<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0d_4O0syqcN8iR6pcgB_axjrKHyrY3g1yuc9z0zXpOYxT3Kxp49XWH9p2BujWT_OgVeNRnc96TgWM-25Aow8Ka9XV7hLLOt8Pi8tGgvlJCZFhRLddIcYrVQkqic5orkGxj4qczCYpdJG8/s1600/Djankov+starting+a+firm+in+France.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0d_4O0syqcN8iR6pcgB_axjrKHyrY3g1yuc9z0zXpOYxT3Kxp49XWH9p2BujWT_OgVeNRnc96TgWM-25Aow8Ka9XV7hLLOt8Pi8tGgvlJCZFhRLddIcYrVQkqic5orkGxj4qczCYpdJG8/s640/Djankov+starting+a+firm+in+France.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 28: Example of complex procedures to register a firm</td></tr>
</tbody></table>
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Exhibit 28 provides a schematic of the start-up procedure for a small firm in France. Procedures are lined up sequentially on the horizontal axis. The time required to complete each procedure is described by the height of the bar and measured against the left scale. Cumulative costs are plotted using a line and measured against the right scale.<br />
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Labels on the horizontal axis are hardly legible so we repeat them here:<br />
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1. Check name uniqueness.<br />
2. Notarize lease and obtain home office approval.<br />
3. Certificate of clean criminal record.<br />
4. Certificate of marital status.<br />
5. Power of attorney.<br />
6. Open bank account and deposit capital.<br />
7. Notarize company deeds.<br />
8. Publish headquarters address in Journal.<br />
9. Register articles of association at tax office.<br />
10. Request registration.<br />
11. Form K for business.<br />
12. Unblock capital.<br />
13. Notify post office.<br />
14. Designate bondsmen and guarantee taxes.<br />
15. Initial firm ledgers and registers.<br />
16. File for Social Security.<br />
<br />
See also https://www.lawyersfrance.eu/starting-a-business-in-france<br />
<div>
<br /></div>
In France, according to the Lex Mundi data, it takes 66 days and money equivalent to 24% of per capita French GDP to navigate the regulatory regime for starting a firm in France. In contrast, in New Zealand (not represented graphically here, see the paper) requires only 10 days and a monetary cost equivalent to only 2% of GDP per capita.<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOtUgFn8ql-F4cKkTOMKSCxnZ4CzpCl3blAg47PHG6XwL4yL-v8yDGamOJgZb1tqe0iJnp7Eq0M9GsTe_7F59rtWdCH2-UZYXPMsSXn0KZrUX-H8khAJV_-gAiIkD0clWcUPHrZYStEFUm/s1600/Djankov+registry+procedures+and+informality.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOtUgFn8ql-F4cKkTOMKSCxnZ4CzpCl3blAg47PHG6XwL4yL-v8yDGamOJgZb1tqe0iJnp7Eq0M9GsTe_7F59rtWdCH2-UZYXPMsSXn0KZrUX-H8khAJV_-gAiIkD0clWcUPHrZYStEFUm/s640/Djankov+registry+procedures+and+informality.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 29: Regulatory complexity, and labor market informality</td></tr>
</tbody></table>
<br />
<br />
<br />
Djankov et al. went beyond New Zealand and France to collect these and other indicators of the regulatory process for some 40 countries. Exhibit 29 presents the loglinear relationship between the number of procedures to register a firm, and the percentage of the labor force employed in the unofficial or informal economy. Unsurprisingly, the denser the regulatory thicket, the larger the fraction of the labor force employed outside the strictly legal framework. This is no small matter since the costs imposed on citizens by informality has been detailed many times before including in De Soto’s book.<br />
<br />
<br />
The next step in the evolution of these indexes was to institutionalize this kind of cross country data collection in the World Bank’s Doing Business surveys. Exhibit 30 presents an overview of the kinds of data collected.<br />
<div>
