David Andolfatto - Miscellaneous

Real Estate

Estimating the Effect of Metro Vancouver's Foreign Buyers Tax on City-Level Real Estate Prices (w/ Marie Rekkas). Working Paper, 2024.

Psychology

Rational Truth-Avoidance & Self-Esteem (w/ Steeve Mongrain & Gordon Myers). Canadian Journal of Economics, 2009.

Had a lot of fun discussing the ideas in this paper with these guys.

Property Rights

A Theory of Inalienable Property Rights. Journal of Political Economy, 2002.

The idea for this paper came to me when I was walking around in East Vancouver's skid row neighborhood (Hastings & Main). As I marveled at the street life, I asked myself how these people managed to survive. I reminded myself of the provincial government's relatively generous welfare system (if I recall correctly, even single males were entitled to around $2000/month in the late 1990s). And then, for some reason, I thought about the net present value of this income stream. It then occurred to me that recipients would consider themselves wealthy if they could sell (or borrow against) this asset. It further occurred to me that many, if not most, people living on the streets would likely avail themselves of the opportunity to sell their entitlement. Thankfully, there is a law preventing them from doing so. That is, it occurred to me that borrowing constraints might arise not because of imperfect capital markets, but because capital markets work too well (i.e., contrary to the preferences of a voting majority).

Technological Development

Distributional Dynamics Following a Technological Revolution (w/ Eric Smith). Canadian Journal of Economics, 2001.
Technological Innovation, Diffusion, & Business Cycle Dynamics (w/ Glenn MacDonald). Unpublished.
Technology Diffusion & Aggregate Dynamics (w/ Glenn MacDonald). Review of Economic Dynamics, 1998. (WP version).

Heterogeneous Time-Preferences

As a graduate student in the late 1980s, I was very interested in the role of time-preference (in psychology, the willingness to delay gratification). I was also intrigued by the notion of time-inconsistency (see Myopia & Inconsistency in Dynamic Utility Maximization, Strotz, 1956 and Passions Within Reasons, Frank, 1988), but never followed through with any work on my own on the subject because I thought there wasn't much to add (David Liabson soon proved me wrong: Golden Eggs & Hyperbolic Discounting, 1997). In any case, I did follow through with a couple of papers using heterogeneous (but time-consistent) time-preferences. Here, I was influenced by the discussions I had with James Melvin, who introduced me to the great Scottish-Canadian economist, John Rae (1796-1872) who stressed the role of heterogeneous time-preference in explaining why some communities prospered and others languished. The two papers I wrote were with my brilliant colleague, James Redekop (James, if you're still alive, please reach out.) Unfortunately, we could not get anyone to take this idea seriously back in the mid 1990s. We were told repeatedly that "economists do not explain things with an appeal to unobserved preference heterogeneity." My response to this was always, "alright then, I guess we'll just go on assuming unobserved preference homogeneity." Needless to say, that attitude did not get me very far. Ironically, heterogeneous time-preference is employed widely in the profession today. I comfort myself thinking we were just a little too far ahead of our time. Or maybe our papers weren't so good. I prefer the former hypothesis.

Heterogeneous Time-Preference & the Distribution of Wealth (w/ James Redekop). Unpublished.
Redistribution Policy in a Model with Heterogeneous Time-Preference (w/ James Redekop). Unpublished.

Contracts

Optimal Team Contracts (w/ Ed Nosal). Canadian Journal of Economics, 1997.

While writing this paper, I learned of a Roman practice that we interpreted as a mechanism to discipline team output (performance of a legion in battle) when inputs (individual combat effort) were difficult to monitor. Evidently, if after a battle a legion was found seriously wanting in its performance, soldiers were asked to draw lots with a 1-in-10 chance of winning the lottery. The "winners" of this lottery were then clubbed to death by the remaining 9/10 of the legion. Apparently, this is where the word "decimation" comes from.

Ph.D. Thesis

Essays on the Theory of Growth & Unemployment, 1994.

Advisors: Peter Howitt, Glenn MacDonald & Steve Williamson.

Interviews with Interesting Economists

david.andolfatto@miami.edu