Tin Cheuk Leung

Why Is Polygyny More Prevalent in Western Africa? An African Slave Trade Perspective

Polygyny rates are higher in Western Africa than in Eastern Africa. The African slave trades explain this difference. More male slaves were exported in the trans-Atlantic slave trades from Western Africa, while more female slaves were exported in the Indian Ocean and Red Sea slave trades from Eastern Africa. The slave trades led to prolonged periods of abnormal sex ratios, which impacted the rates of polygyny across Africa. In order to assess these claims, we construct a unique ethnicity-level data set linking current rates of polygyny with historical trade flow data from the African slave trades. Our OLS estimates show a positive correlation between the trans-Atlantic slave trades and polygyny. An IV approach shows the relationship is causal and statistically signicant. We also provide cross-country evidence corroborating our findings.

Anchoring and Loss Aversion in the Housing Market: Implications on Price Dynamics

In this paper we develop a simple model with anchoring and loss aversion to explain house price dynamics. We have two testable implications: 1) when both cognitive biases are present, price dispersion and trade volume are pro-cyclical; 2) if anchoring decreases with time, then price dispersion and trade volume are higher for transactions whose previous purchase is more recent. Using a dataset that contains most real estate transactions in Hong Kong from 1992 to 2006, we find strong and significant anchoring and loss aversion which are robust to type of housing and sample period. The finding is consistent with the strong correlation between house price, price dispersion, and volume in the data. Moreover, anchoring decreases with time since previous transaction, and both price dispersion and volume show the same pattern. Our results suggest that anchoring and loss aversion can induce cyclicality in house prices.

Music piracy: Bad for record sales but good for the iPod?

Music piracy is a double-edged sword for the music industry. On the one hand, it hurts record sales. On the other hand, it increases sales of its complements. To quantify the effect of music piracy, I construct a unique survey data set and use a Bayesian method to estimate the demand for music and iPods, and find three things. First, music piracy decreases music sales by 24% to 42%. Second, music piracy contributes 12% to iPod sales. Finally, counterfactual experiments show that, if music were free, the increase in Apple’s profits from iPod can more than compensate the loss of musicians. The last result implies that a Pareto improving iPod tax is possible.

Dispersion and distortions in the trans-Atlantic slave trade

Market distortions can lead to resource misallocation, which can further lead to inefficiency. Throughout the history of the trans-Atlantic slave trade, qualitative evidence of various sources of distortion abounds. No study, however, has quantified the inefficiency in the slave trade due to these distortions. We use a structural approach to identify the dispersion of distortions in the slave trade from wedges in first order conditions. We then calculate the TFP gains had the dispersion of distortions disappeared. Two main results emerge. First, dispersion of distortions had the smallest damage to TFP in Great Britain, followed by Portugal, and then France. Second, dispersion of distortions in the product market had a bigger impact on TFP than that of the capital and labor markets.

Tax-driven Bunching of Housing Market Transactions: The Case of Hong Kong

We study the implications of a property market transaction tax. As property buyers are obligated to pay a transaction tax (i§stamp dutyi¨ or SD) where the rate increases with the value of the transaction, there are incentives to trade at the cutoff points of the tax schedule or just below them. Thus, both i§bunching in transactionsi¨ and i§underpricingi¨ should be observed near those cutoffs. Furthermore, the bunching points should change with the tax schedule. We confirm these conjectures with a rich dataset from the Hong Kong housing market and provide a measure of tax avoidance.

Quantifying the Impacts of Digital Rights Management and E-Book Pricing on the E-Book Reader Market

The demand for electronic books (e-books) and the e-book readers are complementary. On the one hand, the emergence of e-book readers such as Amazons Kindle has triggered the recent growth of the e-book market. On the other hand, several issues in the e-book market can affect the future of the e-book reader market. Considering this complementarity, this paper quantifies the impact of digital rights management (DRM) and discounted e-book pricing on the demand for e-book readers. We collect conjoint survey data to estimate a random coefficient demand model using a hierarchical Bayesian method. Our counterfactual experiments suggest two things. First, Kindles and Nooks market shares would increase by dropping DRM. Consumer welfare would increase seven percent if all e-book readers dropped DRM. Second, an increase in e-book prices would increase iPads market share at the expense of that of Kindle and Nook. Consumer welfare would decrease 6 to 10 percent if Kindles and Nooks e-book prices went up by 50 percent.

Can Anchoring and Loss Aversion Explain the Predictability in the Housing Market

We offer an explanation of why changes in house prices are predictable. Extending the static model in Leung and Tsang (2010), we analyze the housing market with loss averse sellers and anchoring buyers in a dynamic setting. A buyers current offer price increases with the housing units previous purchase price, and the seller has the tendency to delay the sale of a housing unit that has a loss. We show that when both cognitive biases are present, changes in house prices are predicted by price dispersion and trade volume. Using a sample of housing transactions in Hong Kong from 1992 to 2006, we find that price dispersion and transaction volume are indeed powerful predictors of housing return. For forecasting both in and out of sample, the two variables perform as well as conventional predictors like real interest rate and real stock return.

Can Restricting Property Use Be Value Enhancing? Evidence from Short-Term Rental Regulation

Short-term rentals, private residences where tourists stay, have become ubiquitous over the past decade. Many communities are divided over the trade-offs between a property owner’s rights and nuisance problems created by transient populations in residential neighborhoods. This paper empirically examines the effects of regulation restricting short-term rentals on property sales prices, using a unique data set and policy experiment from Anna Maria Island, Florida. We show that nonresident ownership of properties on the island decreased following the rental regulation and that the regulation decreased property values except in areas where the density of non-resident-owned properties in a neighborhood was quite high.

Can Anchoring and Loss Aversion Explain the Predictability of Housing Prices

We offer an explanation of why changes in house price are predictable. We consider a housing market with loss‐averse sellers and anchoring buyers in a dynamic setting. We show that when both cognitive biases are present, changes in house prices are predicted by price dispersion and trade volume. Using a sample of housing transactions in Hong Kong from 1992 to 2006, we find that price dispersion and transaction volume are, indeed, powerful predictors of housing return. For both in and out of sample, the two variables predict as well as conventional predictors such as the real interest rate and real stock return.

On the Optimal Skill Distribution in a Mirrleesian Economy

People are heterogenous in the skills by which they turn eort into output. A central question in normative public economics is how to redistribute resources from more- to less-skilled individuals eciently. In addition to income taxation, this paper considers another policy tool of redistribution by allowing planner to choose the dispersion of skill distribution given the average skill level of the economy. We nd that, depending on the parameters of the model, either perfectly unequal skill distribution in which one group has a very high skill level and the rest are completely unskilled, or perfectly equal skill distribution in which all agents have the same skill level, is socially optimal, but an interior level of skill inequality is never optimal. We then provide conditions on the parameters under which perfectly equal and perfectly unequal skill distributions are optimal.