Aaron YelowitzApplied economist · University of Kentucky
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Historical

ECO 499 · Spring 2008

Economics Seminar

Historical syllabus; policies and dates reflect this term.

Archived syllabus. Policies, dates, assignments, and readings reflect Spring 2008.

Course information

Economics 499-001: Economics of Housing University of Kentucky Spring Semester 2008 URL: http://gatton.uky.edu/faculty/yelowitz/499/spring2008.html (historical link unavailable) Lectures Tuesday/Thursday, 12:30-1:45 pm, Business and Economics Building 125. Relevant info on me Professor Aaron Yelowitz Office: 335W Business and Economics Building Office hours: Tuesday/Thursday 2-3:30 pm, and by appointment. Email: aaron@uky.edu My background: I am an associate professor in the economics department. This is my seventh year at UK. Before I joined UK, I was an assistant professor in the economics department at UCLA, from 1994 to 2001. I received my Ph.D. in economics from MIT in 1994, and my B.A. from UC Santa Barbara in 1990. My research interest focus on welfare programs, minimum wages, health insurance mandates, and housing policy.

Enrolling in this Class

If you want to enroll in this class, you need to talk to Debbie Wheeler in the economics department; she handles that. Due to the nature of ECO 499, class size is limited. The class is already over-enrolled.

Course Description

This course is study various aspects of the economics of housing. First, we will examine recent movements in housing prices and the implications for the macroeconomy. Next, we examine the tax treatment of housing and how local amenities affect the valuation of housing. After that, we explore one of the major questions that motivates the favorable tax treatment of housing: Does home ownership cause positive externalities?The next topic in the course examines, in depth, the organization of the residential real estate market. We end by exploring mortgage discrimination and the treatment of housing as an asset in portfolio choice. In addition to exploring the economic theory, this class will examine recent, high-quality statistical analyses regarding these policy issues. A key objective in doing this is to not only ask what economists have found, but just as importantly, how they got to the answer. It is likely that you may already be familiar with some of the issues we will cover in the class – these issues are often discussed in leading newspapers like the Wall Street Journal and New York Times. Some of the articles on the syllabus influence not only economists, but also reach the popular press. Our objective will go beyond the typical undergraduate textbook analysis, and explore some of the original studies in some detail..

Prerequisites

ECO 391 and completion of either ECO 401 or ECO 402. All prerequisites will be enforced, and the class is restricted to upper-division B&E Economics majors and A&S Economics majors.

Required Textbooks

There is no required textbook for this class. There are numerous academic readings that you are responsible for. Many of the readings are freely available from National Bureau of Economic Research (NBER) or through University of Kentucky’s electronic library. As a convenience, I have gathered up the readings and produce a downloadable ZIP file, so that you do not have to gather up the studies yourself.

Preparing for Class

We will generally follow the order of topics on the syllabus. In terms of the academic studies, you should attempt to read through them ahead of time, but there is no expectation that all parts of the study will be completely understandable to you.

Grading

  1. The final is on Thursday, May 1, 2008, at 1 p.m. It will count for 25% of your grade. It lasts 2 hours.
  2. You will be given one midterm, in class, on Thursday, February 28, 2008. It will count for 25% of your grade. It lasts 75 minutes.
  3. You will be assigned a paper topic during the semester (details will be given later in the semester). It will count for 25% of your grade. It will be due Thursday, April 3, 2008 by 4 pm, EST.
  4. Class participation/attendance/pop quizzes will count for 25% of your grade. Given the goals of this course, it is vital for students to attend, prepare ahead of time, and participate. During the semester, there will also be opportunities to earn extra credit. These opportunities will only be announced during class.

University Holidays / Cancelled Classes

According to the university calendar, there will be no class on March 11 or March 13, 2008, for Spring Break.

Course outline and readings

1. Recent Movements In Housing Prices

  • Edward L. Glaeser & Joseph Gyourko & Raven Saks, 2005. "Why is Manhattan So Expensive? Regulation and the Rise in House Prices," Journal of Law and Economics, xxx(y), pages 331-369, October. Karl E. Case & Robert J. Shiller, 2003. "Is There a Bubble in the Housing Market?" Brookings Papers on Economic Activity, 2003(2), pages 299-342. Charles Himmelberg, Christopher Mayer & Todd Sinai, 2005. "Assesing High House Prices: Bubbles, Fundamentals and Misperceptions," Journal of Economic Perspectives 19(4), pages 67-92, Autumn. Karl E. Case & John M. Quigley & Robert J. Shiller, 2001. "Comparing Wealth Effects: The Stock Market versus the Housing Market," Cowles Foundation Discussion Papers 1335, Cowles Foundation, Yale University. Martin S. Feldstein, 2007. "Housing, Credit Markets and the Business Cycle," NBER Working Papers 13471, National Bureau of Economic Research, Inc. Robert J. Shiller, 2007. "Understanding Recent Trends in House Prices and Home Ownership," NBER Working Papers 13553, National Bureau of Economic Research, Inc.

