Globizen

Harvard economist Ed Glaeser recently blogged about the Obama administration’s efforts to develop a Bureau of Consumer Financial Protection and asked: How much consumer regulation is appropriate given that regulators, just like the average consumer, make mistakes too?

The impetus for a consumer protection agency, of course, is largely because of a perceived failure, on the part of the private sector. Glaeser uses the example of home owners and lenders:

“The more obvious consumer error — made by home buyers and lenders alike — was to have wildly unrealistic expectations about housing prices. Karl Case and Robert Shiller surveyed recent home buyers in four cities in 2003. They found that, on average, home buyers in Boston, Los Angeles, Milwaukee and San Francisco thought that over the next 10 years prices would rise each year by 14.6, 13.1, 11.7 and 15.6 percent, respectively. These price expectations certainly seem wrong after the fact — prices are lower today in Boston and San Francisco than they were at the end of 2003 (see chart below) — but economists typically thought that these expectations were exaggerated and unrealistic in 2003, as well.”

Hence, the birth of a consumer protection agency. But determining the appropriate amount of regulation is key, argues Glaeser:

“A consumer protection agency, however, is based on the view that a regulator can help offset the errors made by private individuals. In some cases, regulatory agencies really do make things better; I treasure the caloric information available in supermarket aisles. But history has seen plenty of bad regulation, whether in railroads or financial markets, that privileges insiders and restricts innovation. The best way to avoid these missteps is for the Bureau of Consumer Financial Protection to have modest, well-defined goals, like providing clear information to borrowers. Clear, limited objectives will reduce administrative overreach and respect the fact that politicians and regulators are people, too, and make the same kinds of mistakes as lenders and home buyers.”

Image: Flickr

Perhaps in celebration of New York’s recent subway fare increase, Treehugger has looked at the price of subway fares for some of the major cities in the world. In their study, Mexico City came out as the cheapest ($0.15) and, not surprising, London came out as the most expensive ($4.41). Of course, London also charges a variable fare depending on how far you’re traveling; unlike New York which is a flat fee. Click here for the Treehugger article.

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Welcome to GlobizenProperty.com! We’re a blog dedicated to real estate, architecture and urban planning in global cities across the world. We’ll be discussing new developments, interest rates, elegant new buildings, the inevitable planning debacles that seem to arise no matter where in the world you’re located, and more.

The objective of the site is to have Correspondents on the ground in major cities across the world. These talented individuals will be professionals in real estate, architecture, law and other related disciplines. The real estate business is an inherently local business and there is no better way to get industry information than from global citizens across the world.

If you’re interested in becoming a Correspondent or just have a great suggestion, please contact Brandon at bdonnelly at alumni.upenn.edu.