Financially Overextended: College Attendance as a Contributor to Foreclosures During the Great Recession

Although subprime mortgage lending and unemployment were largely responsible for the wave of foreclosures during the Great Recession, additional sources of financial risk may have exacerbated the crisis. We hypothesize that many parents sending children to college were financially overextended and vulnerable to foreclosure as the economy contracted. With commuting zone panel data from 2006 to 2011, we show that increasing rates of college attendance across the income distribution in one year predict a foreclosure rate increase in subsequent years, net of fixed characteristics and changes in employment, refinance debt, house prices, and 19-year-old population size. We find similar evidence of college-related foreclosure risk using longitudinal household data from the Panel Study of Income Dynamics. Our findings uncover a previously overlooked dimension of the foreclosure crisis, and highlight mortgage insecurity as an inadvertent consequence of parental investment in higher education.     

THE FUTURE OF SOCIAL SECURITY

(with an introduction by Daniel L. McFadden) The past and the present processes leading to social security legislation inform expectations regarding the future of social security, and with international comparisons, provide lessons to those who would learn them. (JEL H55)     

Extending Bayesian back-calculation to estimate age and time specific HIV incidence

Lifetime Data Analysis - CD4-based multi-state back-calculation methods are key for monitoring the HIV epidemic, providing estimates of HIV incidence and diagnosis rates by disentangling their...     

Over‐indebtedness and microcredit in Cambodia: Moving beyond borrower‐centric frames

Over the past two decades, Cambodia has experienced an unprecedented credit boom, a growth in lending so rapid that the International Monetary Fund (IMF) referred to it as “one of the fastest financial deepening episodes by historical cross‐cultural standards” (IMF, 2016, p. 4). This deepening has been driven by the expansion of microcredit. In tandem, over‐indebtedness has increased among microcredit borrowers, and debt has become a significant political and economic concern. This article explores how over‐indebtedness is understood and explained by stakeholders across microcredit value chains. To do so, we draw on interviews with microfinance institution (MFI) executives, investors, branch managers, partners, financial literacy trainers, loan officers and borrowers in Siem Reap and Phnom Penh. We find that across the sector, dominant framings of over‐indebtedness privilege borrower‐centric explanations, while discounting the structural drivers of excessive lending and borrowing. As a consequence, current efforts to limit over‐indebtedness are unlikely to produce the kinds of solutions that are most needed to reduce the debt stress among borrowers. These arguments have implications across the Global South, particularly for contexts where microfinance is rapidly expanding.     

English proficiency in Australia, 1981 to 2016

Using Australian census data, the paper examines the incidence of poor English competency in Australia from 1981 onwards. The paper examines English competency in relation to various characteristics such as sex, age, language spoken, visa type, citizenship, duration of residence and location. It finds that there was a sharp rise in the numbers of people not speaking English well between the 2011 and 2016 Censuses and special attention is given to this rise in the paper. Recently, the Australian Government unsuccessfully legislated for the introduction of a requirement of English competency at the level of IELTS 6 (the commonly used university entrance level) as a condition for the award of Australian citizenship. The paper argues that this test would have led to a very large number of disenfranchised Australian permanent residents and this would be a highly undesirable result. Nevertheless, employment and social participation are strongly influenced by English competency and residents with poor English are disadvantaged. The policy suggestion is made that participation in a course of English language training for those without functional English skills could be made a precondition of the award of permanent residence—without the application of a passing grade.     

Finding common ground: how superdiversity is unsettling social work education

For social work education in the Netherlands, the rapid transition towards superdiversity means that its capacity to adapt to this new reality and to adjust to diverse students’ backgrounds is fiercely challenged. The key aim of this article is to discuss how social work educators are dealing with the unsettling challenges of increasing diversity, based on the research outcomes of an explorative study amongst Turkish–Dutch and Moroccan–Dutch female professionals. Two different groups of educators were asked to comment on the outcomes of this study. One of the dilemmas for educators is to determine what can be considered supportive and inclusive and as reducing inequality in education. The authors used two key theoretical concepts, ‘superdiversity’ and ‘the capability approach’. These theoretical perspectives were used to deconstruct the rather massive concepts of diversity and social justice, by emphasising contextual approaches. Both perspectives stress the urgent need to involve students as ‘active agents of change’, by building a social work community to stimulate and facilitate an on-going dialogue. To successfully fulfil a pivotal role in the upward mobility or emancipation of ethnic minority students, social work education needs to be adjusted to accommodate diverse student groups.     

Let's Call it Quits: Break‐Even Effects in the Decision to Stop Taking Risks

“Chasing” behavior, whereby individuals, driven by a desire to break even, continue a risky activity (RA) despite incurring large losses, is a commonly observed phenomenon. We examine whether the desire to break even plays a wider role in decisions to stop engaging in financially motivated RA in a naturalistic setting. We test hypotheses, motivated by this research question, using a large data set: 707,152 transactions of 5,379 individual financial market spread traders between September 2004 and April 2013. The results indicate strong effects of changes in wealth around the break‐even point on the decision to cease an RA. An important mediating factor was the individual's historical long‐term performance. Those with a more profitable trading history were less affected by a fall in cash balance below the break‐even point compared to those who had been less profitable. We observe that break‐even points play an important role in the decision of nonpathological risk takers to stop RAs. It is possible, therefore, that these nonpathological cognitive processes, when occurring in extrema, may result in pathological gambling behavior such as “chasing.” Our data set focuses on RAs in financial markets and, consequently, we discuss the implications for institutions and regulators in the effective management of risk taking in markets. We also suggest that there may be a need to consider carefully the nature and role of “break‐even points” associated with a broader range of nonfinancially‐focused risk‐taking activities, such as smoking and substance abuse.