That's essentially what this study is saying:
http://www.telegraph.co.uk/science/science-news/9289125/Men-more-attracted-to-women-who-act-dumb.html
Makes perfect sense. Males evolved to take advantage of every sexual opportunity that presents to them. After all, unlike women, men could decide after conception whether to dedicate resources to nurturing their offspring (women were stuck being pregnant). When men do decide to commit and dedicate resources, the qualities that they seek are different.
If you are a woman interested in attracting quality men for long term commitment, it is probably helpful to still show some vulnerability (potential for easy sex) by acting receptive and playing a bit dumb. 100% prim and proper does not grab male attention. However, if you act 100% dumb, you will be treated as such.
Wednesday, May 30, 2012
Monday, May 21, 2012
Asians in Medical School: Who are they?
Asians constitute 23% of U.S. Allopathic medical students despite accounting for only 5% of the total population. Who are these people?
1. Asian medical students are, by and large, children of highly educated immigrants.
61% of Asian medical students had a father who has a graduate degree, compared to 52% for whites and 37% for Black and Hispanic students. Asian medical students were also least likely to have a father who didn't finish college (only 16%). Combined with the fact that 90% of U.S. Asians are either foreign born or have a parent who is foreign-born, we can deduce that Asians in medical schools are generally the children of high-skill immigrants. Some of these students were born in Asia and then moved to the U.S.; some were born to parents who immigrated to the U.S. from Asia.
2. Asian medical students tend to come from high income families, similar to Whites.
The above chart is a few years old. We see that the parental income distribution of of Asians (Both Indian/Pakistani and All Asian) are skewed to the right and is similar to the parental income distribution of Whites. Interestingly, Vietnamese medical students come from families with an average income lower than that of Black medical students. The tendency for Asian medical students to come from high-income families is perhaps expected given the high level of parental education attainment.
3. Although Asian medical students overall tend to have highly educated parents, the relative advantage of having highly educated parents is smallest in Asians.
This fact is not immediately apparent from the raw data, as Asian medical students have on average the highest socioeconomic background of all races.
If we assume that educational level distribution of population at large shown in the above table roughly holds true for people who have medical school age children, we can calculate that Asians with graduate-school educated fathers have 7.3 times higher probability of going to medical school than Asians whose parents don't have college degrees. [Calculation method: (61/24)/(16/46)=7.3 grad-school educated 24% of the fathers produce 61% of medical students, while 46% non-college fathers produce 16% of medical students] This ratio is 13.4 for Whites, 13.7 for Blacks, and 17.2 for Hispanics. It is 14.95 for the population as a whole.
Conversely, we can say Asians with fathers without college degrees are least disadvantaged in getting into medical school compared to students of other races with fathers without college degrees. Combined with the general over-representation of Asians in medical schools, we can conclude that Asian students are substantially more likely to overcome low parental educational attainment to become medical students.
1. Asian medical students are, by and large, children of highly educated immigrants.
 |
| Taken from https://www.aamc.org/download/142770/data/aibvol9_no10.pdf |
2. Asian medical students tend to come from high income families, similar to Whites.
 |
| Taken from http://01f21cf.netsolhost.com/underserved/higher_income_distribution.htm |
3. Although Asian medical students overall tend to have highly educated parents, the relative advantage of having highly educated parents is smallest in Asians.
This fact is not immediately apparent from the raw data, as Asian medical students have on average the highest socioeconomic background of all races.
If we assume that educational level distribution of population at large shown in the above table roughly holds true for people who have medical school age children, we can calculate that Asians with graduate-school educated fathers have 7.3 times higher probability of going to medical school than Asians whose parents don't have college degrees. [Calculation method: (61/24)/(16/46)=7.3 grad-school educated 24% of the fathers produce 61% of medical students, while 46% non-college fathers produce 16% of medical students] This ratio is 13.4 for Whites, 13.7 for Blacks, and 17.2 for Hispanics. It is 14.95 for the population as a whole.