2. The Tax Treatment of Housing

  • Jonathan Gruber, Public Finance and Public Policy, Chapter 18. Patric H. Hendershott & Joel Slemrod, 1983. "Taxes and the User Cost of Capital for Owner-Occupied Housing," Journal of the American Real Estate and Urban Economics Association, 10(4), pages 375-393, Winter. James M. Poterba, 1984. "Tax Subsidies to Owner-occupied Housing: An Asset-Market Approach," The Quarterly Journal of Economics, MIT Press, vol. 99(4), pages 729-52, November.

3. Valuing Housing

  • Jonathan Gruber, Public Finance and Public Policy, Chapter 10. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," The Journal of Political Economy, 64(5), pages 416-424, October. Sandra E. Black, 1999. "Do Better Schools Matter? Parental Valuation of Elementary

Education," The Quarterly Journal of Economics, MIT Press, vol. xxx(y), pages 577-599, May. Kenneth T. Rosen, 1982. "Confirmations and Contradictions - The Impact of Proposition 13 on House Prices in Northern California: A Test of the Interjurisdictional Capitalization Hypothesis," The Journal of Political Economy, 90(1), pages 191-200, February.

4. Externalities from Home Ownership

  • DiPasquale, Denise & Glaeser, Edward L., 1999. "Incentives and Social Capital: Are Homeowners Better Citizens?," Journal of Urban Economics, 45(2), pages 354-384, March. Brian A. Jacob, 2004. "Public Housing, Housing Vouchers, and Student Achievement: Evidence from Public Housing Demolitions in Chicago," The American Economic Review, 94(1), pages 233-258, March. Peter H. Rossi & Eleanor Weber, 1996. "The Social Benefits of Homeownership: Empirical Evidence from National Surveys," Housing Policy Debate, 7(1), pages 1-35. Richard K. Green & Michelle J. White, 1997. "Measuring the Benefits of Homeowning: Effects on Children," Journal of Urban Economics, 41, pages 441-461. Currie, Janet & Yelowitz, Aaron, 2000. "Are public housing projects good for kids?," Journal of Public Economics, Elsevier, vol. 75(1), pages 99-124, January.

5. Buying & Selling Decisions and the Organization of the Real Estate Market

  • Henry J. Munneke & Abdullar Yavas, 2001. "Incentives and Performance in Real Estate Brokerage," Journal of Real Estate Finance and Economics, 22(1), pages 5-21.

  • B. Douglas Bernheim & Jonathan Meer, 2007. "How Much Value Do Real Estate Brokers Add? A Case Study," Mimeo, Stanford University, July. Merlo, Antonio & Ortalo-Magne, Francois, 2004. "Bargaining over residential real estate: evidence from England," Journal of Urban Economics, 56(2), pages 192-216, September. Genesove, David & Mayer, Christopher J, 1997. "Equity and Time to Sale in the Real Estate Market," American Economic Review, American Economic Association, 87(3), pages 255-69, June. David Genesove & Christopher Mayer, 2001. "Loss Aversion And Seller Behavior: Evidence From The Housing Market," The Quarterly Journal of Economics, MIT Press, 116(4), pages 1233-1260, November.

Steven D. Levitt & Chad Syverson, 2005. "Market Distortions when Agents are Better Informed: The Value of Information in Real Estate Transactions," NBER Working Papers 11053, National Bureau of Economic Research, Inc. Chang-Tai Hsieh & Enrico Moretti, 2003. "Can Free Entry Be Inefficient? Fixed Commssions and Social Waste in the Real Estate Industry," The Journal of Political Economy, 111(5), pages 1076-1122. Igal Hendel, Aviv Nevo & Francois Ortalo-Magne, 2007. "The Relative Performance of Real Estate Marketing Platforms: MLS Versus FSBOMadison.com," NBER Working Paper 13, National Bureau of Economic Research, Inc.

6. Mortage Discrimination

  • Helen F. Ladd, 1998. "Evidence on Discrimination in Mortgage Lending," Journal of Economic Perspectives, American Economic Association, 12(2), pages 41-62, Spring. Geoffrey M. B. Tootell, 1996. "Redlining in Boston: Do Mortgage Lenders Discriminate Against Neighborhoods?" The Quarterly Journal of Economics, 111(4), pages 1049-1079, November. Alicia H. Munnell, Geoffrey M. B. Tootell, Lynn E. Browne & James McEneaney, 1996. "Mortgage Lending in Boston: Interpreting HMDA Data," The American Economic Review, 86(1), pages 25-53, March.

7. Housing as an Asset

  • Todd Sinai & Nicholas S. Souleles, 2005. "Owner-Occupied Housing as a Hedge Against Rent Risk," The Quarterly Journal of Economics, MIT Press, 120(2), pages 763-789, May. James M. Poterba & Andrew A. Samwick, 1997. "Household Portfolio Allocation Over the Life Cycle," NBER Working Papers 6185, National Bureau of Economic Research, Inc. Marjorie Flavin & Takashi Yamashita, 2002. "Owner-Occupied Housing and the Composition of the Household Portfolio," The American Economic Review, 92(1), 345-362, March.