#99: Housing Bubble Week Epilogue: Not All Bubbles Are Created Equal – Vernon Smith

Vernon Smith won the Nobel Prize in Economic Sciences in 2002.

Show notes

Charts

Selected links

• Follow Vernon: Website
• Rethinking Housing Bubbles, by Vernon Smith and Steven Gjerstad
• ‘Debt Deflation: Theory and Evidence’, address by Mervyn King
• ‘Is the 2007 US Sub-Prime Financial Crisis So Different? An International
  Historical Comparison’, paper by Rogoff and Reinhart
• ‘Global Household Leverage, House Prices, and Consumption’, FRBSF Economic Letter by Reuven Glick and Kevin Lansing
• ‘Dealing With Household Debt’, chapter by the IMF
• ‘The great mortgaging: housing finance, crises and business cycles’, paper by Jorda, Schularick and Taylor
• ‘Leveraged bubbles’, paper by Jorda, Schularick and Taylor
• ‘Housing and the Economy’, 2019 speech by Guy Debelle
• ‘Bubbles, Crashes, and Endogenous Expectations in Experimental Spot Asset Markets’, paper by Vernon Smith, Gerry Suchanek and Arlington Williams
• A Life of Experimental Economics, Volume I, by Vernon Smith
• The example scenario of pessimists and optimists buying 100 identical houses is from House of Debt, by Amir Sufi and Atif Mian
• ‘The Leverage Cycle’, paper by John Geanakoplos
• ‘Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment’, paper by Brad Barber and Terry Odean
• The Wisdom of Crowds, by James Surowiecki
• ‘The Clinton Housing Bubble’, WSJ article by Vernon Smith
• ‘‘We’re heartbroken’: home in same family for 93 years passes in’, 2018 The Daily Telegraph article
• ‘Why are we so worried about household debt?’, article by Stephen Koukoulas
• ‘Public perceptions of foreign and Chinese real estate investment: intercultural relations in Global Sydney’, paper by Dallas Rogers, Alexandra Wong and Jacqueline Nelson
• A Monetary History of the United States, by Milton Friedman and Anna Schwartz
• ‘The Debt-Deflation Theory of Great Depressions’, paper by Irving Fisher

Topics discussed

• Vernon’s childhood, growing up in the Great Depression. 16:44
• How did Vernon choose to go to college? 21:10
• What does Vernon remember of the Great Depression? 23:49
• How did Vernon come to create the field of experimental economics? 28:04
• The secret to a perfect hamburger. 38:21
• Markets for perishables vs. markets for long-lived durables. 41:07
• How credit makes bubbles bigger. 45:45
• The psychology of housing bubbles. 55:10
• When did the US housing bubble begin? 1:01:49
• How do housing bubbles end? 1:11:32
• The macroeconomic consequences of housing busts. 1:24:48
• Household balance sheets. 1:30:54
• What happens when someone falls into negative equity? 1:36:27
• The effect of negative equity on consumption. 1:42:15
• The construction cycle vs. the price cycle. 1:47:14
• Australia’s housing market. 1:48:33
• Rethinking the Great Depression. 2:01:59
• Australia’s 1890s depression. 2:14:03