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Contributions of economists to the housing-price bubble

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  • Martha A. Starr

Abstract

After the bursting of the housing-price bubble in 2006 and ensuing financial crisis, there has been much discussion of what economists could have done differently to help avert the crisis and "Great Recession" that followed. One dimension of this concerns information supplied by economists to the general public about causes of high appreciation in home prices and their likely future course, as good information could have helped the public hedge their finances against downside risks while bad information may have encouraged them to take on too much risk. This paper analyzes data from 24 California newspapers on assessments and predictions offered by economists as to whether bubbles were forming in the state's housing markets. In brief, we find that the California public was fairly decently served by economists offering their views via the media -- although with some significant problems of biased forecasts not made in good faith, and of inattention to concerns about "harm avoidance" that ought to apply when economists share their opinions in this way.

Suggested Citation

  • Martha A. Starr, 2011. "Contributions of economists to the housing-price bubble," Working Papers 2011-03, American University, Department of Economics.
  • Handle: RePEc:amu:wpaper:2011-03
    DOI: 10.17606/0fvp-6r81
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Economists did see the bubble coming
      by Economic Logician in Economic Logic on 2011-04-27 19:39:00

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    Cited by:

    1. Paolo Ramazzotti, 2013. "Shared economic thought and the neglect of social costs. Why progressive economists often stick to conventional wisdom," Working Papers 71-2013, Macerata University, Department of Finance and Economic Sciences, revised Dec 2015.
    2. Martha A. Starr, 2014. "Qualitative And Mixed-Methods Research In Economics: Surprising Growth, Promising Future," Journal of Economic Surveys, Wiley Blackwell, vol. 28(2), pages 238-264, April.
    3. Eddison T. Walters, 2020. "Evidence From Data Analysis, Fifteen Developed Countries and the United States Home Prices Increase Between 1990 to 2006 Result of Advancement In Technology, Worldwide Economic Collapse and Great Rece," International Business Research, Canadian Center of Science and Education, vol. 13(11), pages 114-114, November.

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    Keywords

    JEL classification: R21; D31; D12; E32;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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