Yuval Arbel

Anchoring and Housing Choice: Results of a Natural Policy Experiment

This research employs data from a natural experiment to assess the effects of behavioral heuristics on housing choice and public program management. The analysis focuses on programs designed to privatize public housing in Israel. The government programs provided the tenants with a call (real) option to purchase their rental unit at a discounted exercise price. We employ a large panel of transactions over the 1999–2008 period to evaluate whether the tenants used prior program price reductions as anchors in their purchase decisions. The results of hazard model estimation provide strong evidence of anchoring in the timing of home purchase. Further, model simulation suggests that by accounting for the anchoring heuristic, program managers could have both accelerated purchases and significantly increased government revenues associated with privatization. We also find evidence that anchoring varies with individual and market characteristics.

The Correlation among Immigrant Homeownership, Objective and Subjective Characteristics, and Civic Participation: New Evidence from the Israeli Experience

The correlation between immigrant objective and subjective characteristics and the likelihood of achieving homeownership is tested empirically. Also, the article examines whether homeownership promotes civic participation and community involvement among immigrants. Observing a sample of immigrants who arrived in Israel between the years 1989 and 2004, it is found that a longer stay in the receiving country, living in proximity to other immigrants, being over 35 years old, holding a full-time job, earning above average income and being a single or divorced woman associate with greater likelihood of attaining homeownership. Moreover, it is found that the subjective notion of both respect for the receiving culture and proficiency in the language positively correlate with homeownership. Finally, it is found that the previous empirical findings, according to which native homeownership is tied to civic participation, extend to the immigrant population. Research findings may serve decision-makers in setting policies that advance homeownership among immigrant populations.

Are the Disabled Less Loss Averse? Evidence from a Natural Policy Experiment

Research findings show that disabled persons often develop physical and psychological mechanisms to compensate for disabilities. Coping mechanisms may not be limited to the psychophysiological domain and may extend to cognitive bias and loss aversion. In this study, we apply unique microdata from a natural policy experiment to assess the role of loss aversion in home purchase among nondisabled and disabled households. Results of survival analysis indicate that the physically disabled are substantially less loss averse in home purchase. Furthermore, loss aversion varies with other population characteristics and attenuates with degree of disability. Findings provide new evidence of diminished cognitive bias and more rational economic decision‐making among the physically disabled.

Social involvement, level of income and employment among immigrants : The Israeli experience

Purpose - – Previous studies of immigrant populations suggest that ceteris paribus an immigrants level of income is strongly and positively correlated with his proficiency in the local language. The purpose of this paper is to extend this literature using data from a telephone survey carried out in 2005 among a representative sample of Former Soviet Union (FSU) immigrants. Unlike previous surveys, the data includes responses to detailed subjective questions on degree of social involvement, in addition to the number of years since migration and level of proficiency in the local language. The authors are able to demonstrate that a higher degree of assimilation is associated with a significantly higher likelihood of finding full-time employment. Moreover, the estimation results for the wage equation reveal that the effect on income previously attributed solely to language proficiency is in fact also the result of more successful assimilation in the receiving culture. The findings thus stress the importance of assimilation in determining success in job search and in explaining variations in income among immigrants who are already employed in full-time jobs. Finally, the results obtained when differentiating according to gender show that male immigrants have better prospects of finding a job than female immigrants and higher incomes once they find one, which is consistent with the existing literature. Design/methodology/approach - – In order to compare the relative importance of the language proficiency variable ( Findings - –The authors are able to demonstrate that a higher degree of assimilation is associated with a significantly higher likelihood of finding full-time employment. Moreover, the estimation results for the wage equation reveal that the effect on income previously attributed solely to language proficiency is in fact also the result of more successful assimilation in the receiving culture. The findings thus stress the importance of assimilation in determining success in job search and in explaining variations in income among immigrants who are already employed in full-time jobs. Finally, the results obtained when differentiating according to gender show that male immigrants have better prospects of finding a job than female immigrants and higher incomes once they find one, which is consistent with the existing literature. Research limitations/implications - – The limitation is, like all of the existing literature and in particular the few studies that deal with social networking, that the database is exclusively based on either interviews or surveys consisting of self-assessment questions (such as, Dustman, 1996; Lazear, 1999; Amuedo-Dorantes and Mundra, 2007). Consequently, the implicit assumption is that the respondents self-perceived level of assimilation constitutes a good proxy for the true level. Practical implications - – The implications are the following: the findings are thus consistent with those of Lazear (1999), who anticipates a negative correlation between the relative size of a minority group and the level of proficiency in the local language. In the case of Israel, which received a massive wave of 1.5 million immigrants from the FSU, the findings indeed suggest that the chances of an immigrant job seeker finding a job are far more dependent on his degree of assimilation than his level of language proficiency. Moreover, the effect of the degree of assimilation, which has not previously been included in estimations, was mistakenly attributed to language proficiency. The findings of this research thus reveal the importance of the degree of assimilation in finding a job and can explain income differences among those who have already found full-time employment. Originality/value - – Previous studies of immigrant populations suggest that ceteris paribus the level of income is strongly and positively correlated with proficiency in the local language. The current study extends this literature using data from a telephone survey carried out in 2005 among a representative sample of FSU immigrants. Unlike previous surveys, the data includes responses to detailed subjective questions on degree of social involvement, in addition to the number of years since migration and level of proficiency in the local language. The authors are able to demonstrate that a higher degree of assimilation is associated with a significantly higher likelihood of finding full-time employment. Moreover, the estimation results for the wage equation reveal that the effect on income previously attributed to language proficiency is in fact the result of more successful assimilation in the receiving culture. The results are robust to gender differences. The findings thus stress the importance of assimilation in determining success in job search and in explaining variations in income among immigrants who are already employed in full-time jobs.

Green versus Conventional Housing: Time-to-Sell and Willingness to Pay

This research is the first to explore the time-to-sell (TTS) and willingness to pay (WTP) in the context of green real estate. We employ unique data on transactions and household characteristics of owner-occupiers in newly developed green and conventionally built condominiums. We find that, after addressing the potential endogeneity between unit TTS and price, the average TTS of units in green, as compared to conventional, structures is significantly shorter. Considering developers’ financing cost, this shorter TTS is equivalent to an indirect price premium of 1.8%–5.3%. We further find that whenever the indirect green premium associated with TTS decreases, the green quality-adjusted price premium increases. Finally, we find an insignificant difference between the green and conventional structures in the correlation between household characteristics and the WTP. Our findings may serve both developers and policymakers in promoting green real estate construction.

Are the Disabled Less Loss Averse? New Evidence from the Housing Market

Empirical findings in physiology and psychology show that disabled persons often develop physical and mental mechanisms to compensate for disabilities. Coping mechanisms may not be limited to the psycho-physiological domain, however, and may extend to economic behavior. Improved economic decision-making could result in better survival prospects among disabled persons in modern, knowledge-based societies. In this study, we test for differences in cognitive bias and economic behavioral heuristics among physically disabled and non-disabled populations. Using unique micro data from an Israeli government natural experiment, we assess loss aversion in home purchase among disabled and non-disabled households. Results of survival analysis indicate that the physically disabled are substantially less loss averse in timing of home purchase. Also, loss aversion attenuates with degree of disability. Research findings provide new evidence suggesting that the compensatory mechanisms of disabled households extend to the economic domain and result in more rationale economic decision-making.