Conversely, we can say Asians with fathers without college degrees are least disadvantaged in getting into medical school compared to students of other races with fathers without college degrees. Combined with the general over-representation of Asians in medical schools, we can conclude that Asian students are substantially more likely to overcome low parental educational attainment to become medical students.
Saturday, May 19, 2012
How top colleges set their class sizes - artificial scarcity and implications on the admission of favored groups.
Harvard aims to bring in about 1650 new teenagers into its campus each year to become its undergraduates. Yale aims for about 1350. Princeton sets its target at about 1250. How do elite universities determine what the undergraduate class size shall be? In the short run, dormitory and classroom sizes are a constraint. These colleges require dorm residence for at least a part of 4 years of college.
But buildings can be built and there's no shortage of money to build them. With endowments of 17.1 billion dollars (Princeton), 19.4 billion dollars (Yale), and 32 billion dollars (Harvard), the cost of construction is rather trivial. Furthermore, the construction of a major residence hall or a classroom building is always tied with a fundraising drive. And it's not like students live in dorms for free - rental price per square ft does not seem to be lower than the going market rent.
Undergraduates also pay a hefty tuition - about $40,000 per year. Top colleges love to say how they spend on each student more than twice the amount of tuition. Although not factually inaccurate, a lot of the operating cost of universities goes towards activities that do not have direct impact on student education, such as faculty research. I certainly did not feel it actually took $40,000 per year to teach me. Granted, I mostly took large lectures, for which there is just one professor supported by an army of graduate student TAs, so it could have been cheap to educate me compared to a student that loves to take seminars. But my hunch is that increasing undergraduate enrollment would not cause the school to lose money, as long as expenditures such as research do not go up with enrollment (there's no reason why a school should do more research because it has more undergraduates).
How does Harvard, Yale, and Princeton come up with their magical numbers of undergraduate class sizes, then, if money is not really the issue?
It is said that Harvard receives 300 applications a year from people whose academics are so superior that they could be admitted based on academics alone. Then there are people who are not academic superstars but still are very good students combined with great extracurricular activities (leadership, in particular). There are development kids, whose families have donated large sums of money. There are legacies. There are athletes. There are black, hispanic, or American Indian kids, who are admitted even if they are not in the aforementioned categories because they bring "diversity."
The number of students in each of these categories are limited, because even the students in favored groups - development kids, legacies, athletes, and "diversity" - must still meet a relatively high level of academic and/or extracurricular excellence. Alas, Harvard sets its number at 1650 because that's approximately the number of students that it deems worthy that Harvard can entice to attend. For Yale and Princeton, its somewhat lower, probably because Harvard has a bigger name and has a slight upper hand in attracting cross admits. Top colleges set their enrollment numbers with the specific intent of making admissions very selective, so that they can remain elite and prestigious.
Many people gripe about how unfair it is that rich kids, legacies, athletes, and "diversity" students are selected over more accomplished applicants. It is not the intention of this post to comment on the fairness of college admissions or whether this type of favoritism is actually good for the students, the school, or society. My point is that the total number of elite college slots have been determined under the assumption that some slots will be reserved for these favored groups. In the short run, it is true that the admission of one less accomplished favored group student results in the rejection of a more accomplished applicant. But in the long run, the number of slots is fluid. Elite colleges determine how many of each year's crop of 18 year olds are elite enough, and then will set enrollment at that number.
But buildings can be built and there's no shortage of money to build them. With endowments of 17.1 billion dollars (Princeton), 19.4 billion dollars (Yale), and 32 billion dollars (Harvard), the cost of construction is rather trivial. Furthermore, the construction of a major residence hall or a classroom building is always tied with a fundraising drive. And it's not like students live in dorms for free - rental price per square ft does not seem to be lower than the going market rent.
Undergraduates also pay a hefty tuition - about $40,000 per year. Top colleges love to say how they spend on each student more than twice the amount of tuition. Although not factually inaccurate, a lot of the operating cost of universities goes towards activities that do not have direct impact on student education, such as faculty research. I certainly did not feel it actually took $40,000 per year to teach me. Granted, I mostly took large lectures, for which there is just one professor supported by an army of graduate student TAs, so it could have been cheap to educate me compared to a student that loves to take seminars. But my hunch is that increasing undergraduate enrollment would not cause the school to lose money, as long as expenditures such as research do not go up with enrollment (there's no reason why a school should do more research because it has more undergraduates).
