"Unfortunately, many economics papers are written in a way that is incomprehensible to a colloquial English speaker. I have a hard time understanding precisely what they are claiming in many parts of the paper. One could argue that that is excusable (or that it is my problem, not the authors’). Brain surgeons and rocket scientists shouldn’t worry about writing in a way that I can understand. But, the problem with economics is that our knowledge is still hit and miss and there are many issues where all the econo-speakers have faulty assumptions or empirical blind-spots that foreign speakers can’t account for. When it is at its worst, it leads to discourse on Swiftian floating islands._ KE
And I thought it was just me.
Way back in my college undergrad days (think telegraph poles) there was snotty line among Cal Berkeley student cynics, about "mysticism through obfuscation." The stilted language, the obscure math no one will ever check, the faux objectivity...but were the undergrads wrong?
To that I add my skeptical view that "Academic authors write the abstract and conclusion first, and then the rest of the paper follows."
That is justified as "testing the hypothesis."
Of course, in real science the hypothesis is tested through replicable experiments--and even then sometimes fails, as seen in the pharmaceutical sector, which actually has some rigid testing before approval, but even then some drugs don't work as planned or have unforeseen side effects when introduced to the broader public.
And that is in "real science."
So what to extract from the flood of econ papers, written in horrible language, now usually by multiple authors, which include phrases as "We show that...." Of course, then other econ authors have the opposite conclusions. This is not real science.
Here is a study from the St. Louis Fed that QE has little effect on inflation.
Yi Wen, 2013. "Evaluating unconventional monetary policies -why aren’t they more effective?," Working Papers 2013-028, Federal Reserve Bank of St. Louis.
So why should the Fed reduce its balance sheet? I don't know.
Why does Japan have so little inflation? I don't know. They have a gigantic Bank of Japan balance sheet, dwarfing that of the Fed (in relation to GDP).
The orthodox macroeconomics profession has many hallowed totems.
>> Instead we think this correlation is easily explained by differences in demand for housing quality (including amenities like location) relative to demand for quantity.
It’s funny, this is basically the NIMBY view in a nutshell, just dressed up in academic jargon.
According to them, the REAL problem is that a bunch of people want to live in places they can’t afford. Nevermind anyone’s particular reason for wanting — or NEEDING — to live somewhere; if they can’t afford it, they don’t deserve it, period.
Several very big forces shifted in 2008, continuing to the Covid disruption of 2020. I’ve never seen those itemized, but it should include the demographic misalignment posed by the Millennial age wave arriving at adulthood, following right after the undersized Gen X. Yes, the babies were growing older, but there is no evidence Treasury, FHFA, or Fed Reserve paid any notice. “Fighting the last war,” they tightened credit, never loosening after the crisis had passed and the Millennial tsunami drove up demand. I’ve been eager to ask Kevin Erdmann about this!
Well, the millennial demographic shift ALSO happened, as Kevin alludes to in his comment about greenfield limits, at the same time that most cities hit those limits!
And THAT coincided with the receding of the crime 70’s-90’s crime wave, together creating a strong demand pressure for urban living.
This is just speculation, but I think that if Millennials had instead demanded suburban living, we would have come up with ways to finance it even despite the mortgage crackdown. We’d have bought up exurban housing and the entire suburban sprawl machine would have right gone back to plugging away at sprawling like before. The mortgage industry would demand policymakers rev back up their financing — and, heck, if the Obama admin had refused to go along with it, might have even resulted in Romney getting elected.
This sort of policy demand would have been EASIER for the system to process, because the suburban sprawl machine was already in place. The reason why we have a crisis NOW is that in the process of being born, the sprawl machine KILLED the urban growth/densification machine that existed before it. A new such densification machine is thus now struggling to be reborn from scratch, which is why it’s happening in these painful fits and starts.
I don't understand why this idea about cities all hitting their greenfield limits is so popular. I mean, I guess if it could be true, it could explain the sudden collapse of single-family construction. But, it's so silly. American cities exist on a gradient of population sizes. The idea that they all suddenly slammed up against a natural limit of suburban sprawl is really, really silly. Single-family construction collapsed in a whole bunch of cities with maximum commute times of 15 minutes.
The primary appeal for me is, the “sprawl limit” hypothesis explains why (1) there was and continues to be no mass movement to roll back the mortgage crackdown, and (2) why the exurbs never got bid-up by rabid Millennials as much as the closed-access cities.