<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgBd1Wi2vpk8pGnR_77BKpTK-Y0sqX30_asuxAug9xtmHEX1-QrPDmFbdz8WEYrcMtlbynyrEDY-MEJVYwmCFBVQvQB4xf0aj4kl1sCN9tqZ-_sGMbGttyHZEV40-Jb5HUtJrQlJ-Wgw7F8/s1600/WB+Doing+Business+summary.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgBd1Wi2vpk8pGnR_77BKpTK-Y0sqX30_asuxAug9xtmHEX1-QrPDmFbdz8WEYrcMtlbynyrEDY-MEJVYwmCFBVQvQB4xf0aj4kl1sCN9tqZ-_sGMbGttyHZEV40-Jb5HUtJrQlJ-Wgw7F8/s640/WB+Doing+Business+summary.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 30: Summary of Doing Business elements</td></tr>
</tbody></table>
The Doing Business survey has been subject to several criticisms. One is that the data collected are about the procedures as laid out within the legal and regulatory framework on paper, not necessarily as actually implemented. In a number of countries, the actual regime hardly follows the official legal framework and may include additional payments; these may be legal (such as developer provision of public goods such as parks or traffic signals, and/or campaign contributions common in the United States) as well as illegal and/or corrupt payments.<br />
<br />
Another problem related to the caveat we made above regarding care not to over interpret a single element or coefficient in such index elements is the charge that as Doing Business became more prominent, countries might “game the index” by focusing attention on one or a few elements that give them a chance to move up in the rankings published annually by the World Bank, but make a limited contribution to easing total regulatory burdens.<br />
<br />
Yet another set of criticisms focuses on potential downsides of labor market flexibility. One man’s or woman’s labor inflexibility is another’s protection from arbitrary dismissal or unsafe working conditions. More on this in the next version of this blog post.<br />
<div>
<br /></div>
These elements are reported as national data, but are actually collected for the largest city in each country. Data are obtained from local experts, and refer to the rules de jure. Actual experience/enforcement may vary de facto.<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiRQEq6Von_9SpYE-bRN8eUtyXOOrNU_ncqct4etdZOxvMbgmikikcdqAC1JvEqQ0HXZiyJLjLhuAdLuOLLPBLkKUsaVNsA3zKvFSJqITdjBgpin8yW42sdvKLITLzwCujAtmWmAsRRQ-tW/s1600/JLL+India+MD+and+Doing+Business+Investible+Real+Estate.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiRQEq6Von_9SpYE-bRN8eUtyXOOrNU_ncqct4etdZOxvMbgmikikcdqAC1JvEqQ0HXZiyJLjLhuAdLuOLLPBLkKUsaVNsA3zKvFSJqITdjBgpin8yW42sdvKLITLzwCujAtmWmAsRRQ-tW/s640/JLL+India+MD+and+Doing+Business+Investible+Real+Estate.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 31: JLL Managing Director comments on India's Doing Business score improvement</td></tr>
</tbody></table>
<br />
India’s jump on WB’s Doing Business 2018 Index: A real estate analysis<br />
JLL’s India Managing Director Shubhranshu Pani<br />
Housing.com, November 7, 2017<br />
<br />
<br />
Real estate-specific improvements cited by Pani include:<br />
<br />
<br />
<ul>
<li>Single window approval system for building plans.</li>
<li>Streamlining business incorporation processes.</li>
<li>Easing tax compliance procedures (via online filing, consolidation through GST, etc.).</li>
<li>Bankruptcy and insolvency.</li>
<li>Easing export-import border compliance procedures.</li>
<li>Establishment of debt recovery tribunals in India, associated with a reduction in non-performing loans of 28 per cent.</li>
</ul>
<br />
The Doing Business survey itself has four data elements related to real estate development:<br />
<ul>
<li>Time required to register a property in days.</li>
<li>Number of procedures to register a property.</li>
<li>Time required to build a warehouse in days</li>
<li>Number of procedures to build a warehouse.</li>
