Metropolitan Area Home Prices and the Mortgage Interest Deduction: Estimates and Simulations from Policy Change

We simulate changes to metropolitan area home prices from reforming the Mortgage Interest Deduction (MID). Price simulations are based on an extended user cost model that incorporates two dimensions of behavioral change in home buyers: sensitivity of borrowing and the propensity to use tax deductions. We simulate prices with both inelastic and elastic supply. Our results show a wide range of price effects across metropolitan areas and prospective policies. Considering behavioral change and no supply elasticity, eliminating the MID results in average home price declines as steep as 13.5% in Washington, D.C., and as small as 3.5% in Miami-Fort Lauderdale, FL. Converting the MID to a 15% refundable credit reduces prices by as much as 1.4% in San Jose, CA, San Francisco, CA, and Washington, D.C. and increases average price in other metropolitan areas by as much as 12.1% (Miami-Fort Lauderdale). Accounting for market elasticities produces price estimates that are on average 36% as large as standard estimates

Discrimination in Mortgage Lending: Evidence from a Correspondence Experiment

We design and implement an experimental test for differential response by mortgage loan originators (MLOs) to requests for information about loans. Our e-mail correspondence experiment is designed to analyze differential treatment by client race and credit score. Our results show net discrimination by 1.8% of MLOs through non-response. We also find that MLOs offer more details about loans and are more likely to send follow up correspondence to whites. The effect of being African American on MLO response is equivalent to the effect of having a credit score that is 71 points lower

On Variants of CM-triviality

We introduce a generalization of CM-triviality relative to a fixed invariant collection of partial types, in analogy to the Canonical Base Property defined by Pillay, Ziegler and Chatzidakis which generalizes one-basedness. We show that, under this condition, a stable field is internal to the family, and a group of finite Lascar rank has a normal nilpotent subgroup such that the quotient is almost internal to the family

Tragedy of the Commons in the Chemostat

We present a proof of principle for the phenomenon of the tragedy of the commons that is at the center of many theories on the evolution of cooperation. We establish the tragedy in the context of a general chemostat model with two species, the cooperator and the cheater. Both species have the same growth rate function and yield constant, but the cooperator allocates a portion of the nutrient uptake towards the production of a public good -the "Commons" in the Tragedy- which is needed to digest the externally supplied nutrient. The cheater on the other hand does not produce this enzyme, and allocates all nutrient uptake towards its own growth. We prove that when the cheater is present initially, both the cooperator and the cheater will eventually go extinct, hereby confirming the occurrence of the tragedy. We also show that without the cheater, the cooperator can survive indefinitely, provided that at least a low level of public good or processed nutrient is available initially. Our results provide a predictive framework for the analysis of cooperator-cheater dynamics in a powerful model system of experimental evolution.Comment: 23 pages, 4 figure

Housing Market Distortions and the Mortgage Interest Deduction

Housing market distortions from the mortgage interest deduction (MID) typically focus on a single choice measure such as home size or self-reported amount of debt on a new mortgage. We estimate the amount of mortgage interest deducted on federal tax returns to capture the full range of housing market distortions from the MID. Our primary results show that for every one percentage point increase in the tax rate that applies to deductibility, the amount of mortgage interest deducted increases by US$303 to US$590. Empirical estimates imply elasticities of mortgage interest deducted with respect to the after-tax cost of housing between -0.78 and -1.62, and deadweight loss estimates ranging from 16 to 36 percent of MID tax expenditure

African Americans have a harder time getting mortgage information compared to whites.

In the 1960s and 70s, Congress enacted a number of laws aimed at eliminating discrimination in access to credit in the housing market. Despite these legal prohibitions against discrimination, Hal Martin, Andrew Hanson, and Zackary Hawley find that mortgage lenders do discriminate against African Americans. Using fictitious ‘black’ and ‘white’ names to request mortgage information, they find that lenders sent responses more slowly and less often to those with ”black’ names, and that this difference was even more pronounced for those with lower credit scores

Deep Brain Stimulation—A new treatment for tinnitus

AbstractIntractable tinnitus can lead to serious consequences. Study evidence indicates that the central nervous system is involved in generation and maintenance of chronic tinnitus and that tinnitus and other neurologic symptoms such as chronic pain may share similar mechanisms. Brain ablation and stimulation are used to treat chronic pain with success. Recent studies showed that ablation and stimulation in non-auditory areas resulted in tinnitus improvement. Deep brain stimulation (DBS) may be an alternative treatment for intractable tinnitus and deserves further study

Alternative Defrost Strategies for Residential Heat Pumps

Heat pumps are an energy efficient way to provide adequate heating to an indoor space. In contrast to electric or gas heating, a heat pump works to draw the free heat from the cold outdoor ambient and transfer thermal energy to the heated space. When the outdoor ambient is cold and humidity conditions are right, however, frost will start to develop on the heat pump’s outdoor coil. Frost on the coil surface blocks air flow through the coil thus reducing the heat pump’s efficiency and overall performance. Control of frosting and defrosting is particularly important to the successful use of heat pumps in cold climates. To restore the unit’s heating capacity and efficiency, a defrost cycle is needed to remove the accumulated frost developed on the coil. While defrosting restores heat pump efficiency, this period of operation itself requires additional power and ultimately results in an energy penalty. Improving defrost performance and/or reducing the number and duration of required defrost periods would significantly improve heat pump operation. Heat pump researchers and manufacturers have spent a great amount of effort on the topic of defrosting. A comprehensive review of efforts within the last 15 years was conducted to summarize existing defrosting technologies and identify those solutions that may be more feasible or readily commercialized to reduce the defrost penalty. This summary highlights technologies that may reduce or eliminate the negative impacts of the defrosting period including approaches using hot gas bypass, coil coatings and advanced control strategies. The potential impact of the identified technologies is energy and demand savings, improved performance for comfort, and removal of a significant barrier to widespread adoption of air-source heat pumps in all climates