This time around, Matt talks to Luca Gattoni-Celli about why it’s so expensive to buy a house.

In the 80s, people from all sorts of socioeconomic backgrounds were able to afford apartments and houses in places like New York City, San Francisco, or London. Now, on the other hand, even many wealthy people are getting priced out of the city. And indeed, the issue is no longer specific to urban areas: the problem of seemingly infinitely increasing real estate prices would appear to be creeping into the rest of the US, and into many other areas that were typically regarded as affordable in the recent past.

Why is this the case? In this episode, Luca Gattoni-Celli discusses three factors that have artifically inflated housing prices far beyond the equilibrium point between supply and demand. One is zoning regulations, which impose limits on how maximum building size in a given area, how many people can live on a single property, and so forth. Another is permitting, which has the effect of introducing delays into the building process that make it financially infeasible and thus effectively block it from happening. The third is building codes, many of which were introduced for the purposes of making buildings safer to inhabit, but which have the perverse effect of preventing the construction of new buildings that would be safer than the old buildings that are currently in use.

Our guest also makes the argument that zoning regulations have a sordid racist and classist past, which you can see, to an extent, in some of the original proposals that led to some of the original policies. More broadly, the claim is that population density is the way that low-income people band together to be able to afford real estate for which there is high demand, and that a push to block density effectively amounts to a push to keep lower-income people out.

I found the discussion quite stimulating; I hope you enjoy it.

Matt Teichman

Hosted on Acast. See acast.com/privacy for more information.

Note: this episode was recorded in August of 2022.

In the latest Elucidation, Matt talks to Witold Więcek about the difficulties that come up for researchers who would like to draw upon statistics.

Lots of academic fields need to draw heavily on statistics, whether it’s economics, psychology, sociologym, linguistics, computer science, or data science. This means that a lot of people coming from different backgrounds often need to learn basic statistics in order to investigate whatever question they’re investigating. But as we’ve discussed on this podcast, statistical reasoning is easy for beginners to mess up, and it’s also easy for bad faith parties to tamper with in undetectable ways. They can straight up fabricate data, they can cherry pick it, they can keep changing the hypothesis they are testing until they find one that is supported by a trend in the data they have. So what should we do? We can’t give up on statistics; it is simply too useful a tool.

Witold Więcek argues that researchers have to be mindful of “p-hacking”. Statistical significance, the golden standard of academic publishing, can easily be guaranteed by unscrupulous research or motivated reasoning: statistically speaking, even noise can look like signal if we keep asking more and more questions of our data. Modern statistical workflows require us to either adjust the results for number of hypotheses tested or to follow principles of Bayesian inference. As a broader strategy, Więcek recommends that every research project making significant use of statistical arguments bring in in an external consultant, who can productively stress test those arguments in an adversarial way, given that they aren’t part of the main team.

It was a great conversation! I hope you enjoy it.

Matt Teichman

Hosted on Acast. See acast.com/privacy for more information.

In this episode, Matt sits down with Shruti Rajagopalan (Mercatus Center) to talk about what the future holds for India.

We often have a tendency to think of the current economic and geopolitical situation as simply the way things are. Especially for people who grew up in the United States over the past 50 years, the fact that it is an economic and military superpower sorta feels set in stone. But in this episode, Shruti Rajagopalan encourages us to take the long view, regarding the current state of the US as just one phase in a decades or possibly centuries-long economic development life cycle. First, the country logs a certain number of decades as a manufacturing hub, under conditions of minimal top-down interference from regulatory bodies. This enables it to build wealth, which eventually pushes it away from being a manufacturing economy, but it’s a race against the clock. With economic growth comes a rise in average life expectancy, plus a lower birth rate, which together can lead to large aging population. Once the aging population increases, the country’s economy needs to be strong in order to accommodate all the caregiving that an aging population makes necessary.

Interestingly, it’s starting to look like some other countries—particularly India—are currently poised to undergo a similar trajectory of economic development that the US did. What makes India stand out is that among the countries in the world with a large young population, they have an unusually high GDP per capita. They also have a pretty sizeable early-career, STEM-savvy middle class that is ready to move anywhere in the world, build a life wherever they end up, and culturally assimilate.

Our esteemed guest argues a) that the relaxation of economic restrictions which took place in India in 1991 made this siutation possible, and that b) a few conditions still need to be met for the future to unfold in the optimal way. One is that India needs to build up its manufacturing sector that the country can get richer before the population gets too old. Another is that other countries need to take advantage of the fact that India’s young workforce is ready to emigrate. She even suggests that wealthier countries with a rising elderly population, low birthrate, or declining heritage language could perhaps address those issues by welcoming an incoming population of young workers from India.

Join us as our guest outlines the (hopefully) upcoming rise of India on the world stage!

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