Research Abstracts

“Caste, Faith, Gender: Determinants of Homeownership in Urban India”

Professor(s): Professor Edward Coulson
Co-author(s): Prashant Das, Alan Ziobrowski
Accepted at: : Journal of Real Estate Finance and Economics

Analyzing a large dataset of urban non-slum households, we find that homeownership tenure choice in India is significantly associated with gender, religion and caste. In particular, large households or those headed by women or with larger number of women are significantly more inclined towards homeownership than households of otherwise similar characteristics. Salaried households are the least and self-employed households the most likely to be homeowners. Compared to Hindus, Muslims show significantly lower while other minority religions (Sikhs, Buddhists and Jain combined) show significantly higher propensity towards homeownership after controlling for other factors. Castes which have been victims of discrimination show significantly higher propensity towards homeownership. The propensity towards homeownership in discriminated class households significantly increases when endowed with esteem or affluence.

“Estimating Supply Functions for Residential Real Estate Attributes”

Professor(s): Professor Edward Coulson
Co-author(s): Zhi Dong and Tien Foo Sing, National University of Singapore
Accepted at: : Real Estate Economics

This paper is the first to identify and estimate developers’ supply functions for real estate attributes. It introduces instruments that separate the demand side effects of real estate attributes and capture the nature of developers upon their initial business establishment into a two-stage estimation model. We construct a unique dataset by merging the datasets containing characteristics of projects and developers with the dataset of new private non-landed residential sales in Singapore. The study covers the period from January 1995 to March 2009. The supply functions for unit area and floor level are concave with developers’ building experience, and convex with developers’ business age. Developers enjoy marginal cost reductions on the two attributes after they have developed 1,000 or more units; and young developers have steeper “learning curve” than other developers. Old and experienced developers demonstrate less elasticity in their supply functions than young and inexperienced developers. This study provides new empirical evidence on corporate learning curve and knowledge diffusion processes with regard to the supply of real estate attributes.

“Tenure Tipping”

Professor(s): Professor Edward Coulson
Co-author(s): Gregory Wommer
Accepted at: : Regional Science and Urban Economics

In light of the increased importance of the single family rental market, local policymakers and homeowners associations have expressed concern that neighborhoods might turn over, rapidly or otherwise, from largely owner-occupied homes to rental occupied properties. We construct a theoretical model of tenure tipping and employ the methods of Card, Mas and Rothstein (2009) to understand the nature of this type of neighborhood turnover. The CMR model demonstrates that tenure tipping is observed only in the 1990s and 2000s (and not in earlier decades). However, this is not tipping in the traditional sense, since robustness checks indicate that tipping is only observed in more rapidly growing neighborhoods. In the 2000s in particular, this is congruent with investors in single family rentals geographically concentrating their investments in neighborhoods with sufficiently high initial rental share.

“Competition and Appraisal Inflation”

Professor(s): Professor Edward Coulson
Co-author(s): James Conklin, Moussa Diop, and Thao Le
Accepted at: : Journal of Real Estate Finance and Economics

In mortgage debt contracts, real property serves as collateral and the terms of mortgage financing are largely conditional on the certification of collateral value by appraisers. However, overstatement of collateral value is common in the appraisal industry, causing troubles in the mortgage market as observed in the recent crisis. In this paper, we examine whether competition in the appraisal industry affects appraisal bias. We model appraiser behavior given a loan officer's preference for favorable appraisals (i.e. appraisal values at least as high as the transaction prices). As appraisers cater to loan officers to increase their probability of winning future business, our model predicts more inflated appraisals in more competitive markets. We confirm this prediction using a sample of purchase mortgages originated between 2003-2006 by a large subprime mortgage lender. Our results show that a one standard deviation increase in appraiser competition, measured at the MSA/year level, is associated with a 1.6 (3.7 percentage point) increase in the share of at-price appraisals. Furthermore, the effect is stronger in areas experiencing high house price growth.

“When Guidelines Conflict: A Case Study of Mammography Testing during the 1990s”

Professor(s): Mireille Jacobson
Co-author: Srikanth Kadiyala
Accepted at: Women’s Health Issues, 2017, 27(6):

Cancer screening guidelines communicate important information to patients and physicians regarding the costs and benefits of screening. Currently, guideline recommendations from major organizations conflict regarding the age of mammography screening initiation. To understand current and future U.S. mammography screening patterns we study age-mammography patterns from the 1990s, another period of conflicting guideline recommendations.