IOW, “Millennials decided they wanted walkable urbanism instead of 1 hr commutes” makes a lot more sense than “Millennials never cared about commutes and would happily have accepted 1 hr-plus commutes, and for some unexplained reason they didn’t demand the mortgage crackdown be reversed even as their rents skyrocketed”.
Like, not to overweight my own example, but if I wanted to go buy a $250k house in the deep exurbs of CT and drive over an hour each way, I *would*. Shit, it’d be cheaper than my rent even with rates where they’ve been, and it’s not like the NIMBYs in my town haven’t spent the last nearly a decade telling me to fuck off out of their backyard and do precisely that (buy exurban).
That sort of decision, en masse, genuinely would have represented a new wave of suburbanizing sprawl! But it didn’t happen. Even though it was never financed, you still have to explain why it wasn’t Millennials’ first idea to DEMAND it be financed.
I would consider the effect of lack of housing in creative hubs led to changing cultural norms about how to live. Shows like Friends and Sex in the City in the 1990s profiled people living lives in cities more than older suburban family shows. This may have changed what millennial expected a bit. Also, who says Occupy Wall Street wasn't the protest? It was railing against the Conditions even if it was not advocating for suburban houses.
So, in 2009, when millions of mortgage applications were denied that would have been approved at any time in the preceding decades, that isn't evidence of demand for moving to single-family homes in the suburbs because they didn't follow up on those denials by organizing a political protest in the face of the Tea Party and Occupy Wall Street and everything else?
>They have net domestic outmigration. If not a single person moves into those cities this year, hundreds of thousands will still need to move away. Because people have babies and babies grow up. And some grown ups really don’t like to be displaced from their homes. Increased demand is not necessary for these cities to have a housing crisis.
Isn't this still a form of increased demand? Ie. each cohort of 22-year-olds (say) moving out on their own is a shift in the demand curve.
They very clearly do the household/population thing which is laughable and sad.
Is their paper even able to capture that supply constraints ban smaller homes and smaller homes are cheaper?
"Unfortunately, many economics papers are written in a way that is incomprehensible to a colloquial English speaker. I have a hard time understanding precisely what they are claiming in many parts of the paper. One could argue that that is excusable (or that it is my problem, not the authors’). Brain surgeons and rocket scientists shouldn’t worry about writing in a way that I can understand. But, the problem with economics is that our knowledge is still hit and miss and there are many issues where all the econo-speakers have faulty assumptions or empirical blind-spots that foreign speakers can’t account for. When it is at its worst, it leads to discourse on Swiftian floating islands._ KE
And I thought it was just me.
Way back in my college undergrad days (think telegraph poles) there was snotty line among Cal Berkeley student cynics, about "mysticism through obfuscation." The stilted language, the obscure math no one will ever check, the faux objectivity...but were the undergrads wrong?
To that I add my skeptical view that "Academic authors write the abstract and conclusion first, and then the rest of the paper follows."
That is justified as "testing the hypothesis."
Of course, in real science the hypothesis is tested through replicable experiments--and even then sometimes fails, as seen in the pharmaceutical sector, which actually has some rigid testing before approval, but even then some drugs don't work as planned or have unforeseen side effects when introduced to the broader public.
And that is in "real science."
So what to extract from the flood of econ papers, written in horrible language, now usually by multiple authors, which include phrases as "We show that...." Of course, then other econ authors have the opposite conclusions. This is not real science.
Here is a study from the St. Louis Fed that QE has little effect on inflation.
Yi Wen, 2013. "Evaluating unconventional monetary policies -why aren’t they more effective?," Working Papers 2013-028, Federal Reserve Bank of St. Louis.
So why should the Fed reduce its balance sheet? I don't know.
Why does Japan have so little inflation? I don't know. They have a gigantic Bank of Japan balance sheet, dwarfing that of the Fed (in relation to GDP).
The orthodox macroeconomics profession has many hallowed totems.
>> Instead we think this correlation is easily explained by differences in demand for housing quality (including amenities like location) relative to demand for quantity.
It’s funny, this is basically the NIMBY view in a nutshell, just dressed up in academic jargon.
According to them, the REAL problem is that a bunch of people want to live in places they can’t afford. Nevermind anyone’s particular reason for wanting — or NEEDING — to live somewhere; if they can’t afford it, they don’t deserve it, period.
