Research

We often hear that “people don’t know their neighbors anymore” or that “neighborhoods don’t matter.” In this line of research, we push back against this common misconception. Using detailed parcel-level and household-level data sets, we show that households are affected by their neighbors in a number of ways, positive and negative. As those people who share our immediate built and natural environment, our neighbors are key players in our social networks. Understanding how they affect us, how we affect them, and how policy can leverage these relationships is a key research initiative of the HUF Lab.

Example Project: In a recently published paper titled “Household mortgage refinancing decisions are neighbor influenced, especially along racial lines,” Ben McCartney and co-authors show that households are more likely to refinance their mortgages if they have neighbors who have recently refinanced. These positive peer effects can help explain regional variation in mortgage refinancing and give policymakers information about a tool that might help them increase policy efficacy.

The mortgage industry is an intricate web of home buyers, underwriters, lenders, and governments. A complex and dynamic set of policies, regulations, cutoffs, and requirements dictate the rules. And a creative financial market has developed many products ultimately depending on mortgage payments. Understanding the multi-trillion dollar mortgage market is a primary goal of the HUF Lab.

Example Project: Sanket Korgaonkar, in a forthcoming paper titled “The agency costs of tranching: Evidence from RMBS,” investigates a potential unintended consequence of securitization. Securitization is the process of bundling together many different streams of cash flows and then breaking them apart into different securities, often labeled tranches, which are then sold to investors. This kind of multi-tiered capital structures give rise to agency costs, particularly in the setting of residential mortgage backed securities. Specifically, Korgaonkar finds that tranching increases coordination costs across investors holding varying cash flow rights and weakens monitoring of the asset managing agent.

Measuring and understanding the extent to which individuals and households are exposed to environmental change and its consequences is critical to increasing the resilience and sustainability of the United States. While technological advances have improved our understanding of where environmental changes and events are happening across space and time, there remain large gaps in our understanding of who is exposed and the consequences of exposure. The HUF Lab is working closely with The Environmental Inequality Lab to better understand how we can reduce disparities in environmental quality.

Example Project: Two UVA PhD students, Ben Chenault and Jessica Montgomery are using HUF Lab data to explore how households and local economies are affected by natural resource extraction. Specifically, in a paper titled “The environmental and economic effects of mountaintop removal mining in Central Appalachia,” Chenault and Montgomery investigate how property markets respond to the changes in landscapes brought about by MTR influenced flooding.

In democracies, the policymakers who write legislation and implement public policy are not randomly assigned, they are elected. But how households’ financial situations affect who the policymakers are and the decisions they make is poorly understood. And, furthermore, the importance of political affiliation and partisanship in today’s society means that being civically engaged is no longer just about driving policy changes but also expressing ones self-identity. HUFL’s extraordinarily detailed data allows us to better understand the ramifications of a polarized electorate for both households and urban environments.

Example Project: We know from surveys that people dislike those affiliated with the opposite party, but whether this spills over into the real economy is still being debated. Ben McCartney and co-authors merged deeds data with voter records to explore the real effects of political polarization and wrote up their findings in a forthcoming paper titled, “Political Polarization Affects Households’ Financial Decisions, Evidence from Home Sales.” They find that current current residents are more likely to sell their homes when opposite-party neighbors move in nearby, especially when the new neighbors are politically active. They discuss the implications for political segregation and place-based policies.