A Blog to be Ashamed of?
I got an email today from a guy named Steve Sailer, who informed me and co-authors that he'd blogged about our recent paper on the mortgage crisis at length. Apparently, he's a conservative journalist and blogger who's been criticized heavily as a racist. According to his Wikipedia site:
Sailer's article on Hurricane Katrina was followed by accusations of racism from "left-wing" organizations Media Matters for America and the Southern Poverty Law Center.[16][17] In reference to the New Orleans slogan "let the good times roll", Sailer commented:
And...this guy likes our paper. You can read his blog post about it here.
Here's my take on everything. We can't ignore the issue of race in the current mortgage crisis. Minorities are disparately impacted by the mortgage crisis, and this is well established in the literature. So my co-authors and I wanted to take an honest, hard, empirical look into race effects in a mortgage delinquency model. We found that race effects persisted even when controlling for all information obtained at loan origination.
In other words, we found that African-American and Hispanic mortgage borrowers were more likely to go into mortgage delinquency, even after accounting for differences in income, credit score, other financial characteristics, mortgage characteristics, and property attributes.
This is a tricky finding that I think is interesting and worthwhile to pursue. In our paper, we cite some possible explanations based on prior research findings, including racial differences in home buying experience, studies of predatory lender behavior toward minority borrowers, and surveys documenting racial and cultural differences in household financial behavior. The last issue is most contentious. I think people are opposed to the notion that there may be cultural/racial reasons for racial differences in financial behavior, because people are wary of arguments that potentially "blame" different groups for the financial crisis, when clearly predation was a huge issue as well. For me, I think figuring out what went on is important. And there are many explanations for why there might be racial differences in repayment behavior. Cultural attitudes are just one of many explanations.
Anyway, Steve Sailer loved that we mentioned racial differences in household financial behavior. First, he quoted our paper:
"Guiso, Sapienza, and Zingales (2009) offer an interesting explanation for the highest delinquency rates observed among Hispanic borrowers. Based on survey data, the authors find that Hispanics are much less likely (between 18 and 27 percentage points) than blacks or whites to feel morally or socially obligated to continue paying their mortgages when the equity value is significantly below zero."
His next comment?
Wow. Don't tell the SPLC or they'll come after Wei Jiang, Ashlyn Aiko Nelson, Edward Vytlacil with pitchforks.
Ugh.
The purpose of this study was not to cast blame on any particular group; it was to clarify the mechanism through which mortgage borrowers become delinquent, and think about possible reasons for delinquency. I don't want the study to become the darling of a group of people who view it as evidence allowing them to blame minorities for the mortgage crisis.
The comments are even more interesting. One commenter wrote:
Interesting ethnic mix of authors ... Wei Jiang is of course Chinese, Ashlyn Aiko Nelson looks Hapa from her picture on the Stanford site, and Edward Vytlacil is probably of Czech descent and looks quite European.
Then another responded:
As a recent college grad, I can say that aside from the Hapa this mix is pretty normal in American university econ departments. Chinese and foreign Eastern European (yes, I know Czech is technically Central European, but you know what I mean) is quite standard.
What the heck! At any rate, Kris thinks that any publicity is good publicity. I'm not so sure.
Sailer's article on Hurricane Katrina was followed by accusations of racism from "left-wing" organizations Media Matters for America and the Southern Poverty Law Center.[16][17] In reference to the New Orleans slogan "let the good times roll", Sailer commented:
Neoconservative columnist John Podhoretz responded in the National Review Online blog by calling Sailer's statement "shockingly racist and paternalistic".What you won’t hear, except from me, is that 'Let the good times roll' is an especially risky message for African-Americans. The plain fact is that they tend to possess poorer native judgment than members of better-educated groups. Thus they need stricter moral guidance from society.
—Sailer, Steve, "Let the Good Times Roll", VDare.com
And...this guy likes our paper. You can read his blog post about it here.
Here's my take on everything. We can't ignore the issue of race in the current mortgage crisis. Minorities are disparately impacted by the mortgage crisis, and this is well established in the literature. So my co-authors and I wanted to take an honest, hard, empirical look into race effects in a mortgage delinquency model. We found that race effects persisted even when controlling for all information obtained at loan origination.
In other words, we found that African-American and Hispanic mortgage borrowers were more likely to go into mortgage delinquency, even after accounting for differences in income, credit score, other financial characteristics, mortgage characteristics, and property attributes.
This is a tricky finding that I think is interesting and worthwhile to pursue. In our paper, we cite some possible explanations based on prior research findings, including racial differences in home buying experience, studies of predatory lender behavior toward minority borrowers, and surveys documenting racial and cultural differences in household financial behavior. The last issue is most contentious. I think people are opposed to the notion that there may be cultural/racial reasons for racial differences in financial behavior, because people are wary of arguments that potentially "blame" different groups for the financial crisis, when clearly predation was a huge issue as well. For me, I think figuring out what went on is important. And there are many explanations for why there might be racial differences in repayment behavior. Cultural attitudes are just one of many explanations.
Anyway, Steve Sailer loved that we mentioned racial differences in household financial behavior. First, he quoted our paper:
"Guiso, Sapienza, and Zingales (2009) offer an interesting explanation for the highest delinquency rates observed among Hispanic borrowers. Based on survey data, the authors find that Hispanics are much less likely (between 18 and 27 percentage points) than blacks or whites to feel morally or socially obligated to continue paying their mortgages when the equity value is significantly below zero."
His next comment?
Wow. Don't tell the SPLC or they'll come after Wei Jiang, Ashlyn Aiko Nelson, Edward Vytlacil with pitchforks.
Ugh.
The purpose of this study was not to cast blame on any particular group; it was to clarify the mechanism through which mortgage borrowers become delinquent, and think about possible reasons for delinquency. I don't want the study to become the darling of a group of people who view it as evidence allowing them to blame minorities for the mortgage crisis.
The comments are even more interesting. One commenter wrote:
Interesting ethnic mix of authors ... Wei Jiang is of course Chinese, Ashlyn Aiko Nelson looks Hapa from her picture on the Stanford site, and Edward Vytlacil is probably of Czech descent and looks quite European.
Then another responded:
As a recent college grad, I can say that aside from the Hapa this mix is pretty normal in American university econ departments. Chinese and foreign Eastern European (yes, I know Czech is technically Central European, but you know what I mean) is quite standard.
What the heck! At any rate, Kris thinks that any publicity is good publicity. I'm not so sure.