How does Harvard, Yale, and Princeton come up with their magical numbers of undergraduate class sizes, then, if money is not really the issue?
It is said that Harvard receives 300 applications a year from people whose academics are so superior that they could be admitted based on academics alone. Then there are people who are not academic superstars but still are very good students combined with great extracurricular activities (leadership, in particular). There are development kids, whose families have donated large sums of money. There are legacies. There are athletes. There are black, hispanic, or American Indian kids, who are admitted even if they are not in the aforementioned categories because they bring "diversity."
The number of students in each of these categories are limited, because even the students in favored groups - development kids, legacies, athletes, and "diversity" - must still meet a relatively high level of academic and/or extracurricular excellence. Alas, Harvard sets its number at 1650 because that's approximately the number of students that it deems worthy that Harvard can entice to attend. For Yale and Princeton, its somewhat lower, probably because Harvard has a bigger name and has a slight upper hand in attracting cross admits. Top colleges set their enrollment numbers with the specific intent of making admissions very selective, so that they can remain elite and prestigious.
Many people gripe about how unfair it is that rich kids, legacies, athletes, and "diversity" students are selected over more accomplished applicants. It is not the intention of this post to comment on the fairness of college admissions or whether this type of favoritism is actually good for the students, the school, or society. My point is that the total number of elite college slots have been determined under the assumption that some slots will be reserved for these favored groups. In the short run, it is true that the admission of one less accomplished favored group student results in the rejection of a more accomplished applicant. But in the long run, the number of slots is fluid. Elite colleges determine how many of each year's crop of 18 year olds are elite enough, and then will set enrollment at that number.
Tuesday, May 15, 2012
Female Shortage Leads to Early Marriage for Females - and Why Polygyny Leads to Oppression of Women and Angry Men
This article from the journal of Evolutionary Psychology describes what tends to happen when there's a relative shortage of women compared to men. The authors analyzed census data from 50 largest metropolitan areas in the United States and found that the relative shortage of women was correlated with:
1. lower average age of females at marriage
2. higher variation in the ages of males at marriage (no significant effect on average age at marriage)
The explanation is essentially this: when there is a shortage of women, women get wooed into marriage more aggressively and tend to marry at a younger age. Another way of looking at it is that women are more likely to find a suitable mate at an earlier age. Since young men know that there's increased competition for brides, they are also more likely to be willing to want to commit at a young age. However, young men do not on average have the wealth and status of older men. Some women may use the extra bargaining power that they have to marry an older guy with wealth and status. Also, some young men may find themselves "unmarriageable" before building their careers. All this combines to form a situation in which women tend to marry early but males vary a lot in the age at marriage.
Some amount of female shortage in a society that enforces monogamy (USA) is clearly beneficial for women, who can use their scarcity to land either a younger guy who otherwise wouldn't have committed or an older guy with wealth and status. However, extreme female shortage caused by polygyny (one man can take on multiple wives) is bad for most women and most men. In every society where polygyny is practiced, the average age of marriage is very low. This is a uniform trend from ultra-orthodox Mormon communities, to Muslim societies, to many countries in Africa. This makes complete sense: since some men take multiple wives, there's an extreme shortage of single women compared to men looking for brides. Women get hit on aggressively and men are very willing to marry. The age at marriage becomes so low that many women forego higher education.
The need to keep multiple wives in line while keeping aggressive single men at bay promote restriction of female freedom and strong patriarchy. To varying degrees, women are restricted to the home and are forbidden from showing off their sexual appeal publicly (burqas are the extreme case, orthodox Mormons have a code of dress). Look at the two pictures below. Both types of dresses are designed to hide women's sexual appeal - it's difficult to judge the body contours of these women. There's a huge variation in male reproductive success, and the winner males must try hard to keep their spoils to themselves.
