Bias in estimates of discrimination and default in mortgage lending: The effects of simultaneity and self-selection

The common practices of estimating single-equation models of mortgage rejection to test for discrimination in mortgage markets or single-equation ex ante mortgage default equations to validate underwriting criteria produce biased and inconsistent parameter estimates. This is due to problems of simultaneous equations bias which arise because, in a world of imperfect information, mortgage terms are not exogenous to the rejection or default decision. In addition, mortgage default estimates are also subject to selection bias. Monte Carlo experiments are used to study the nature and extent of likely bias in single-equation estimation results. We find that rejection equation estimates indicate discrimination when none exists and that estimated coefficients of mortgage terms, such as the loan-to-value ratio, are also subject to significant bias in both rejection and default equations.     

State lotteries and externalities to their participants

The degree of participation in state lotteries can either increase or decrease expected returns. It is theoretically possible for unfair bets to become more than fair as participation in lotteries changes. In addition, the purchase of every combination of numbers can be more than a fair bet and such a purchase may increase the expected return to other lottery players.     

Living next to godliness: Residential property values and churches

This article extends the analysis concerning the impact of neighborhood churches on residential property values by investigating nearly 5,000 residential property transactions in Henderson, Nevada, between January 1986 and December 1990. We find that real property values decrease, at a decreasing rate, as distance from a neighborhood church increases. This result is the opposite of that reported by Do, Wilbur, and Short in a previous edition of this journal. We bolster our findings by showing that distance from the site of a future church has little or no impact on residential property values, whereas distance from an existing church is associated with lower property values. Our evidence indicates that neighborhood churches are amenities that enhance the value of neighborhood residential property. Finally, we demonstrate that larger churches (as measured by square foot of lot size) tend to have a greaterpositive impact on residential property values.     

Comparing variations in labor costs for two vs. one full-time nurse manager

Labor costs for two versus one full-time nurse manager were compared. Results revealed reductions in nursing costs per patient day. These results suggest that innovative models may hold promise as organizations struggle to retain nurses and decrease costs.