American Economic Review: Vol. 104 No. 5 (May 2014)

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The Mortgage Mess, the Press, and the Politics of Inattention

Article Citation

Caplin, Andrew, and Roy Lowrance. 2014. "The Mortgage Mess, the Press, and the Politics of Inattention." American Economic Review, 104(5): 77-81.

DOI: 10.1257/aer.104.5.77

Abstract

In reviewing the Challenger tragedy, Richard Feynman identified a flawed O-Ring as the proximate cause and NASA's flawed safety culture as a deeper cause. There has been no similar investigation of the mortgage mess, which has been baptized rather than understood. In part, this is due to committed ideological views in the public and press that eliminate the call for expert analysis and reform. Broader and deeper policy problems are identified and illustrated using NASA's past behavior and FHA's ongoing behavior. The Columbia tragedy sounds an ominous warning on the future stability of housing finance markets.

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Authors

Caplin, Andrew (NYU)
Lowrance, Roy (Center for Data Science, NYU)

JEL Classifications

D72: Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
G21: Banks; Depository Institutions; Micro Finance Institutions; Mortgages
G28: Financial Institutions and Services: Government Policy and Regulation
R31: Housing Supply and Markets
R38: Production Analysis and Firm Location: Government Policy


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