The loser males, in particlar, become very frustrated. In monogamous societies, virtually all males are guaranteed a wife if he wants one badly enough (just not as hot and high-status as he might hope). There's overwhelming evidence that when men marry, they become calmer and more stable. His testosterone goes down. It is perhaps no coincidence that Muslim societies tend to produce suicide bombers. They are men who are angry, frustrated, and have no family anyway. In almost all civilizations, monogamy was the rule - exceptions were granted only for very powerful men such as kings - and even in those cases there was usually only one official wife. All this was for a good reason, and I am lost as to why Muslim societies developed the way they did. Perhaps the promise of virgins girls in heaven kept lower status Muslim men from revolting?
1. lower average age of females at marriage
2. higher variation in the ages of males at marriage (no significant effect on average age at marriage)
The explanation is essentially this: when there is a shortage of women, women get wooed into marriage more aggressively and tend to marry at a younger age. Another way of looking at it is that women are more likely to find a suitable mate at an earlier age. Since young men know that there's increased competition for brides, they are also more likely to be willing to want to commit at a young age. However, young men do not on average have the wealth and status of older men. Some women may use the extra bargaining power that they have to marry an older guy with wealth and status. Also, some young men may find themselves "unmarriageable" before building their careers. All this combines to form a situation in which women tend to marry early but males vary a lot in the age at marriage.
Some amount of female shortage in a society that enforces monogamy (USA) is clearly beneficial for women, who can use their scarcity to land either a younger guy who otherwise wouldn't have committed or an older guy with wealth and status. However, extreme female shortage caused by polygyny (one man can take on multiple wives) is bad for most women and most men. In every society where polygyny is practiced, the average age of marriage is very low. This is a uniform trend from ultra-orthodox Mormon communities, to Muslim societies, to many countries in Africa. This makes complete sense: since some men take multiple wives, there's an extreme shortage of single women compared to men looking for brides. Women get hit on aggressively and men are very willing to marry. The age at marriage becomes so low that many women forego higher education.
The need to keep multiple wives in line while keeping aggressive single men at bay promote restriction of female freedom and strong patriarchy. To varying degrees, women are restricted to the home and are forbidden from showing off their sexual appeal publicly (burqas are the extreme case, orthodox Mormons have a code of dress). Look at the two pictures below. Both types of dresses are designed to hide women's sexual appeal - it's difficult to judge the body contours of these women. There's a huge variation in male reproductive success, and the winner males must try hard to keep their spoils to themselves.
The loser males, in particlar, become very frustrated. In monogamous societies, virtually all males are guaranteed a wife if he wants one badly enough (just not as hot and high-status as he might hope). There's overwhelming evidence that when men marry, they become calmer and more stable. His testosterone goes down. It is perhaps no coincidence that Muslim societies tend to produce suicide bombers. They are men who are angry, frustrated, and have no family anyway. In almost all civilizations, monogamy was the rule - exceptions were granted only for very powerful men such as kings - and even in those cases there was usually only one official wife. All this was for a good reason, and I am lost as to why Muslim societies developed the way they did. Perhaps the promise of virgins girls in heaven kept lower status Muslim men from revolting?
Sunday, May 13, 2012
Equity Financing of College Education: Problem Lies in Adverse Selection
An organization called FixUC has made a proposal to scrap tuition for University of California and replace it payment of 5% of post-college earnings for 20 years. The organization proposes that the federal government take the pre-agreed percentage of income from former students every year and send it to UC. If UC needs immediate cash, it could sell the collection rights (equity). I have long toyed with the idea of equity financing of college education - universities offering education for a pre-agreed share of post college income of students, and have come to feel that it has many benefits but is only plausible if we can realistically tackle the economic problem of adverse selection.
But first, what are the benefits? In addition to opening access to higher education to all talented students regardless family economic status (improvement in equity), the equity financing model would turn universities into investors and incentivize them to identify the students who are most likely to be productive and attempt to churn out productive graduates (improvement in efficiency). Although the FixUC plan has proposed a 5% flat rate, universities would quickly realize that they should offer lower rates to students with good track records to entice them to enroll, while much higher (perhaps even prohibitive) rates will be necessary for unmotivated students. Some universities might even tie an offer for a lower rate with the student majoring in a specified field with lots of employer demand - nursing, for example. All this discourages mediocre students from enrolling in relatively useless majors only to find out at graduation that a life of crushing debt awaits them. In the current state of affairs, that crushing debt would contain some federal money, so everybody should be concerned.
