Posts by steve black
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Eric Crampton is a "working statistician" and he says
Whether or not you believe the numbers that Labour highlighted last week -- and I do not put much stock in them -- there is growing international evidence of substantial foreign capital that would be more than happy to find a home in Auckland housing.
in his Herald opinion piece. I agree with the part I've quoted, and would count that as another working statistician vote for "could do better" on the statistics.
Crampton goes on to weigh in on the side of "reduce the regulations on foreign investment and on building whatever you like in Auckland at whatever density you like", as the way to solve "the problem". I don't agree with him on those matters, but you go and read it yourselves. I reckon he's cleverer than I am at mathematics and economics. The difference between us is our belief systems.
On the matter of Tony Alexander, thanks for the newsletter link Katharine. I've had a read and I don't know whether he is really saying what he recommends, or whether he's couching it in terms of "if people ask me what are the arguments might be for x I would give the following list". Maybe that's hedging your bets, not having the BNZ appear to take a clear and strong position on a complex and political topic in the heat of the moment, or my faulty reading.
Please note I'm not asking for somebody to go and pick out lots of quotes which to appear to have Tony Alexander making a clear and strong position. I'm more talking about the balance between taking a position sometimes and appearing to just give information (the aforementioned "if people ask me what are the arguments might be for x I would give the following list").
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Polity: A week on from the housing controversy, in reply to BenWilson,
It’s quite scary to think that the most powerful people this country could have a policy of deliberate ignorance about such an important issue as where the money going into the largest asset class comes from. How are you going to fight that? Spend your own money and time on extremely expensive analysis, just to prove something that is almost bleeding obvious, but not officially provable?
I do not have sympathy in the same way for this sort of thing you describe. But no, I don't put (much) of my own money into research to do something about it. I've retreated into research interests which really aren't of much concern to 99.9% of the population (vaguely estimated but probably conservative if you knew I'm busy researching how to date vintage cymbals and vintage cymbal prices). And old cymbals certainly aren't about saving the planet or the economy. But I was interested in the price bubble estimation paper because I've been wanting a methodology for assessing the existence of bubbles. No direct analogue of P/E yet for old cymbals, but then in that paper they did look at alternatives and assumptions of using P/E in the appendix from what I remember.
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Polity: A week on from the housing controversy, in reply to BenWilson,
Perhaps a better way of putting this: If it’s not the Reserve Bank’s official duty, then whose official duty is it to know what is happening with by far the biggest asset class in this country? Is it really no one at all? Are we really happy to just walk this path in total official blindness to the changing nature of our economic situation?
I think maybe the answer to this is: yes nobody official is watching. But it could be they are watching and withholding. We can’t tell from the outside.
Lack of watching might be because of the belief that “the market will magically take care of everything”. “The market will magically…” is not a belief I subscribe to (just in case anybody thought I might).
Watching and withholding might be because the consequences of issuing warnings about it is deemed to be likely to create a greater mess than the officials are comfortable with. Which takes us back to the crux of the matter about Labour’s decision to release (vs withhold) the results of their study. It’s a fine balance which has to be carefully thought out.
And let’s remember that thanks to the very same Rob Salmond it seems like the Government doesn’t always describe official advice accurately, nor follow it:
I have great sympathy for those who might be sitting quietly on the proper data because the potential problems with releasing it are too great.
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Polity: A week on from the housing controversy, in reply to BenWilson,
Could be done. Why has no one done it? Not just Labour, but anyone?
Thanks for your reply Ben. And your question is spot on as far as I’m concerned. The only observation I’d add is: Having worked for a couple of decades in private practice (versus my time in Universities) I’d agree that the Real Estate Company records would already have data which would allow things to be done properly. Being able to enlist their support and get the data to a trusted independent source is the big task.
I avoided talking about where the list of sales might come from because the list at the core of this particular conflagration is part of the problem/moral questions/lack of clarity about data sources. So my list is just “if somebody showed up with a list” rather than the list. I was just trying to sketch out for people who might not know what doing it properly would look like. I didn’t mention phone numbers, although I though about it. I wanted to avoid mode of survey (face to face vs telephone vs web based) because that tends to complicate the discussion again when the methodological microscopes come out.
What I proposed is simple in concept, but in no way easy to undertake.