“Systems Healthcare: A Holistic Paradigm for Tomorrow”

Professor(s): Mireille Jacobson
Co-authors: Massimo S. Fiandaca, Mark Mapstone, Elenora Connors, Edwin S. Monuki, Shaista Malik, Fabio Macciardi, and Howard J. Federoff
Accepted at: BMC Systems Biology, January 2018

Systems healthcare is a holistic approach to health premised on systems biology and medicine. The approach integrates data from molecules, cells, organs, the individual, families, communities, and the natural and man-made environment. Both extrinsic and intrinsic influences constantly challenge the biological networks associated with wellness. Such influences may dysregulate networks and allow pathobiology to evolve, resulting in early clinical presentation that requires astute assessment and timely intervention for successful mitigation. Herein, we describe the components of relevant biological systems and the nature of progression from at-risk to manifest disease. We illustrate the systems approach by examining two relevant clinical examples: Alzheimer’s and cardiovascular diseases. The implications of systems healthcare management are examined through the lens of economics, ethics, policy and the law. Finally, we propose the need to develop new educational paradigms to enhance the training of the health professional in an era of systems medicine.

“Do Medical Marijuana Laws Reduce Addictions and Deaths Related to Pain Killers?”

Professor(s): Mireille Jacobson
Co-authors: David Powell and Rosalie Pacula
Accepted at: Journal of Health Economics, January 2018

Recent work finds that medical marijuana laws reduce the daily doses filled for opioid analgesics among Medicare Part-D and Medicaid enrollees, as well as population-wide opioid overdose deaths. We replicate the result for opioid overdose deaths and explore the potential mechanism. The key feature of a medical marijuana law that facilitates a reduction in overdose death rates is a relatively liberal allowance for dispensaries. As states have become more stringent in their regulation of dispensaries, the protective value generally has fallen. These findings suggest that broader access to medical marijuana facilitates substitution of marijuana for powerful and addictive opioids.

“Social Transmission Bias and the Cultural Evolution of Folk Economic Beliefs”

Professors David Hirshleifer and Siew Hong Teoh
Accepted at: Brain and Behavioral Sciences, January 2018

Evolved dispositions influence, but do not determine, how people think about economic problems. The evolutionary cognitive approach offers important insights, but underweights the social transmission of ideas as a level of explanation. The need for a social explanation for the evolution of economic attitudes is evidenced, for example, by immense variations in folk economic beliefs over time and across individuals. 

“When Guidelines Conflict: A Case Study of Mammography Testing during the 1990s”

Professor Mireille Jacobson
Co-author:  Srikanth Kadiyala
Accepted at: Women’s Health Issues,  November 2017

Cancer screening guidelines communicate important information to patients and physicians regarding the costs and benefits of screening. Currently, guideline recommendations from major organizations conflict regarding the age of mammography screening initiation. To understand current and future U.S. mammography screening patterns we study age-mammography patterns from the 1990s, another period of conflicting guideline recommendations.

“Defending against Speculative Attacks: the Policy Maker’s Reputation”

Professor(s): Chong Huang
Accepted at: Journal of Economic Theory, July 2017

This paper studies how speculative attacks and regime change arise from the interaction between a policy maker's reputation for defending against speculative attacks and speculators' learning of the policy maker's type. If speculators receive conditionally independent and identically distributed private signals about the policy maker's type in every period, then no matter how precise their per-period private signals are, there can be no equilibrium with attacks. If the speculators receive private signals whose precision increases as a power function of the time with the power strictly greater than two, there exist infinitely many equilibria with attacks, but this equilibrium multiplicity arises from the timing of the attacks only. In such a case, the set of status quos surviving in any equilibrium is strictly larger than in the case of a short-lived policy maker.

“Reputation Effects of Information Sharing”

Professor Radhika Lunawat
Accepted at: Journal of Economic Behavior & Organization, September 2016

This paper analyzes a model of investment and return in an economy characterized by information asymmetry between an investor and a manager. The realized value of the uncertain state of nature is the manager’s private information. The paper first considers an economy where the manager cannot share her private information with the investor. Therefore, dividend payment is the only reputation building tool available to the manager. If the investor’s prior beliefs about the manager’s trustworthiness are sufficiently high, then the manager will return a dividend consistent with the lower possible state of nature having occurred and the investor will revise such beliefs downwards. However, if the beliefs are not so high, then the equilibrium will be mixed strategies. 