What problems must be tackled before equity financing of college can work? Here is an illustration of the adverse selection problem: Imagine two excellent students, A and B. Both are academic superstars and have a stellar list of extra-curricular activities. Both get admitted to BigName U. and Prestige U. BigName U. offers equity financing, while Prestige U. accepts traditional tuition payment only. Now, assume that A has no interest in making money while B plans to go into a highly lucrative career. A will choose BigName U.'s equity financing, while B will pay tuition to Prestige U. Pretty soon, BigName U. will find that it needs to increase the offered income percentage, since its graduates are not making as much money as originally predicted! This will exacerbate adverse selection, since only people expecting to go into less renumerative careers will choose BigName U.!
This problem is similar to the adverse selection problem in individual health insurance market. The relatively sick are more likely to want to purchase health insurance, so insurance companies must charge high premiums. The high premiums further discourage healthy people from purchasing individual health insurance. Health insurance companies attempt to pick out healthier people and offer lower premiums, but they cannot do so perfectly. In the equity financing model of higher education, prospective students would be wise to list their membership in their high school finance interest group but hide activities that suggest disinterest in money. The predominant form of private health insurance in America is employer sponsored insurance, and that is because of the problem of adverse selection. In this model, a health insurance company agrees to take on all workers of an employer - this largely eliminates the adverse selection problem.
For higher education, universities could come together and agree to institute equity financing. This could work for top universities - the Ivy Leagues and top liberal arts colleges already have amazingly similar tuition and financial aid policies. They clearly collude - and for a good reason: no single school can afford to have a substantially more generous financial aid because then it would be swamped by students in need of financial aid, so they agree to share the burden of supporting students from low income families. But outside the top few, the number of universities is so high that such private-level collusion is not possible. The middle range is arguablely where the efficiency gains really lie - pricing out the unmotivated and incentivizing students towards more useful majors. For equity financing to be a real possibility, the federal government needs to offer strong incentives for universities to adopt equity financing model (or even force it). The federal government already underwrites a large portion of higher education in this country, so it has buttons it can press.
Some readers might ask, why not simply fund higher education with tax dollars, like they do in Europe? Such a system needs to be tied with a mechanism to enforce some quality control among the students. In France, some public universities are clearly designed to be eliter than others, and there are not enough university spots for everyone. In Germany, you can choose to enroll in any public university, but students are flunked out ruthlessly and graduation is by no means guaranteed. No country in the world has ever handed out higher education diploma to anyone who wants it. It wouldn't be called higher education if it was that easy, would it? But if socialized higher education was instituted in America, my hunch is that it would quickly degenerate into a chain of public diploma mills due to political reasons. Equity financing of university education takes the power AND responsibility to determine who's qualified away from government officials and to individual universities, who would be in better position to determine who's up to the cut or not. In my view, that's capitalism at its best.
But first, what are the benefits? In addition to opening access to higher education to all talented students regardless family economic status (improvement in equity), the equity financing model would turn universities into investors and incentivize them to identify the students who are most likely to be productive and attempt to churn out productive graduates (improvement in efficiency). Although the FixUC plan has proposed a 5% flat rate, universities would quickly realize that they should offer lower rates to students with good track records to entice them to enroll, while much higher (perhaps even prohibitive) rates will be necessary for unmotivated students. Some universities might even tie an offer for a lower rate with the student majoring in a specified field with lots of employer demand - nursing, for example. All this discourages mediocre students from enrolling in relatively useless majors only to find out at graduation that a life of crushing debt awaits them. In the current state of affairs, that crushing debt would contain some federal money, so everybody should be concerned.