Several very big forces shifted in 2008, continuing to the Covid disruption of 2020. I’ve never seen those itemized, but it should include the demographic misalignment posed by the Millennial age wave arriving at adulthood, following right after the undersized Gen X. Yes, the babies were growing older, but there is no evidence Treasury, FHFA, or Fed Reserve paid any notice. “Fighting the last war,” they tightened credit, never loosening after the crisis had passed and the Millennial tsunami drove up demand. I’ve been eager to ask Kevin Erdmann about this!
Well, the millennial demographic shift ALSO happened, as Kevin alludes to in his comment about greenfield limits, at the same time that most cities hit those limits!
And THAT coincided with the receding of the crime 70’s-90’s crime wave, together creating a strong demand pressure for urban living.
This is just speculation, but I think that if Millennials had instead demanded suburban living, we would have come up with ways to finance it even despite the mortgage crackdown. We’d have bought up exurban housing and the entire suburban sprawl machine would have right gone back to plugging away at sprawling like before. The mortgage industry would demand policymakers rev back up their financing — and, heck, if the Obama admin had refused to go along with it, might have even resulted in Romney getting elected.
This sort of policy demand would have been EASIER for the system to process, because the suburban sprawl machine was already in place. The reason why we have a crisis NOW is that in the process of being born, the sprawl machine KILLED the urban growth/densification machine that existed before it. A new such densification machine is thus now struggling to be reborn from scratch, which is why it’s happening in these painful fits and starts.
I don't understand why this idea about cities all hitting their greenfield limits is so popular. I mean, I guess if it could be true, it could explain the sudden collapse of single-family construction. But, it's so silly. American cities exist on a gradient of population sizes. The idea that they all suddenly slammed up against a natural limit of suburban sprawl is really, really silly. Single-family construction collapsed in a whole bunch of cities with maximum commute times of 15 minutes.
Also, throughout history even before cars, people wanted a commute of less than 30 minutes. https://www.bloomberg.com/news/features/2019-08-29/the-commuting-principle-that-shaped-urban-history
The primary appeal for me is, the “sprawl limit” hypothesis explains why (1) there was and continues to be no mass movement to roll back the mortgage crackdown, and (2) why the exurbs never got bid-up by rabid Millennials as much as the closed-access cities.
IOW, “Millennials decided they wanted walkable urbanism instead of 1 hr commutes” makes a lot more sense than “Millennials never cared about commutes and would happily have accepted 1 hr-plus commutes, and for some unexplained reason they didn’t demand the mortgage crackdown be reversed even as their rents skyrocketed”.
Like, not to overweight my own example, but if I wanted to go buy a $250k house in the deep exurbs of CT and drive over an hour each way, I *would*. Shit, it’d be cheaper than my rent even with rates where they’ve been, and it’s not like the NIMBYs in my town haven’t spent the last nearly a decade telling me to fuck off out of their backyard and do precisely that (buy exurban).
That sort of decision, en masse, genuinely would have represented a new wave of suburbanizing sprawl! But it didn’t happen. Even though it was never financed, you still have to explain why it wasn’t Millennials’ first idea to DEMAND it be financed.
I would consider the effect of lack of housing in creative hubs led to changing cultural norms about how to live. Shows like Friends and Sex in the City in the 1990s profiled people living lives in cities more than older suburban family shows. This may have changed what millennial expected a bit. Also, who says Occupy Wall Street wasn't the protest? It was railing against the Conditions even if it was not advocating for suburban houses.
So, in 2009, when millions of mortgage applications were denied that would have been approved at any time in the preceding decades, that isn't evidence of demand for moving to single-family homes in the suburbs because they didn't follow up on those denials by organizing a political protest in the face of the Tea Party and Occupy Wall Street and everything else?
Sure, my man.
To be clear, I’m talking about the long period AFTER 2009.
Good point. The baby-boomlet centered around 1990 should have been associated with an increase in housing demand after 2008.
Oof.
>They have net domestic outmigration. If not a single person moves into those cities this year, hundreds of thousands will still need to move away. Because people have babies and babies grow up. And some grown ups really don’t like to be displaced from their homes. Increased demand is not necessary for these cities to have a housing crisis.
Isn't this still a form of increased demand? Ie. each cohort of 22-year-olds (say) moving out on their own is a shift in the demand curve.
Yes. It's just not a form of excessive demand from newcomers or agglomeration. Good catch. I'll edit for clarity.