</ul>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiW_sfBQqQ2Zc3lP5SzTGlCLK00qvm29mnDtukxWOCgtaIBcbQmdEvMo-52XfHsQEW-v_aGjqRzh4FkckD0CUXqxzNGCY16imf_BJWRfIRAKZmsccQZyqEcElR6eqg0T47AQGssR6ASvWNL/s1600/Global+House+Price+and+WB+Doing+Business+01.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiW_sfBQqQ2Zc3lP5SzTGlCLK00qvm29mnDtukxWOCgtaIBcbQmdEvMo-52XfHsQEW-v_aGjqRzh4FkckD0CUXqxzNGCY16imf_BJWRfIRAKZmsccQZyqEcElR6eqg0T47AQGssR6ASvWNL/s640/Global+House+Price+and+WB+Doing+Business+01.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 32: Exploratory Data Analysis of house prices and World Bank Doing Business data</td></tr>
</tbody></table>
<br />
As part of ongoing research with Alain Bertaud, I constructed a simple index from Doing Business real estate elements. First I undertook simple standardization of each of four components; then summed the four components to construct a simple index. For housing price data I used Global Property Guide house price per square meter, mainly because it was conveniently available. That data, as we noted above, is focused on the high-end. A future version of this blog may present more representative prices. In the event I normalize these prices by dividing them by each country’s World Bank Atlas method per capita GDP.<br />
<br />
As the data are plotted we find a few surprises among the indexes. Taking the data at face value, according to the Doing Business data, Russia appears to be one of the easiest places to do real estate business. That would be a surprise to President Trump who has not yet managed to build his longed-for Moscow hotel. At the other extreme, Portugal is no easy place to do business – in fact it was a World Bank debate on over Portugal’s housing policies that help motivate the World Bank research program on rent control discussed above. Nevertheless, we might be surprised to see Portugal as such an outlier on the regulatory index.<br />
<br />
Taking all this data at face value there is not much correlation between these crudely normalized housing prices and the simple regulatory index. The regression line has the expected sign but only 3% of the variance in the house price to per capita GDP ratio is explained.<br />
<div>
<br /></div>
<br />
<a href="https://www.us.jll.com/en/trends-and-insights/research/global/global-real-estate-transparency-index">Jones Lang LaSalle Real Estate Transparency Index</a> JLL's Index aims to measure the quality and quantity of each country's real estate data. Historically real estate markets have been largely private and opaque. But a tradeoff exists. Increasing transparency may reduce excess returns to selected agents, eroding the value of private information; but in general this will be more than offset by the gains associated with attracting more capital, a wider range of investors, and overall increased efficiency and fairness of a market. See Gordon (2000) for elaboration of these arguments.<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgW5MdKLI6smh1_ZoR4NeWohyaCgaFfAks6gd76eiM3ejCbh4dlfz_hNNcrm9ZH1YLW0-N288k3XOc4mExDFQm-CBkLHhowye76aG-71gCzuCbm_vAVpdD5Q2GPk6T3B4hBAGm9ahoKZXww/s1600/JLL+transparency+elements.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="375" data-original-width="615" height="390" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgW5MdKLI6smh1_ZoR4NeWohyaCgaFfAks6gd76eiM3ejCbh4dlfz_hNNcrm9ZH1YLW0-N288k3XOc4mExDFQm-CBkLHhowye76aG-71gCzuCbm_vAVpdD5Q2GPk6T3B4hBAGm9ahoKZXww/s640/JLL+transparency+elements.PNG" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="font-size: 12.8px;">Exhibit 33: Elements of JLL's Transparency Index</td></tr>
</tbody></table>
<br />
<br />
As Exhibit 34 illustrates, more transparent markets according to the JLL index (lower values of the index) are associated with greater transaction volumes. Again, correlation or causality? More work to do here.<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFAo2YN7biwFw-6j9jmCPOwDFlzRkQbnwtzCANktwLogarWM4RRSwjBFQwcDpwie6f8sK9D_vdKbgg4n5rO7Z5FyQk87YWyxzR7-iwKkIRC84xDXKji90_mrYu723VvzIvwPKRHkVMsSTH/s1600/JLL+Transparency.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="914" data-original-width="1294" height="452" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFAo2YN7biwFw-6j9jmCPOwDFlzRkQbnwtzCANktwLogarWM4RRSwjBFQwcDpwie6f8sK9D_vdKbgg4n5rO7Z5FyQk87YWyxzR7-iwKkIRC84xDXKji90_mrYu723VvzIvwPKRHkVMsSTH/s640/JLL+Transparency.PNG" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="font-size: 12.8px;">Exhibit 34: Real estate transparency index and transparency volumes, from Jacques Gordan et al. JLL</td></tr>