What problems must be tackled before equity financing of college can work? Here is an illustration of the adverse selection problem: Imagine two excellent students, A and B. Both are academic superstars and have a stellar list of extra-curricular activities. Both get admitted to BigName U. and Prestige U. BigName U. offers equity financing, while Prestige U. accepts traditional tuition payment only. Now, assume that A has no interest in making money while B plans to go into a highly lucrative career. A will choose BigName U.'s equity financing, while B will pay tuition to Prestige U. Pretty soon, BigName U. will find that it needs to increase the offered income percentage, since its graduates are not making as much money as originally predicted! This will exacerbate adverse selection, since only people expecting to go into less renumerative careers will choose BigName U.!
This problem is similar to the adverse selection problem in individual health insurance market. The relatively sick are more likely to want to purchase health insurance, so insurance companies must charge high premiums. The high premiums further discourage healthy people from purchasing individual health insurance. Health insurance companies attempt to pick out healthier people and offer lower premiums, but they cannot do so perfectly. In the equity financing model of higher education, prospective students would be wise to list their membership in their high school finance interest group but hide activities that suggest disinterest in money. The predominant form of private health insurance in America is employer sponsored insurance, and that is because of the problem of adverse selection. In this model, a health insurance company agrees to take on all workers of an employer - this largely eliminates the adverse selection problem.
For higher education, universities could come together and agree to institute equity financing. This could work for top universities - the Ivy Leagues and top liberal arts colleges already have amazingly similar tuition and financial aid policies. They clearly collude - and for a good reason: no single school can afford to have a substantially more generous financial aid because then it would be swamped by students in need of financial aid, so they agree to share the burden of supporting students from low income families. But outside the top few, the number of universities is so high that such private-level collusion is not possible. The middle range is arguablely where the efficiency gains really lie - pricing out the unmotivated and incentivizing students towards more useful majors. For equity financing to be a real possibility, the federal government needs to offer strong incentives for universities to adopt equity financing model (or even force it). The federal government already underwrites a large portion of higher education in this country, so it has buttons it can press.
Some readers might ask, why not simply fund higher education with tax dollars, like they do in Europe? Such a system needs to be tied with a mechanism to enforce some quality control among the students. In France, some public universities are clearly designed to be eliter than others, and there are not enough university spots for everyone. In Germany, you can choose to enroll in any public university, but students are flunked out ruthlessly and graduation is by no means guaranteed. No country in the world has ever handed out higher education diploma to anyone who wants it. It wouldn't be called higher education if it was that easy, would it? But if socialized higher education was instituted in America, my hunch is that it would quickly degenerate into a chain of public diploma mills due to political reasons. Equity financing of university education takes the power AND responsibility to determine who's qualified away from government officials and to individual universities, who would be in better position to determine who's up to the cut or not. In my view, that's capitalism at its best.
Friday, May 11, 2012
Why is Manhattan housing cost so high? Answer lies in restrictive regulations
The average rent in Manhattan has reached a new record, according to this Market Watch article.
The average rent in Manhattan is now $3,429 per month, well above pre-recession levels. A new one bedroom unit in a doorman building fetches $3982 per month. Even a one bedroom in a walk-up costs $2580 per month. The article attributes this ongoing surge in rent to supply constraint, citing a vacancy rate of 1.16% - well below the national average of about 5%.
Surely, prices are ultimately set by supply and demand. According to Wikipedia, the residential population of Manhattan is 1.58 million. Every work day additional 1.61 million people pour into Manhattan - there is no shortage of potential buyers.
But having lived in NYC area briefly, I've long suspected that there's more than just market forces inflating housing costs. It always appeared unusual to me that large tracts of Manhattan - one of the most valuable pieces of real estate in the world - are covered by run down buildings from over a century ago. Large areas on the west side of Manhattan are covered by warehouses and low rise buildings. If left to their own devices, land owners will surely demolish these existing structures and build high rise condominiums. Housing stock in Manhattan would grow rapidly, and prices would come down. I've always thought that there must be some political reasons behind this paradox.