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So first an overview which mentions the research and gives some context
and the research paper (warning: mathematics + data rich)
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Polity: A week on from the housing controversy, in reply to Sacha,
That’s novel. Who else has been bidding prices eternally higher?
Just to answer your question (and not defend the original comment nor it’s context) the others bidding up prices would be:
people buying a dwelling to live in
people buying a dwelling to give their kids somewhere to live
people buying a rental property
people buying a property betting that the price will riseYou would call the last set of people speculators. I haven’t seen any research which looks at the proportions of those different classes of people involved in recent house purchases. I have read a nice paper on assessing the bubble(s) in the Auckland market and NZ markets, but it's technical, and I'm struggling to get the link in properly. I might have to postpone it until a new post...
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Polity: A week on from the housing controversy, in reply to BenWilson,
...shed light on where/how this could have been done instead without getting bogged down in all the moral issues that surround this research.
Say you are interested in looking at what proportion of house purchasers are non resident.
If somebody came to me with a list of purchasers of houses and I could get names and addresses out of it, I wouldn't head for a computer and start classifying names as Chinese. I'd pick a random sample of names from the list and start contacting people and explain the research being undertaken. I can't remember if the original number of names on the list has been given, but for starters let's say pick a 10% random sample.
Do the usual research thing. Contact them and find out some things like their citizenship and residence status. Go ahead and ask ethnicity if you like. You could even ask them how many houses or apartments they own. And are they going to live in the one they purchased or is it an investment?
You then analyze your data to work out things like the proportions of purchasers who are residents vs non residents, citizens, investors. You now have measured the proper variables at the level of individual data. You could also look at the proportions of overseas resident purchasers who are in different categories of interest: Australian, American, Kiwis living abroad, Chinese.
Write these results up without resorting to sensational headlines and be very clear that this isn't an estimate of the total sampling universe (all sales). Just the proportions in the list.
This takes more effort than Rob put in. But I think it measures the right variables.
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OnPoint: Don't put words in our mouths, Rob, in reply to Steve Curtis,
It would be good to hear more people who work in everyday statistics
You have heard from me. I am a PhD qualified working statistician. What you are saying isn’t helping to create a quality discussion of the issues. I spent some time constructing my criticism avoiding all mention of the Chinese Ethnicity issue because I feel the Chinese Ethnicity is but one of the methodological issues.
That quote from the Stat Dept is about recognizing that all data has issues and limitations. But no we don’t throw it away. We write them up in the methodology section and use the limitations to inform our analysis so we don’t overgeneralize. Or we take action to adjust for the defects in sampling, and we test our assumptions about how these adjustments affect estimates. These are the sorts of things which weren’t done adequately in the report.
You have also heard from Thomas Lumley on Statschat.
If it was a medical study they would have measured residency, not just imputed it from ethnicity.
link: statschat blog
and he’s a statistican too. Failure to measure what they needed to measure (residency) is still the biggest flaw for me. But I’ve discussed others. Mostly I say "there are things I'd need to know more about to judge the weight of evidence". And I'm all in favor of collecting the right data.
Thank you Craig, for the double facepalm. It’s probably a more eloquent response than mine.
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OnPoint: Don't put words in our mouths, Rob, in reply to Steve Curtis,
Were you meaning B&T were specifically targeting overseas clients.
Are you highlighting the old switch-a-roo from “Chinese-speaking house buyers” to “overseas clients”? That seems to be a major conflation between two different concepts right back at the beginning of this saga A conflation leading to a conflagration.
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OnPoint: Don't put words in our mouths, Rob, in reply to SHG,
It’s for one company that specifically targets Chinese-speaking house buyers in its marketing
That’s something I’ve been wondering about and haven’t seen mention of so far in the context of how representative this data is of all market sales. To what extent is it usual practice in all real estate companies to target Chinese-speaking house buyers? All companies do it? Some do it, some don’t? Are there big differences in the spending on marketing this way by the real estate companies which do it? So many questions in terms of understanding the potential representativeness of the sample data compared to the sampling universe of all sales.
Oh, and just for fun, I thought I should include my suggested re-write of the original Herald headline having removed all the unnecessary words and those mentioning variables which aren’t actually measured: “People may influence Auckland’s property market”.
That’s whittled down from the original: “Leaked figures support claims that Chinese investors are a big influence on Auckland’s overheated property market.”
Yes I know my version probably wouldn’t have made the same media splash…