</tbody></table>
<br />
<h3>
Is "Big Data" the Future? How Will Traditional Real Estate Productivity Measures Evolve in the World of Emerging "PropTech"? </h3>
<div>
<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSZYVbg0um8PHlcVqvn0l8ytO4QLCL1PKqSOhgLrjJhXppH_nyEejrc22kG5XiBl3MFmDGEiB0yOHOvpB8DHgLfQa8zpfLtg4kHAjDUsohYXfRpfGdwVJiBuF5aBlOPynY6AWHOVTUGl9K/s1600/Hilbert+information+quantity.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="591" data-original-width="1119" height="338" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSZYVbg0um8PHlcVqvn0l8ytO4QLCL1PKqSOhgLrjJhXppH_nyEejrc22kG5XiBl3MFmDGEiB0yOHOvpB8DHgLfQa8zpfLtg4kHAjDUsohYXfRpfGdwVJiBuF5aBlOPynY6AWHOVTUGl9K/s640/Hilbert+information+quantity.PNG" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 35: Exponential growth of global data, broadly defined, over time</td></tr>
</tbody></table>
<div>
<br /></div>
<div>
Gigabyte: a thousand megabytes (10^9 bytes)</div>
<div>
Terabyte a thousand gigabytes (10^12 bytes)</div>
<div>
Petabyte:a thousand terabytes (10^15 bytes)</div>
<div>
Exabyte: a thousand petabytes (10^18 bytes)</div>
<div>
Zettabyte: a thousand exabytes (10^21 bytes)</div>
<div>
Yottabyte: a thousand zettabytes (10^24 bytes)</div>
<div>
<br /></div>
<div>
To get a sense of scale, 10 terabytes would hold all the printed books in the Library of Congress; 2 petabytes would hold all U.S. academic research libraries; 5 exabytes would hold all the words ever spoken by human beings.</div>
<div>
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgZNc-NUBDdGFhiXpLf56WxYdTf6fP7vJWkh5xdI-jebmgX7ghDJfZR_dyVYKAjecATvexPU5MYJ863ea-I1dIIe5Dc3Kr3l4vQJyvzi3EXzB2HLRz6mJWru1rgwYVF42OTgrAGcKY5SWb0/s1600/Big+Data+Value+Chain.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgZNc-NUBDdGFhiXpLf56WxYdTf6fP7vJWkh5xdI-jebmgX7ghDJfZR_dyVYKAjecATvexPU5MYJ863ea-I1dIIe5Dc3Kr3l4vQJyvzi3EXzB2HLRz6mJWru1rgwYVF42OTgrAGcKY5SWb0/s640/Big+Data+Value+Chain.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 36: Some terms encountered in the world of "Big Data"</td></tr>
</tbody></table>
<br />
<br />
Fisher (2015) presents a cogent introduction to big data and related topics. . Fisher quotes Gartner’s definition “big data is high-volume, high velocity, high variety information assets that require new forms of processing to enable enhanced decision-making, insight discovery and process optimization.”<br />
<br />
Fisher begins by setting up a brief discussion of what he calls traditional data such as prices, rents, rates of return, transaction volume and so on; from traditional sources like RCA, NCREIF, and other sources discussed in this blog post as well as many others. He points out that traditional data are generally well structured, set up in time series and cross-sectional; and can be analyzed with traditional statistical and other analytical tools. Big data is, well, “big,” often nearly contemporaneously collected, and often analyzed using primarily descriptive black box modeling.<br />
<br />
Big data are often noisy and unstructured from a wide range of sources. Data are often scraped from the web, from both traditional (e.g. Zillow’s scraping of property tax records) but also from nontraditional sources such as social media (Twitter, Facebook, LinkedIn) as well as informal documents published on the web in a variety of physical formats as well as blogs, discussion forums etc. Data can include video, audio and images as well as traditional numbers and words. The proliferation of the Internet of Things (IoT) presages another threshold leap in the availability of data, in subject matter, quantity, and form.<br />