This Harvard university article confirms my suspicions. It identifies land use regulations as a primary cause of inflated prices in Manhattan. Back in 2004, they calculate that the market price of housing is more than twice the marginal cost of constructing housing. Increase in the number of people wishing to live in Manhattan has not resulted in increased supply, but merely higher prices. Prices today are much higher than it was in 2004, so the article is more true today than ever.
What political forces might drive these land use regulations? Basically, everyone who owns residential real estate in Manhattan has a huge interest in keeping supply down. They form neighborhood associations, historical preservation societies, and also lobby city councilmen. They sue to block new developments in their areas, often citing reasons like "environment" and "overcrowding." Zoning laws fundamentally constrict what areas may be used for residential development - which is great if you happen to already own a residential property in Manhattan. What ticks me off is that large number of renters buy into the arguments of those who already own. Think if it make you that much happy that your block contains century old townhouses and not modern condominiums. It might be charming, but the policies that preserve those townhouses are costing you hundreds if not thousands of dollars per month.
The average rent in Manhattan is now $3,429 per month, well above pre-recession levels. A new one bedroom unit in a doorman building fetches $3982 per month. Even a one bedroom in a walk-up costs $2580 per month. The article attributes this ongoing surge in rent to supply constraint, citing a vacancy rate of 1.16% - well below the national average of about 5%.
Surely, prices are ultimately set by supply and demand. According to Wikipedia, the residential population of Manhattan is 1.58 million. Every work day additional 1.61 million people pour into Manhattan - there is no shortage of potential buyers.
But having lived in NYC area briefly, I've long suspected that there's more than just market forces inflating housing costs. It always appeared unusual to me that large tracts of Manhattan - one of the most valuable pieces of real estate in the world - are covered by run down buildings from over a century ago. Large areas on the west side of Manhattan are covered by warehouses and low rise buildings. If left to their own devices, land owners will surely demolish these existing structures and build high rise condominiums. Housing stock in Manhattan would grow rapidly, and prices would come down. I've always thought that there must be some political reasons behind this paradox.
This Harvard university article confirms my suspicions. It identifies land use regulations as a primary cause of inflated prices in Manhattan. Back in 2004, they calculate that the market price of housing is more than twice the marginal cost of constructing housing. Increase in the number of people wishing to live in Manhattan has not resulted in increased supply, but merely higher prices. Prices today are much higher than it was in 2004, so the article is more true today than ever.
What political forces might drive these land use regulations? Basically, everyone who owns residential real estate in Manhattan has a huge interest in keeping supply down. They form neighborhood associations, historical preservation societies, and also lobby city councilmen. They sue to block new developments in their areas, often citing reasons like "environment" and "overcrowding." Zoning laws fundamentally constrict what areas may be used for residential development - which is great if you happen to already own a residential property in Manhattan. What ticks me off is that large number of renters buy into the arguments of those who already own. Think if it make you that much happy that your block contains century old townhouses and not modern condominiums. It might be charming, but the policies that preserve those townhouses are costing you hundreds if not thousands of dollars per month.
Sibling Rivalry: A woman is more likely to work if her husband makes less than her sister's husband
This is an excerpt from the conclusion of a study by two UPenn economists, Neumark and Postlewaite (full article link)
relative family income by working.
The authors suspect that the very rapid rise in female employment in the late half of the 20th century was driven not just by rational objective economic behavior, but partly by the need of married families to keep up with others. In essence, once dual income families started to become commonplace, many families felt compelled to have 2 income earners so that they don't fall behind.
In particular, women with non-working sisters are more likely to be
employed if their husbands earn less than their sisters’ husbands; this result is
consistent with women’s employment decisions being partly driven by relative
income concerns, because women with relatively low-earning husbands and
non-working sisters may be able to attain higher relative family income if they
work. In addition, women with working sisters are less likely to be employed if
their husbands earn less than their sisters’ husbands; this is also consistent with the
relative income model, since such women are unlikely to be able to attain higher
relative family income by working.
The authors suspect that the very rapid rise in female employment in the late half of the 20th century was driven not just by rational objective economic behavior, but partly by the need of married families to keep up with others. In essence, once dual income families started to become commonplace, many families felt compelled to have 2 income earners so that they don't fall behind.
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