New Economics Papers
on Law and Economics
Issue of 2008‒10‒13
five papers chosen by
Jeong-Joon Lee, Towson University

  1. The Impact of Property Condition Disclosure Laws on Housing Prices: Evidence from an Event Study using Propensity Scores By Anupam Nanda; Stephen L. Ross
  2. The Risk of Divorce and Household Saving Behavior By Gonzalez, Libertad; Özcan, Berkay
  3. Is Being 'Soft on Crime' the Solution to Rising Crime Rates? Evidence from Germany By Entorf, Horst; Spengler, Hannes
  4. What is a Gang and Why Does the Law Care? By Philip A. Curry; Steeve Mongrain
  5. Estate Acts, 1600 to 1830: A New Source for British History By Dan Bogart; Gary Richardson

  1. By: Anupam Nanda (Deloite Services, Mumbai); Stephen L. Ross (University of Connecticut)
    Abstract: We examine the impact of seller's Property Condition Disclosure Law on the residential real estate values. A disclosure law may address the information asymmetry in housing transactions shifting of risk from buyers and brokers to the sellers and raising housing prices as a result. We combine propensity score techniques from the treatment effects literature with a traditional event study approach. We assemble a unique set of economic and institutional attributes for a quarterly panel of 291 US Metropolitan Statistical Areas (MSAs) and 50 US States spanning 21 years from 1984 to 2004 is used to exploit the MSA level variation in house prices. The study finds that the average seller may be able to fetch a higher price (about three to four percent) for the house if she furnishes a state-mandated seller.s property condition disclosure statement to the buyer. When we compare the results from parametric and semi-parametric event analyses, we find that the semi-parametric or the propensity score analysis generals moderately larger estimated effects of the law on housing prices.
    Keywords: Property Condition Disclosure, Housing Price Index, Propensity Score Matching, Event Study
    JEL: C14 K11 L85 R21
    Date: 2008–09
  2. By: Gonzalez, Libertad (Universitat Pompeu Fabra); Özcan, Berkay (Yale University)
    Abstract: We analyze the impact of an increase in the risk of divorce on the saving behaviour of married couples. From a theoretical perspective, the expected sign of the effect is ambiguous. We take advantage of the legalization of divorce in Ireland in 1996 as an exogenous increase in the likelihood of marital dissolution. We analyze the saving behaviour over time of couples who were married before the law was passed. We propose a difference-in-differences approach where we use as comparison groups either married couples in other European countries (not affected by the law change), or Irish families who did not experience a significant increase in the expected risk of divorce (such as very religious families, or single individuals). Our results suggest that the increase in the risk of divorce brought about by the law was followed by an increase in the propensity to save of married couples, consistent with a rise in precautionary savings interpretation. An increase in the risk of marital dissolution of about 40 percent led to a 7 to 13 percent rise in the proportion of married couples reporting positive savings.
    Keywords: divorce, saving, marriage, divorce law
    JEL: J12 D10 K36 E21 D91
    Date: 2008–09
  3. By: Entorf, Horst (University of Frankfurt); Spengler, Hannes (University of Applied Sciences Mainz)
    Abstract: Based on a theoretical framework on informal, custodial and non-custodial sentencing, the paper provides econometric tests on the effectiveness of police, public prosecution and courts. Using a unique dataset covering German states for the period 1977–2001, a comprehensive system of criminal prosecution indicators is derived and subsequently related to the incidence of six major offence categories using panel-econometrics. Empirical evidence suggests that the criminal policy of diversion failed as increasing shares of dismissals by prosecutors and judges enhance crime rates in Germany. Crime is significantly deterred by higher clearance and conviction rates, while the effects of indicators representing type (fine, probation, imprisonment) and severity (length of prison sentence, size of fine) of punishment are often small and insignificant.
    Keywords: evaluation of policy reforms, econometrics of crime, panel econometrics
    JEL: K14 K42 C23
    Date: 2008–09
  4. By: Philip A. Curry (Simon Fraser University); Steeve Mongrain (Simon Fraser University)
    Abstract: The economic theory of optimal punishments states that the expected penalty for a crime ought to be equal (or at least proportional) to the social harm caused by the act. The Criminal Codes in both Canada and the United States allow for criminals to be penalized to a greater degree if they are a member of a gang. According to the economic theory, this would be optimal if either: 1) the social harm from a criminal act is greater for a gang member than for an independent criminal, or 2) the probability of conviction is lower for a gang member. We examine the extent to which both of these possibilities are true and use the findings to develop a (perhaps improved) definition of a gang. Classification-JEL K14, K42
    Keywords: Crime; Criminal Organization; Enforcement
    Date: 2008–09
  5. By: Dan Bogart; Gary Richardson
    Abstract: A new database demonstrates that between 1600 and 1830, Parliament passed thousands of acts restructuring rights to real and equitable estates. These estate acts enabled individuals and families to sell, mortgage, lease, exchange, and improve land previously bound by landholding and inheritance laws. This essay provides a factual foundation for research on this important topic: the law and economics of property rights during the period preceding the Industrial Revolution. Tables present time-series, cross-sectional, and panel data that should serve as a foundation for empirical analysis. Preliminary analysis indicates ways in which this new evidence may shape our understanding of British economic and social history.
    JEL: K0 K11 N13 N43 P14 P16 P26
    Date: 2008–10

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