Chicago Tribune calls for phasing out of mortgage-interest deduction

What interesting arguments people will make in the midst of an economic crisis. While one commentator has a number of reasons why he is “never going to own a home again,” the Chicago Tribune argues that the United States needs to phase out the mortgage-interest deduction. The main reason seems to be that the deduction primarily benefits wealthier homeowners, not the middle class:

Trade groups such as the National Association of Home Builders portray the benefit as a middle-class tax break. But it does a lot less for most Americans than those with a vested interest in promoting home sales would have you believe: If you rent, you get nothing. If you have reasons not to itemize deductions, you get nothing. If you pay off your mortgage to live debt-free, you get nothing.

Borrow a fortune for a McMansion, however, and the Internal Revenue Service provides a big discount, at the expense of every other taxpayer. More than three-fourths of the benefit from the mortgage-interest deduction goes to the 14 percent of tax filers reporting six-figure incomes. Almost one-third of the subsidy goes to the population reporting incomes of $200,000 or more. Those 3 percent of tax filers at the very top receive about the same amount as do the 86 percent earning less than six figures.

As a consequence, this deduction does little to promote homeownership — supposedly its main objective. Data suggest that almost no one now benefiting from the break would flee the real-estate market. People just wouldn’t borrow as much to fund home purchases.

What is remarkable to me about both of these arguments is that such arguments might have been unheard of before this economic crisis. But since the economy has gone downhill, the housing market in particular (and the most recent housing figures are not good), desperate times apparently call for desperate measures.

All of this bears watching: will homeownership remain a cornerstone of the American Dream?

A study looking at “the social cost to academic achievement”

A psychologist writing in the Washington Post suggests that a new study sheds light on this long-standing issue raised by sociologist John Ogbu about high-achieving minority students who are accused of “acting white.” This study of 13,000 students was recently published in the latest issue of Child Development:

The study took measures at two time points and examined the change in social acceptance across the year. The question of interest is whether students’ academic achievement (measured as grade point average) at Time 1 was related to the change in social acceptance over the course of the year.

For White, Latino, and Asian students, it was—positively. That is, the higher a student’s GPA was at Time 1, the more likely it was that his or her social acceptance would increase during the coming year. It was not a big effect, but it was present.

For African American and Native American students the opposite was true. A higher GPA predicted *lower* social acceptance during the following year. This effect was stronger than the positive effect for the other ethnic groups.

Thus, it seemed that the simpler version of the “acting white” hypothesis was supported.

But the story turned out to be a bit more complicated.

Further analyses showed that there was a social penalty for high achieving African Americans *only* at schools with a small percentage of black students. The cost was not present at high-achieving schools with mostly African-American students, or at any low-achieving schools.

At the same time, there was never a social benefit for academic achievement, as there was for White, Latino, and Asian students.

So it sounds like the context of the school matters quite a bit: when African-Americans are a minority in the school, then high achieving Black students are penalized while this is not the case in majority African-American schools. In these majority/minority schools, African-Americans and whites (and others) are directly in opposition and the high-achievers get caught in the middle.

I wonder if there is a “tipping point” in schools where high-achieving African-Americans move from being called out for “acting white” to being accepted. Does the school need to be 40% African-American or higher? The problem may be that there are relatively few schools with somewhat equal mixes of races. We see tipping points in other areas: in neighborhoods, whites start moving out when the Black population reaches about 15-20% and in churches, it is difficult to keep whites in church once the percentage of Blacks reaches a similar amount.

I’d be curious to see what the authors suggest could be done to counteract this trend.

A sizable but smaller gap in happiness between blacks and whites

The Freakonomics blog reports on a new study showing that there is a narrowing gap in happiness between black and whites. The reason for this may be the lessening of “day-to-day racism” – but there needs to be more research so that scholars can figure out “How best to get a handle on the evolution of day-to-day racism.”

Islamophobia: a complicated tale

Time magazine asks a provocative question with its August 30th cover: “Is America Islamophobic?” The story cites a number of statistics, including recent poll figures about whether Americans think President Obama is Muslim, to suggest that Americans have some qualms and/or misperceptions about Islam.

