Buying 9 more houses than the Australians = dominating housing market says @nzherald
10 May 2016 Leave a comment
in economics of regulation, politics - New Zealand, Public Choice, rentseeking Tags: antiforeign bias, housing affordability, land supplied, rational irrationality
Chinese tax residents bought 321 Auckland properties (29.5 per cent of the total); Australian tax residents purchased 312 Auckland properties (28.6 per cent).
Trekonomics: The Final Frontier (w/ Manu Saadia)
09 May 2016 Leave a comment
in applied price theory, applied welfare economics, Austrian economics, comparative institutional analysis, constitutional political economy, development economics, economics of regulation, environmental economics, history of economic thought, industrial organisation, international economics, law and economics, property rights Tags: star trek
The dual concepts of Businesses Cannot Discriminate and Her Body, Her Choice have intersected
08 May 2016 Leave a comment
in economics of regulation, health economics, politics - USA Tags: alcohol regulation, meddlesome preferences, nanny state
New York drinking establishments must post warnings against pregnant women drinking but still must serve them.
The Coase Theorem
08 May 2016 Leave a comment
in applied price theory, applied welfare economics, Austrian economics, comparative institutional analysis, constitutional political economy, economics of regulation, environmental economics, history of economic thought, industrial organisation, law and economics, property rights, Ronald Coase Tags: Coase theorem
@AndrewLittleMP all but admits rents to go up after Healthy Homes Bill?
08 May 2016 Leave a comment
in applied price theory, applied welfare economics, economics of regulation, Public Choice, rentseeking Tags: economics of housing, economics of mandates, expressive voting, fatal conceit, rent controls, The pretense to knowledge
Opposition Leader Andrew Little accepts that mandating insulation and heat pumps into rental properties will increase their value. But he denies that this will affect rents!
Source: Healthy Homes Bill won’t up rents Little | Politics | Newshub.
An upgrade increases the value of a rental property if the improvements that increase its rental value. You cannot have the increase in the value of the asset without the increase in rent.
I will contract out the rest of my answer to David Friedman’s superb book Laws Order:
For an application of economics to a different part of the law, consider the nonwaivable warranty of habitability, a legal doctrine under which some courts hold that apartments must meet court-defined standards with regard to features such as heating, hot water, sometimes even air conditioning, whether or not such terms are provided in the lease—indeed, even if the lease specifically denies that it includes them.
The immediate effect is that certain tenants get services that their landlords might not otherwise have provided. Some landlords are worse off as a result; some tenants are better off. It seems as though supporting or opposing the rule should depend mainly on whose side you are on.
In the longer run, the effect is quite different. Every lease now automatically includes a quality guarantee. This makes rentals more attractive to tenants and more costly to landlords. The supply curve, the demand curve, and the price, the rent on an apartment, all shift up. The question, from the standpoint of a tenant, is not whether the features mandated by the court are worth anything but whether they are worth what they will cost.
The answer may well be no. If those features were worth more to the tenants than they cost landlords to provide, landlords should already be including them in their leases—and charging for them. If they cost the landlord more than they are worth to the tenant, then requiring them and letting rents adjust accordingly is likely to make both landlord and tenant worse off. It is particularly likely to make poorer tenants worse off, since they are the ones least likely to value the additional features at more than their cost.
A cynical observer might conclude that the real function of the doctrine is to squeeze poor people out of jurisdictions that adopt it by making it illegal, in those jurisdictions, to provide housing of the quality they can afford to rent.
If my analysis of the effect of this legal doctrine seems implausible, consider the analogous case of a law requiring that all cars be equipped with sunroofs and CD changers. Some customers—those who would have purchased those features anyway—are unaffected. Others find that they are getting features worth less to them than they cost and paying for them in the increased price of the car.
Psychological Bias as a Driver of Financial Regulation
06 May 2016 Leave a comment
in comparative institutional analysis, constitutional political economy, economics of bureaucracy, economics of regulation, financial economics, Public Choice Tags: behavioural public choice, rational irrationality
“Psychological Bias as a Driver of Financial Regulation,” David Hirshleifer, European Financial Management, 14(5), November, (2008):856-874.
Does invested $1 in retrofitting saves $6 in health expenditure? @PhilTwyford @PeterDunneMP @AndrewLittleMP
05 May 2016 Leave a comment
in economics of regulation, energy economics, health economics, politics - New Zealand, public economics Tags: cost benefit analysis, economics of housing, economics of insulation, energy efficiency gap, The fatal conceit, The pretense to knowledge, valuation of life
Various bold claims have been made about the payoff from investing more in retrofitting insulation into housing. The government recently spent $600 million on such retrofitting of insulation.
https://twitter.com/PhilTwyford/status/728137160113557505
There is a private member’s bill before Parliament to introduce minimum standards for rental properties with regard to insulation and other matters. Little is by the Leader of the Opposition Andrew Little said for the consequences for rents of this additional expense to landlords.
Ian Harrison of Tail Risk Economics initially estimated that the $600 million invested in retrofitting of insulation will save barely half of that:
After correcting for this major error and taking a more realistic view of the benefit estimates in other studies, the net benefits of $630 million disappear.
The $600 million insulation investment will probably generate benefits of closer to $170 million, for an economic loss of $430 million.
After meeting with Ian, I read through the rather dull background documents behind a cost benefit analysis relied upon by the government to spend the $600 million dollars.
