A bit more on housing

I expanded my post on housing affordability into a piece for the Fin, published yesterday. The suggestion of replacing stamp duty with land tax produced a letter from someone whose argument (if I got it right) was that homeowners would be better off if stamp taxes were abolished and not replaced with anything. True, and while we’re at it, free expresso and ponies all around would be nice.
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Weekend reflections

Weekend Reflections is on again. Please comment on any topic of interest (civilised discussion and no coarse language, please). Feel free to put in contributions more lengthy than for the Monday Message Board or standard comments.

Survivor (also at CT)

The question of disciplinary boundaries is a perennial, and Brian Weatherson’s CT post on Richard Gott’s Copernican principle provides yet another instance. Gott, an astrophysicist, is interested in the question of whether you can infer the future duration of a process from its present age, and this issue seems to received some discussion in philosophy journals.

It may be beneath the notice of these lofty souls, but statisticians and social scientists have actually spent a fair bit of time worrying about this question of survival analysis (also called duration analysis). For example, my labour economist colleagues at ANU were very interested in the question of how to infer the length of unemployment spells, based on observations of how long currently unemployed people had actually been unemployed. The same question arises in all sorts of contexts (crime and recidivism, working life of equipment, individual life expectancy and so on). Often, the data available is a set of incomplete durations, and you need to work out the implied survival pattern.

Given a suitably large sample (for example, the set of observations of Broadway plays, claimed as a successful application of Gott’s principle) this is a tricky technical problem, and requires some assumptions about entry rates, but raises no fundamental logical difficulties. The problem is to find a distribution that fits the data reasonably well and estimate its parameters. I don’t imagine anyone doing serious work in this field would be much impressed by Gott’s apparent belief that imposing a uniform distribution for each observation is a good way to go.

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A couple of thoughts on Haneef

I’ve been at meetings today, so I haven’t had a chance to keep up with all the commentary on this case. But I have a couple of observations, or maybe questions.

First, it appears that the Minister for Immigration now has the power to seize and detain indefinitely anyone in Australia who is not a permanent resident (or maybe anyone who is not a citizen, or maybe anyone at all). All that is required is to revoke their visa, on the (non-reviewable?) grounds that they are not of good character, and then delay the implied deportation indefinitely. Can this be true?

Second, the evidence that is publicly available goes nowhere near justifying this decision. All we know is that Haneef gave his SIM card to his cousin, and that (as I interpret the charge against him) the government alleges that he ought to have suspected that the cousin was a terrorist. The Minister hints that there is a lot more that he knows and we don’t. But, given this government’s track record, isn’t it equally likely that the decision was taken purely in the hope that Labor could be wedged between concern for civil liberties and fear of terrorism?

Plea for help

I’ve reached the limit of my technical ability with the problems that have been plaguing the blog for the last few months, most recently the blank pages problem. It’s time for me to abandon the solo effort and call for collaborator(s) with the WordPress skills to keep the site running properly (or maybe the capacity to migrate to yet another system). So, if you’re interested, please drop me a line.

Land and house prices

Over at Club Troppo, Nicholas Gruen has a nice piece on what is driving the growth in house prices. He’s correctly sceptical of the view that restrictions on land releases on the urban fringe are to blame.

The crucial economic test here is the location-price gradient, measuring the rate at which prices increase as you move from the rural fringe to the inner city. I haven’t got numbers but it’s pretty clear that this gradient has become steeper over time. This is most obvious in Sydney where the Southwest was the last area to boom and the first to bust.

Sticking with supply constraints, Nicholas goes on to mention resistance to urban consolidation, an effect which works in the right direction. Still, it seems to me that this resistance has been much less effective recently than in the past.

It seems clear that the primary motive for the boom is increased demand. Of course, if the supply of land, skilled building workers, materials and so on were perfectly elastic, higher demand would not increase prices. But supply is never perfectly elastic.

Looking at policy, the obvious thing to change, if you want to make it easier for people to buyer houses is to remove taxes on entrants, like stamp duty, and replace them with taxes on incumbents, by removing the owner-occupier exemption from land tax. The fury with which this suggestion is invariably rejected makes it clear that, as a community, we don’t really mind high house prices.

Default theme

I’ve gone back to the default theme in the hope of solving the problems I’ve had with blank pages and similar. If readers could advise on whether this seems to be more reliable, I’d be very grateful.