<br />
As Fisher points out these data require new ways of storing and analyzing them as well as collection protocols. Signaling his concern with data quality, Fisher points out that many observers are adding “veracity” to the measured characteristics of big data. Big data analysts often eschew traditional statistical techniques like regression analysis in favor of machine learning and various systems of classification including heavy reliance on visual methods.<br />
<br />
As a cautionary tale Fisher (2017) does a quick analysis of correlates of housing starts with Google searches. He finds strong correlations with a number of searches that are hard to sensibly link to housing starts including “Copacabana New York,” “Ramada Plaza downtown,” and “Tower Records.com.” Fisher is making a point with a quick analysis of trends, and doesn’t provide much detail about the exact timing or strategy for his analysis. But the example is sufficient as a cautionary tale, pointing out among other things the ephemeral nature of these correlations. Tower Records, years ago one of my favorite stops for music, went out of business in 2006 after earlier bankruptcies. Perhaps the trending phrase was connected to the redevelopment of some of Tower’s better-known locations in cities like Boston and San Francisco, but it is doubtful Tower has much to tell us about housing starts today, if it ever truly did.<br />
<br />
<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjAKpwDDrgvAJvOYTSOlgUpFHjcxAK-Oe_DCQo8k5K2WnMsZedufkxf8_gndz_RhQBAkYeBTz6pSv6eaPJJ-3pgKWMMZkISGc8bRer53VnOOgBI7E3JK1mCzEjEaIFQ8c1qbuyloPPae7SC/s1600/Deloitte+IoT+sensor+data.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="719" data-original-width="1106" height="416" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjAKpwDDrgvAJvOYTSOlgUpFHjcxAK-Oe_DCQo8k5K2WnMsZedufkxf8_gndz_RhQBAkYeBTz6pSv6eaPJJ-3pgKWMMZkISGc8bRer53VnOOgBI7E3JK1mCzEjEaIFQ8c1qbuyloPPae7SC/s640/Deloitte+IoT+sensor+data.PNG" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 37: One survey of how real estate operators are currently using Internet-of-Things data</td></tr>
</tbody></table>
<div>
<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEglfLm3OVQ5hGqsj2tZgZwWrIQqgvuMZ9LbHeRcrGtXwMD1_vy0xgegvrmY8FYdRijFWGvC-lPVDHCzdXJDv5VSTPc86CLBGe6pI4_f2KPMrH1do-1RK8l6kzaeeCsdjnadnyB2fmPf3V2u/s1600/proptech+trends.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="521" data-original-width="325" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEglfLm3OVQ5hGqsj2tZgZwWrIQqgvuMZ9LbHeRcrGtXwMD1_vy0xgegvrmY8FYdRijFWGvC-lPVDHCzdXJDv5VSTPc86CLBGe6pI4_f2KPMrH1do-1RK8l6kzaeeCsdjnadnyB2fmPf3V2u/s400/proptech+trends.PNG" width="247" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 38: PropTech investment boomed in recent years</td></tr>
</tbody></table>
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYV3E1lcWCeTG5OR22r3mp3p5qMgdeINL_NBSRjNG3w0mEJDlmfSoJK9_AqtEjhhrVFI_26AUvQEljen9J4S8HJeIFA1424AeX3MM6GlzZVMQe6Hm-RmhuGyC-XYEwpHXMDIxdOS9lD5dI/s1600/Gordon+PropTech+Slide.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="973" data-original-width="1364" height="456" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYV3E1lcWCeTG5OR22r3mp3p5qMgdeINL_NBSRjNG3w0mEJDlmfSoJK9_AqtEjhhrVFI_26AUvQEljen9J4S8HJeIFA1424AeX3MM6GlzZVMQe6Hm-RmhuGyC-XYEwpHXMDIxdOS9lD5dI/s640/Gordon+PropTech+Slide.PNG" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Exhibit 39: Examples of PropTech companies/startups from Jacques Gordon (need his original source)</td></tr>
</tbody></table>
<br />
Next steps might be to impose more structure on big data analyses, that is to get away from the black box syndrome. Correlation is still not causality. The future may well see current data mining techniques more effectively combined with old-fashioned techniques attacking old-fashioned issues like endogeneity, robustness, and more or less reliable prediction out of sample.<br />
