Research Interests

Behavioral Finance, Real Estate Finance, Household Finance 


Russell Sage Foundation “The Effect of Better Neighborhoods on Household Financial Wellbeing and Access to Credit: Evidence from the Moving to Opportunity Experiment” with Sarah Miller $150,000 (2016).

Working Papers

      with Sarah Miller

This paper provides new analysis on the role of neighborhood quality in the financial decisions of low-income borrowers. We use individual-level data from the Moving to Opportunity experiment linked to traditional credit reports and data from an ``alternative'' credit bureau that tracks payday loan usage. We find that receiving a voucher to move to a lower poverty neighborhood improves credit access and reduces payday loan usage. Much of the reduction in payday loan usage results from decreased use of online payday loans, indicating that neighborhoods affect demand for these loans in ways that extend beyond simply reducing physical access to brick-and-mortar lenders.

       with Sarah Miller

The use of high cost ``payday loans'' among subprime borrowers has generated substantial concern among policymakers. Existing research is not clear as to whether this type of high cost borrowing behavior is driven by credit constraints, or if it instead reflects poor information. This paper provides the first evidence of substitution between “alternative” and “traditional” credit by exploiting an unexpected positive shock to credit access: the removal of a Chapter 7 bankruptcy flag. We find that use of traditional credit increases, and payday loan usage decreases, when a bankruptcy flag is removed. However, we also document increases in subprime installment borrowing at the time of a flag removal, indicating that providing access to formal credit induces a shift in the type of alternative credit products used, rather than eliminating the use of alternative credit products altogether.

This paper provides the first tests of cross-market contagion in sentiment across markets during the most recent U.S. housing crisis. I document significant cross-market correlation across 34 city sentiment indices, and find some cities are highly correlated while others share little correlated components in sentiment. This paper contributes a new measure of peer sentiment that tracks sentiment from cities that are paid attention to in the local news at a real-time, quarterly frequency. I then test whether sentiment from peer cities mentioned in local news has an impact on the local housing activity. I find that that sentiment has cross-market effects on the number of speculators that enter the market, and these effects are driven primarily by local rather than outside speculators coming into the market from different cities. I find sentiment affects not only new home buyer demand but also on measures of housing supply, including housing starts, permits, and new construction volume. These findings suggest sentiment can move across to geographically distant markets through the channel of news media. 

        with Todd Sinai

We create robust measures of the cost of owning and the cost of renting that enable us to compare the level of rents and ownership costs across MSAs. We show that households can predict whether renting or owning will end up being less expensive ex post.  This exercise is more robust than trying to predict house price changes or housing returns because much of that uncertainty is inframarginal in the optimal own/rent decision, which depends only on the which tenure mode is cheaper.  We show that households can profitably time the home ownership decision.  Using several simple trading rules, we estimate that households can save as much as 50 percent of annual rental costs over a five-year period by timing the decision of when to buy a home.  The potential savings varies across cities.  


        The Review of Financial Studies, April 2018
        Coverage in Wall Street Journal
        Word Lists 

This paper develops first measures of local housing sentiment for 34 cities across the U.S. by quantifying the qualitative tone of local housing news. I find that housing media sentiment has significant predictive power for future house prices, above and beyond his- torically predictive factors and past returns. Sentiment leads price movements by more than two years, and is highly correlated with available survey expectations measures. The structure of the media sentiment index itself reflects a backward-looking nature consistent with extrapolative expectations. Consistent with theories of sentiment, the media sentiment index has a greater effect in markets with more minority homebuyers, more speculative investors, and across lower-priced homes. Including additional controls for subprime lending and easy credit has no impact on the magnitude of the results, but the predictive effect of sentiment is amplified in markets where more subprime loans were issued. Directly investigating the content across news articles finds that results are not driven by news stories of unobserved fundamentals.

       with Jere R. Behrman and Olivia S. Mitchell
       American Economic Review P&P, May 2012, Vol. 102, No. 3, p. 300-304.

       with Charles Noussair 
       Economics Letters, January 2008, Vol. 98, No. 1, p. 71-77

Selected Works in Progress

Interesting Map

“Scarcity and Financial Decision-Making: Evidence from Housing Choice Voucher Lotteries” (w. Sarah Miller)

“Geographic Variation in Subprime Borrowing” (w. Sarah Miller)

“The Causal Effect of Subprime TV Media Coverage” (w. Sarah Miller)

“Are All Subprime Credit Products Equal: Evidence from a New Panel Dataset” (w. Sarah Miller)

“The Impact of Rising Foreign Investment on Domestic Real Estate Markets in the United States”