The paper then compares such a dividend-only economy with one where information sharing is an additional tool available for building reputation. Information sharing disciplines the potential opportunism accruing to a manager out of her informational advantage. It provides ex post verifiability of the state of nature and thereby, obviates downward revision of an investor’s prior beliefs about a manager’s trustworthiness. This results in a greater region of pure strategy play in the dividend-and-information-sharing economy. Since such pure strategy play implies investment with certainty, information sharing leads to higher investment. Further, pure strategy play implies returns consistent with the actual state of nature in the dividend-and-information-sharing economy while it implies dividend consistent with the lower state of nature in the dividend-only economy and these lead to higher return in information sharing. 

“Bayesian Persuasion in Coordination Games”

Professor Chong Huang 
Co-author(s):  Itay Goldstein
Accepted at: American Economic Review, August 2016

Authors of this study sought to estimate the current impact of Medicare on medical expenditure risk and financial strain. Through their research, the authors found, at age 65, out-of-pocket expenditures drop by 33 percent at the mean and 53 percent among the top 5 percent of spenders, and the fraction of the population with out-of-pocket medical expenditures above income drops by more than half. Medical-related financial strain, such as problems paying bills, is dramatically reduced. Using a stylized expected utility framework, the gain from reducing out-of-pocket expenditures alone accounts for 18 percent of the social costs of financing Medicare. This calculation ignores the benefits of reduced financial strain and direct health improvements due to Medicare.

“Physician Agency and Patient Survival”

Professor Mireille Jacobson 
Co-author(s):  Tom Y. Chang, Joseph P. Newhouse and Craig C. Earle
Accepted at: Journal of Economic Behavior & Organization, December 2016

We investigate the role of physician agency in determining health care supply and patient outcomes. We show that an increase in health care supply due to a change in private physician incentives has a theoretically ambiguous impact on patient welfare. The increase can reflect either induced demand for ineffective care or a reduction in prior rationing of effective care. Furthermore, physician market structure matters in determining the welfare effects of changes in private physician incentives. We then analyze a change to Medicare fees that caused physicians to increase their provision of chemotherapy. We find that this increase in treatment improved patient survival, extending median life expectancy for lung cancer patients by about 18%. Consistent with the model, we find that while the treatment response was larger in less concentrated markets, survival improvements were larger in more concentrated markets.

“Do Medical Marijuana Laws Reduce Addictions and Deaths Related to Pain Killers?”

Professor Mireille Jacobson
Co-author(s):  David Powell and Rosalie Pacula
Accepted at: Journal of Health Economics, November 2015

Recent work finds that medical marijuana laws reduce the daily doses filled for opioid analgesics among Medicare Part-D and Medicaid enrollees, as well as population-wide opioid overdose deaths. We replicate the result for opioid overdose deaths and explore the potential mechanism. The key feature of a medical marijuana law that facilitates a reduction in overdose death rates is a relatively liberal allowance for dispensaries.  As states have become more stringent in their regulation of dispensaries, the protective value generally has fallen. These findings suggest that broader access to medical marijuana facilitates substitution of marijuana for powerful and addictive opioids.

“The Effect of Medicare on Medical Expenditure Risk and Financial Strain”

Professor Mireille Jacobson
Co-author(s):  Silvia Barcellos
Accepted at: American Economic Journal:  Economic Policy, March 2015

Authors of this study sought to estimate the current impact of Medicare on medical expenditure risk and financial strain. Through their research, the authors found, at age 65, out-of-pocket expenditures drop by 33 percent at the mean and 53 percent among the top 5 percent of spenders, and the fraction of the population with out-of-pocket medical expenditures above income drops by more than half. Medical-related financial strain, such as problems paying bills, is dramatically reduced. Using a stylized expected utility framework, the gain from reducing out-of-pocket expenditures alone accounts for 18 percent of the social costs of financing Medicare. This calculation ignores the benefits of reduced financial strain and direct health improvements due to Medicare.

“Public-Place Smoking Laws and Exposure to Environmental Tobacco Smoke (ETS)”

Professor Kitt Carpenter 
Co-author(s): Sabina Postolek, and Casey Warman
Accepted at: American Economic Journal- Economic Policy, February 2011

Public-place smoking restrictions are the most important non-price tobacco control measures worldwide, yet surprisingly little is known about their effects on exposure to environmental tobacco smoke (ETS). We study these laws in Canada using data with questions about respondents’ ETS exposure in public and private places. In fixed-effects models we find these laws had no effects on smoking but induced large and statistically significant reductions in public-place ETS exposure, especially in bars and restaurants. We do not find significant evidence of ETS displacement to private homes. Our results indicate wide latitude for health improvements from banning smoking in public places.