I have little doubt that there is truth in the article – the situation could certainly be improved. However, even with the generally negative tone, the story also  admits the situation is more complicated:

Although the American strain of Islamophobia lacks some of the traditional elements of religious persecution — there’s no sign that violence against Muslims is on the rise, for instance — there’s plenty of anecdotal evidence that hate speech against Muslims and Islam is growing both more widespread and more heated. Meanwhile, a new TIME–Abt SRBI poll found that 46% of Americans believe Islam is more likely than other faiths to encourage violence against nonbelievers. Only 37% know a Muslim American. Overall, 61% oppose the Park51 project, while just 26% are in favor of it. Just 23% say it would be a symbol of religious tolerance, while 44% say it would be an insult to those who died on 9/11. 

Islamophobia in the U.S. doesn’t approach levels seen in other countries where Muslims are in a minority. But to be a Muslim in America now is to endure slings and arrows against your faith — not just in the schoolyard and the office but also outside your place of worship and in the public square, where some of the country’s most powerful mainstream religious and political leaders unthinkingly (or worse, deliberately) conflate Islam with terrorism and savagery. In France and Britain, politicians from fringe parties say appalling things about Muslims, but there’s no one in Europe of the stature of a former House Speaker who would, as Newt Gingrich did, equate Islam with Nazism.

A couple things to take out of these two paragraphs:

1. Evidence of increased violence against Muslims is limited or doesn’t exist.

2. There is some anecdotal evidence. This is not necessarily bad evidence but it isn’t systematic or tell us how widespread the issues are.

3. This is not what we might typically consider “religious persecution” – which perhaps suggests how this is defined will change.

4. These issues may be worse in other nations – there is more written about this is in the magazine version as opposed to the abridged version online. Some of the part that is missing between the two paragraphs quoted above:

Polls have shown that most Muslims feel safer and freer in the U.S. than anywhere else in the Western world. Two American Muslims have been elected to Congress, and this year, Rima Fakih became the first Muslim to be named Miss USA. Next month, the country’s first Muslim college will formally open in Berkeley, California…

This suggests that America is one of the better Western nations Muslims can move to. What about America has led to these feelings of safety and freedom among Muslims? We could ask another question: what about America has stopped the response to Islam from being worse, particularly considering the emotions and symbolism of 9/11?

Another quote in the article is intriguing: writer and commentator Arsalan Iftikhar says, “Islamophobia has become the accepted form of racism in America…You can always take a potshot at Muslims or Arabs and get away with it.” The part about the potshots may be true but the first part of this quote ignores a long and complicated racial history in America, particularly antipathy toward African-Americans and other groups. Americans have an infamous legacy of dislike and hatred toward newcomers or “the other” – this is not simply an issue with Muslims.

This is a complicated situation that bears watching.

How race effects chosing a house

The Houston Chronicle contains an interview with sociologist Michael Emerson about a forthcoming study (to be published in Social Forces) regarding housing choice and race.

First, a bit about the methodology of the study:

Researchers for the Institute for Urban Research at Rice University asked that question to 1,000 whites, 1,000 African-Americans and 1,000 Hispanics in Harris County to determine whether race makes a difference when they select homes and neighborhoods, independent of crime, housing prices and schools…

The housing questions were part of 30-minute interviews conducted for the annual Houston Area Survey. Respondents were asked to imagine they were looking for a house and found one they liked in their price range. They then were presented with computer-generated, random scenarios of school quality, property values, crime rate and racial makeup, and asked the likelihood that they would buy the house.

By using hypothetical situations, researchers were able to isolate the effect of certain factors, such as the racial composition of a neighborhood or the crime rate.

Here is a quick summary of the findings, according to Emerson:

For whites, the percentage of African-American or Hispanic matters significantly. They’re more and more averse to buying a house in a neighborhood as the percentage of African-Americans or Hispanics increases, even when crime is low, property values are increasing, and the local schools are of high quality.

The other result we found was for African-Americans in the Houston area, they’re sensitive to the percent Asian. So as the percent Asian increases, the less likely they are to say they want to buy the house.

And for Hispanics, the racial composition did not impact their preference for buying the home.

One other way to understand how strong the impact is, for whites: The likelihood they wouldn’t want to buy the house when there was racial diversity was equal to the likelihood they wouldn’t want to buy when the crime rate was high.

These findings are similar to those of other studies: Whites prefer not to choose a neighborhood with a certain number of African-Americans and Hispanics, even if the neighborhood has other positive features. The findings about other races are interesting as well – a lot of the housing literature focuses on the preferences of whites which makes sense as they are still the largest group and historically and today tend to have more wealth. But it is important to know the preferences of African-Americans and Hispanics, particularly as the Hispanic population grows.

Interestingly, the racial composition of the neighborhood does not appear to matter to Hispanics. I am curious to see what Emerson and his co-authors suggest is behind this.