Sowell Applied Economics Thinking Beyond Stage One (revised and enlarged ed)

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Donation.” The use of financial incentives to increase the supply of organs, and the estimated payments to kidney and liver donors are from pages 3, 11, and 13 of “Introducing Incentives in the Market for Live and Cadaveric Organ Donations” by Gary S. Becker and Julio Jorge Elías, from the Summer 2007 issue of the Journal of Economic Perspectives. The high annual costs of dialysis are mentioned on page 67 of the August/September 2007 issue of Policy Review in an article titled “Supply, Demand & Kidney Transplants,” which began on page 59. The cost estimates of the whole organ transplant process are arrived at by adding the organ procurement costs to the other costs cited on page 12 of the Becker and Elías study, “Introducing Incentives in the Market for Live and Cadaveric Organ Donations” in the Summer 2007 issue of the Journal of Economic Perspectives. The estimate that organ transplants could significantly reduce government expenditures is from page 11 of “Organ Sales and Moral Travails: Lessons from the Living Kidney Vendor Program in Iran,” published by the Cato Institute as the March 20, 2008 issue of Policy Analysis, No. 614. The experience in Iran is cited on page 4. The concern among critics over the poor and desperate selling their organs is quoted from page A22 of the Wall Street Journal of November 13, 2007, in a story beginning on the front page titled “Kidney Shortage Inspires a Radical Idea: Organ Sales.” The difference between health care and medical care is pointed out by Dr. Dana Goldman in an article titled “Sending Back the Doctor’s Bill” from the July 29, 2007 issue of the New York Times, section 4, page 3. Data on differences in the levels of prenatal care and infant mortality rates among American women from various ethnic groups are from pages 9, 11, and 41 of Health, United States, 1990, published by the Public Health Service of the U.S. Department of Health and Human Services. That the United States ranked among the top 3 countries with low death rates from “mortality amenable to health care” is shown on page 61 of the January 1, 2008 issue of Annals of Internal Medicine in an article titled “Achieving a High-Performance Health Care System with Universal Access: What the United States Can Learn from Other Countries.” The multi-tiered pricing employed by hospitals is detailed on page A7 of a story beginning on the

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front page of the Wall Street Journal of March 17, 2003 titled “A Young Woman, an Appendectomy, and a $19,000 Debt.”

CHAPTER 4: THE ECONOMICS OF HOUSING

The 28 million American families spending more than 30 percent of their incomes on housing were reported on page B7 of the June 9, 2002 issue of the Washington Post in a story titled “Housing on the Back Burner.” The quotation about the gap in pricing between expensive communities and average ones is from page 1 of the National Bureau of Economic Research’s Working Paper 12355 titled “Superstar Cities,” written by Joseph Gyourko, Christopher Mayer, and Todd Sinai. The wide disparity in housing prices in Houston, Texas, and San Jose, California, is noted on page 8 of a study by Randal O’Toole titled “Do You Know the Way to L.A.?: San Jose Shows How to Turn an Urban Area into Los Angeles in Three Stressful Decades,” from the October 17, 2007 issue of Policy Analysis, No. 602. The nearly four-fold rise of home prices in Palo Alto during the 1970s, the closing of several schools there as enrollments declined, and a decline in the city’s population in general, were mentioned on pages 10, 85, 89, and 90 of a 1982 study by the Stanford Environmental Law Society titled Land Use and Housing on the San Francisco Peninsula, edited by Thomas M. Hagler. The fact that the rate of increase in California incomes was below the national average during the time when California housing prices skyrocketed is from page 238 of a 1995 book by William A. Fischel titled Regulatory Takings: Law, Economics, and Politics. The fact that a median-priced home in the San Francisco Bay Area in 2005 cost more than three times the national median was reported on page A11 of the San Francisco Chronicle of October 16, 2005 in a story beginning on the front page under the title “Making Ends Meet: Struggling in Middle Class.” The fact that the median price of a home in San Mateo County, California, exceeded one million dollars in 2007 is from a front-page story of the August 16, 2007 issue of the San Mateo County Times under the title “Median Home Cost over $1M.” The fact that Utah, Maryland, Virginia, Colorado, and Minnesota lead the

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nation in percentage of homes with four or more bedrooms is from a frontpage story from the June 4, 2007 issue of USA Today titled “Not-so-humble Abodes,” and also from a wire report in the Associated Press dated May 23, 2007 under the title “Appetite for Big Houses Keeps Growing.” The increase in the ratio between home prices and income in San Jose, California, from 1969 to 2005 is from page 8 of the previously mentioned study by Randal O’Toole titled “Do You Know the Way to L.A.?: San Jose Shows How to Turn an Urban Area into Los Angeles in Three Stressful Decades,” from the October 17, 2007 issue of Policy Analysis, No. 602. The lower rates of homeownership in California compared to the rest of the country are shown on a graph on page A1 of the San Francisco Chronicle of August 18, 2005, under the title “How Do They Afford It?” The effects of zoning restrictions on housing costs are discussed on pages 4, 15–16, and 21 of a study by Edward L. Glaeser and Joseph Gyourko titled “The Impact of Zoning on Housing Affordability,” Working Paper 8835, published in March 2002 by the National Bureau of Economic Research. The efforts to prevent development on the site of Bay Meadows racetrack in San Mateo, California, by a woman who never once attended a race there are mentioned on pages A13 and A17 of the July 1, 2003 issue of the San Francisco Chronicle under the title “Racing Against Time; Group Wants to Preserve Bay Meadows.” The purchase of 17,000 acres of Coastside property in the San Francisco Bay Area to be preserved for farming was discussed on pages 1 and 13 of the news section of the September 5, 2007 issue of the San Mateo County Times, in an article titled “Coastside Farmland Will Remain That Way.” Nantucket’s distinction of being the first large community where the average home price exceeded a million dollars was mentioned on page 192 of Sprawl by Robert Bruegmann, where its severe land use restrictions are also mentioned. Land use restrictions in Loudoun County, Virginia, were described in the Washington Post of July 24, 2001, in a story from pages B1 and B4 titled “Loudoun Adopts Strict Controls on Development.” The affordability in fast-growing regions of the United States with few restrictions on land supply compared with the low affordability and slow growth of heavily regulated areas is from page 134 of The Best-Laid Plans by Randal O’Toole. The fact that the real median