<div>
<br /></div>
<br />
<h3>
Coming Later: A Separate Blog Post on Urban Indicators with a Domestic U.S. Focus</h3>
<br />
<br />
Lots do to here, including discussion of many housing and urban indicators.<br />
<br />
<br />
<br />
<br /></div>
<div>
<h3>
The You-Know-What in the Room</h3>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjyI1BIx6EUXvC0O3DHrcXM89MzPObd3pCvYMw69EBf2XC1LCvnVMMNEdGA-HH6B0KrAVAKx9jZs00RS3kLvz16sPKreWO0Q6-fS_Hc-ue-pG5xT0jl3yjRfO3VOJ9SzwdO5z8nmFuv8zAI/s1600/elephant+in+the+room.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="960" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjyI1BIx6EUXvC0O3DHrcXM89MzPObd3pCvYMw69EBf2XC1LCvnVMMNEdGA-HH6B0KrAVAKx9jZs00RS3kLvz16sPKreWO0Q6-fS_Hc-ue-pG5xT0jl3yjRfO3VOJ9SzwdO5z8nmFuv8zAI/s640/elephant+in+the+room.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><br /><div style="text-align: left;">We just went through dozens of sources of economic and real estate data without reference to the Elephant in the Room.</div></td></tr>
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The blog directly preceding this one contains my arguably obsessive notes and teaching materials on the coronavirus and its effects on economies, housing and real estate markets, and people’s lives. Yet we’ve been through some 40 exhibits and even more links to economic and real estate data without a word on the coronavirus.<br />
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Unsurprisingly, in due course these thoughts on indicators will have to include some discussion of this particular elephant. That will come in time. Meanwhile I hope this version with its introduction and links helps students and researchers and other readers.<br />
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References and Links</h3>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3NW0fE-EQn9_Suc6HZEET_ga-LO3AHO-2I2wtsceSlgwzXz70Ei7vvbrBLhZCDdYWUfE7vuGVzNmD54HOHrOjqiiMTOquNopxBq-vXbA2qmIqlBA9t9M_zzZvUmnm5vmqmUAH1kGFYCPe/s1600/students-guinea2.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="700" data-original-width="937" height="478" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3NW0fE-EQn9_Suc6HZEET_ga-LO3AHO-2I2wtsceSlgwzXz70Ei7vvbrBLhZCDdYWUfE7vuGVzNmD54HOHrOjqiiMTOquNopxBq-vXbA2qmIqlBA9t9M_zzZvUmnm5vmqmUAH1kGFYCPe/s640/students-guinea2.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Students in Guinea <a href="https://marroninstitute.nyu.edu/blog/students-studying-under-streetlights">reading under streetlight</a></td></tr>
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Digression: one of the world's recent successes is an increase in access to electricity. But an estimated <a href="https://ourworldindata.org/energy-access">13 percent of global population</a> is still without access, and others have <a href="https://www.worldbank.org/en/news/feature/2018/12/17/new-report-power-sector-distortions-cost-india-billions">intermittent service</a>.<br />
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Be glad you probably have a much better reading environment. <a href="https://drive.google.com/open?id=17KPyMCjt0Zj1J0Rq_Wk6vQ8AsoZtdcgc">Click here to download</a> a list of references.<br />
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Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com1tag:blogger.com,1999:blog-3258035236231564227.post-19507413285485674332020-03-13T14:48:00.011-07:002021-03-21T11:35:06.098-07:00A Small Posting on a Big Problem: Coronavirus<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKd86e87wKVibmKlz4AlvLW8TQOBvO7BL78zcj8Gv3RRvvkeMM3F0LIsfelCxNNAKpX3HEU3TUorjkHs6Qj0kPeYqQsq4uXMoupozPsYUpNvUnfOPoIR5_z6ucGSyIJA5sCzKeRMSGQYwt/s1600/200130165125-corona-virus-cdc-image-exlarge-tease.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="438" data-original-width="780" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKd86e87wKVibmKlz4AlvLW8TQOBvO7BL78zcj8Gv3RRvvkeMM3F0LIsfelCxNNAKpX3HEU3TUorjkHs6Qj0kPeYqQsq4uXMoupozPsYUpNvUnfOPoIR5_z6ucGSyIJA5sCzKeRMSGQYwt/s640/200130165125-corona-virus-cdc-image-exlarge-tease.jpg" width="640" /></a></div>