The most interesting part of the cost benefit analysis is most of the benefits come from fewer cardiovascular related hospitalisation of the elderly and not from respiratory diseases among children.
I found the error was far more fundamental than a incorrect transfer of a calculation between tables discussed in the first publication by Harrison. I had to read the background documents several times to understand what had been done wrong.
The cost benefit analysis for the Warm Up New Zealand Heat Smart Programme assumes that the number of elderly occupants of the newly insulated house increases by one each year and after 5 years, one of these dies but is replaced by a new elderly occupant.
We have modelled the probability of a vulnerable person avoiding mortality as a result of the intervention. The probability of this is (112.7/1000)*0.27= 0.03 (3%). We treat avoidance of mortality by treatment in each year as independent events.
The multi-year benefit calculated above would accrue based on the life years gained as a result of deaths avoided in year one.
However, we would expect these benefits to accrue in year two for different vulnerable individuals (aged 65 and over with a cardiovascular related hospitalisation in previous 18 months), and for different individuals again in every subsequent year that the treatment continues to have an effect, i.e. an on-going stream of benefits of $1,050.74 per year. This assumes a constant proportion of people aged 65+ who have recently been hospitalised with circulatory problems….( p.38).
In the first year of the new insulation, the first occupant benefits and the net present value is included in the benefit cost analysis calculation – the erroneous benefit cost analysis calculations which its authors still defend.
In the 2nd year, another elderly person moves into that same house and the same calculation is done for them. In the following year, yet another elderly person moves into the same house and the net present value calculation is repeated.
By the end of 5 years, there are 5 occupants in this house all benefiting from the same insulation investment. In the 6th year, the first elderly occupant dies to be replaced by a new elderly occupant who then gains from the insulation upgrade.
There was double counting of the number of people who benefited from the insulation as Iain Harrison explains
The analysis assumed that there was not one, but five occupants who had been hospitalised with a cardiovascular illness in the previous 18 months in each of the relevant insulated houses. There should have been only one such occupant.
The retrofitting of insulation was estimated to cost $600 million. Iain Harrison estimated the benefits to be $300 million, not $1.2 billion. That is a benefit cost ratio of 0.5.
Source: Iain Harrison, The mortality reduction benefits of insulation: the error identified.
@jacindaardern @NZLabour’s Healthy Homes Bill will raise rents to poor tenants and students
05 May 2016 1 Comment
in David Friedman, economics of regulation, law and economics, politics - New Zealand Tags: avoiding difficult decisions, housing habitability laws, living standards, New Zealand Labour Party, offsetting, rent control, The fatal conceit, The pretense to knowledge, unintended consequences
Source: David Friedman, Chapter 1: What Does Economics Have to Do with Law?
The LDP on Marijuana Legalisation
05 May 2016 Leave a comment
in economics of crime, economics of regulation, law and economics, liberalism, libertarianism Tags: marijuana decriminalisation
Does ethical investing pay? Barrier Fund and Ave Maria Catholic Values Fund head to head
04 May 2016 Leave a comment
in economics of regulation, economics of religion, entrepreneurship, financial economics Tags: efficient markets hypothesis, entrepreneurial alertness, ethical investing
Virtue is not its own reward if you invest in the Ave Maria Catholic Values Fund which is AVEMX in the head-to-head comparison with the Barriers Fund, formerly the Vice Fund. The Ave Maria Catholic Values Fund return since inception was 5.63% as compared to the 9.95% return of the Barrier Fund.
Source: VICEX – USA Mutuals Barrier Fund Investor Class Shares Mutual Fund Quote – CNNMoney.com
The S&P index grew by 8 .34% since the inception of the then Vice Fund, now the Barrier Fund. Such is the price of risking of going to hell if you lose Pascal’s wager by investing in tobacco, alcoholic beverage, gaming and defence/aerospace industries.
All of the equity investments (which include common stocks, preferred stocks and securities convertible into common stock) and at least 80% of the net assets of the Ave Maria Catholic Values Fund is invested in companies meeting its religious criteria as the fund manager explains
Morally Responsible Investing (MRI) is a subset of socially responsible investing, which often screens out companies engaged in environmental issues, tobacco products, alcohol, nuclear power, defense, oil and “unfair” labor practices. MRI is different in that it screens out companies engaged in activities that are not pro-life or pro-family…
All investments are screened to eliminate any company engaged in abortion, pornography, embryonic stem cell research, or those that make corporate contributions to Planned Parenthood
Traditional ethical funds use negative screens (to eliminate arms manufacturers and other frowned upon activities) and positive screens (to favour businesses with a good record on corporate social responsibility or that are involved in low-carbon industries etc).
why the world isn’t even more corrupt than what we observe
04 May 2016 Leave a comment
in applied price theory, development economics, economic history, economics, economics of crime, economics of regulation, entrepreneurship, Gordon Tullock, growth disasters, growth miracles, income redistribution, law and economics, Public Choice, rentseeking Tags: bribery and corruption, Tullock paradox
Landmarking Is Turning New York City Into a Life-Sized Historical Diorama
01 May 2016 1 Comment
in applied price theory, applied welfare economics, economics of regulation, urban economics Tags: landmark preservation, zoning
Source: Landmarking Is Turning New York City Into a Life-Sized Historical Diorama – Hit & Run : Reason.com
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