Home ownership policy of the Bush and Clinton administrations was, in essence, an attempt to pay low-income people to make a risky investment that they would otherwise rationally avoid. I cannot understand why anyone would think that such a policy would be sensible. In some cases, these people will do well and enjoy the upside of their investment, but in other cases they will do poorly, with the result that they will be worse off than ever.
That’s the concluding paragraph from an excellent analysis of home ownership by Eric Posner..
Thanks to Tyler Cowen:
You’ll note that Henry Paulson has been calling for the mortgage agencies to be resurrected as “public utilities” of some sort. I don’t understand this path. There is a very good (modern) liberal case against more home ownership: behavioral economics is true, people overestimate their prospects, poor people shouldn’t take too much risk, and the natural market tendency is too much home ownership, not too little. That’s without taking environmental issues into account.
Recent Comments