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<br /><br /><h3 style="text-align: left;">NEWS FLASH! January 14, 2021 version of the files are now available.</h3><div><br /></div><div>
I'm in the process of developing teaching material about COVID-19, and related material about public health, and health systems.<br />
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Every time I update and correct the material, the Google Drive address for my new file changes. I need a place to post a DRAFT PowerPoint presentation that serves as my outline on this material so that colleagues can find and review the latest draft. It's gotten a little large and I've now divided it into to sections. <a href="https://drive.google.com/file/d/1ecH8hJN_C6z90dQ-gry7CKOgJCfFDzp-/view?usp=sharing">CLICK HERE to download Part 1 </a>and <a href="https://drive.google.com/file/d/1En2k68nQyo6CYwPjHXjLa6Jw6KuerYD4/view?usp=sharing">CLICK HERE to download Part 2.<br /></a>
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Even split in half, the files are rather large, around 300 MB each last time I checked. So you probably want to do a right click "save as" to download it to your hard drive, then open it (rather than open it directly in your browser). It might be a little much for a phone...<br />
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For those who still have trouble downloading, here's a pdf version, slides only. <a href="https://drive.google.com/file/d/1YYUwhh5oSTjxq7cUey5vjoH-obezfj5q/view?usp=sharing">CLICK HERE to download Part 1</a> and <a href="https://drive.google.com/file/d/1SqB36bgHw8PXObDXlL__nwXWKtAkOVVC/view?usp=sharing">CLICK HERE to download Part 2</a>. No notes -- which means you lose some commentary, maybe more importantly lots of info on the sources of the data and many of the graphics. And the resolution is a little lower. But this one's only 10 percent of the size of the native PowerPoint.<div><br /></div><div>Some of the slides present metropolitan/micropolitan data on U.S. COVID-19 cases and deaths for the top 40 places, and some charts of the full dataset of several hundred places. If you want to examine the full dataset in Excel, <a href="https://drive.google.com/file/d/1PxvLVtWGCQuhPsqKl-0JpkKTxNDXK5QL/view?usp=sharing">download it here</a>.<br /><div><br />
Latest version of the full deck (in two parts) is dated <b><i>March 20, 2021</i></b>. Still rough, still needs proofing, references, lots of work. You can help! My email address can be found in the slides.<br />
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The style is extremely informal, partly because the audience I have top of mind is an undergraduate class. I also mention here that I don't shy away from some discussion of the failures of the current administration, and others, to address the pandemic effectively. If you find those slides not to your taste, or inappropriate for your class, just delete them.<br />
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Nobody ever teaches the entire deck, including me. Select those you want. Feel free to modify any of these slides as needed for your own classes or presentations. Just be sure to continue to use them for instructional purposes, "fair use."<br />
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Be sure to read the caveats at the beginning of the presentation!<br />
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SM<br />
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<br /></div></div></div>Steve Malpezzihttp://www.blogger.com/profile/14123891817618115599noreply@blogger.com3