Economics and Ideology: Causal Evidence of the Impact of Economic Conditions on Support for Redistribution and Other Ballot Proposals

There is a large literature demonstrating that positive economic conditions increase support for incumbent candidates, but little understanding of how economic conditions affect preferences for parties and for particulars of their platforms. We ask how exogenous shifts to the value of residents. human capital affect voting behavior in California neighborhoods. As predicted by economic theory, we find that positive economic shocks decrease support for redistributive policies. More notably, we find that conservative voting on a wide variety of ballot propositions--from crime to gambling to campaign finance--is increasing in economic well being.

Now You See it, Now You Don't: Why Do Real Estate Agents Withhold Available Houses from Black Customers?

Potential home buyers may initiate contact with a real estate agent by asking to see a particular advertised house. This paper asks whether an agent's response to such a request depends on the race of the potential buyer or on whether the house is located in an integrated neighborhood. We build on previous research about the causes of discrimination in housing by using data from fair housing audits, a matched-pair technique for comparing the treatment of equllay qualified black and white home buyers. However, we shift the focus from differences in the treatment of paired buyers to agent decisions concerning an individual housing unit using a sample of all houses seen during he 1989 Housing Discrimination study. We estimate a random effect, multinomial logit model to explain a real estate agent's joint decisions concerning whether to show each unit to a black auditor and to a white auditor. We find evidence that agents withhold houses in suburban, integrated neighborhoods from all customers (redlining), that agents' decisions to show houses in integrated neighborhoods are not the same for black and white customers (steering), and that the houses agents show are more likely to deviate from the initial request when the customeris black than when the customer is white. These deviations are consistent with the possibility that agents act upon the belief that some types of transactions are relatively unlikely for black customers (statistical discrimination).

The Continuing Practice and Impact of Discrimination

This chapter provides a detailed discussion of the evidence on housing and mortgage lending discrimination, as well as the potential impacts of such discrimination on minority outcomes like homeownership and neighborhood environment. The paper begins by discussing conceptual issues surrounding empirical analyses of discrimination including explanations for why discrimination takes place, defining different forms of discrimination, and the appropriate interpretation of observed racial and ethnic differences in treatment or outcomes. Next, the paper reviews evidence on housing market discrimination starting with evidence of segregation and price differences in the housing market and followed by direct evidence of discrimination by real estate agents in paired testing studies. Finally, mortgage market discrimination and barriers in access to mortgage credit are discussed. This discussion begins with an assessment of the role credit barriers play in explaining racial and ethnic differences in homeownership and follows with discussions of analyses of underwriting and the price of credit based on administrative and private sector data sources including analyses of the subprime market. The paper concludes that housing discrimination has declined especially in the market for owner-occupied housing and does not appear to play a large role in limiting the neighborhood choices of minority households or the concentration of minorities into central cities. On the other hand, the patterns of racial centralization and lower home ownership rates of African-Americans appear to be related to each other, and lower minority homeownership rates are in part attributable to barriers in the market for mortgage credit. The paper presents considerable evidence of racial and ethnic differences in mortgage underwriting, as well as additional evidence suggesting these differences may be attributable to differential provision of coaching, assistance, and support by loan officers. At this point, innovation in loan products, the shift towards risk based pricing, and growth of the subprime market have not mitigated the role credit barriers play in explaining racial and ethnic differences in homeownership. Further, the growth of the subprime lending industry appears to have segmented the mortgage market in terms of geography leading to increased costs of relying on local/neighborhood sources of mortgage credit and affecting the integrity of many low-income minority neighborhoods through increased foreclosure rates.

Redlining, the Community Reinvestment Act, and Private Mortgage Insurance

This paper examines whether neighborhood racial or income composition influences a lender's treatment of mortgage applications. Recent studies have found little evidence of differential treatment based on either the racial or income composition of the neighborhood, once the specification accounts for neighborhood risk factors. This paper suggests that lenders may favor applicants from CRA-protected neighborhoods if they obtain Private Mortgage Insurance (PMI) and that this behavior may mask lender redlining of low income and minority neighborhoods. For loan applicants who are not covered by PMI, this paper finds strong evidence that applications for units in low-income neighborhoods are less likely to be approved, and some evidence that applications for units in minority neighborhoods are less likey to be approved, regardless of the race of the applicant. This pattern is not visible in earlier studies because lenders appear to treat applications from these neighborhoods more favorably when the applicant obtains PMI.