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housing price in Las Vegas did not change between 1980 and 2000 while the city’s population nearly tripled is from page 332 of the October 2005 issue of the Journal of Law and Economics, in an article titled “Why is Manhattan So Expensive?: Regulation and the Rise in Housing Prices,” by Edward L. Glaeser, et al. The recent rise in home prices in Las Vegas, due to the increased resistance of environmental groups to land development, is discussed on page 125 of The Best-Laid Plans by Randal O’Toole. The quote about the success of inclusionary housing policies is from page 3 of the Local section of the August 15, 2007 issue of the San Mateo County Times, in an article titled “Affordable Housing Quotas Working.” The fact that only 7 percent of the Palo Alto police force live in Palo Alto is from page 7 of the August 1, 2007 issue of the Palo Alto Weekly, in an article titled “Police Headquarters Faces Design Choice About Oak Tree.” The proportion of income spent on housing by Americans in 1901 and 2002– 2003 is from pages 6 and 63 of 100 Years of U.S. Consumer Spending: Data for the Nation, New York City, and Boston, Report 991 of the U.S. Department of Labor. The higher proportion of income spent on housing by New Yorkers in 2003 compared to 1901 is from a front-page story in the May 20, 2006 issue of the New York Times in an article titled “After Century, Room and Board in City Still Sting.” The fact that the real income of New Yorkers had quadrupled during the century is mentioned on the same page. The fact that nearly one-fourth of Palo Alto’s police live across the San Francisco Bay is from page 7 of the August 1, 2007 issue of the Palo Alto Weekly, in an article titled “Police Headquarters Faces Design Choice About Oak Tree.” The affordability of a two-bedroom apartment on a nurse’s salary in various cities was reported on page 34 of the December 7, 2002 issue of The Economist under the title “The Roof That Costs Too Much.” The dramatic decrease from 2002–2005 in the number of apartments in New York City that would be affordable to starting firefighters and police officers was reported on page 1 of Section 4 of the July 23, 2006 issue of the New York Times, in an article titled “Cities Shed Middle Class, and Are Richer and Poorer for It.” Statistics on the decline of the black population in various California communities between the 1990 and 2000 censuses are from the following U.S. Bureau of the Census publications: 1990 Census of

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Population: General Population Characteristics California, 1990 CP–1–6, Section 1 of 3, pages 29, 31, 76, 82, 100, 250, 620; Profiles of General Demographic Characteristics 2000 (2000 Census of Population and Housing: California), Table DP–1, pages 22, 42, 619, 689, 903 (from the website of the U.S. Census Bureau: http://www.census.gov/prod/cen2000/dp1/2kh06.pdf). The 70-minute daily commute of a worker at a water filtration plant in Alameda County is from page G1 of the San Francisco Chronicle dated February 16, 2003 under the title “Eastward ho.” The increase in the number of commuters into the San Francisco Bay Area from outlying counties was reported in the March 6, 2003 issue of the San Francisco Chronicle on page A15 under the title “Census Sees Long Ride to Work.” The early morning commute from Contra Costa County into the San Francisco Bay Area was reported on page 10 of the Local section of the San Mateo County Times of September 15, 2005, under the title “Bay Area Traffic Problem Second-Worst in Nation.” The quote, “driving ’til you qualify” is from page 54 of the May 1, 2006 issue of Newsweek, in an article titled “The Long and Grinding Road,” which began on page 53. The fact that the median home price in San Francisco was $790,000 in 2005 is from page C1 of the San Francisco Chronicle of September 15, 2005 under the title “Still Red Hot, But Slowing.” The Bay Area residents moving to the inland valleys to purchase 2,000-square-foot homes for less than $300,000 were reported on page G8 of the San Francisco Chronicle dated February 16, 2003 in an article titled “Eastward ho.” The dramatic increase in home prices in Merced County from 1997–2002 is shown on page G7 of the San Francisco Chronicle of February 16, 2003 in a story titled “Bay Area Paychecks Price Out the Locals.” The decrease in the black population in the city of San Francisco and subsequent increase in the black population in outlying communities is from pages A1 and A6 of the April 9, 2007 issue of the San Francisco Chronicle under the title “S.F. Moves to Stem African American Exodus.” Additional information on black population shifts in the Bay Area between the years 1990–2006 is from pages A1 and A11 of the January 14, 2008 issue of the San Francisco Chronicle under the title “Bayview’s Black Exodus.” The projected decrease in the white population in the Central Valley of California is from page G8 of the previously mentioned article

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“Eastward ho,” from the San Francisco Chronicle dated February 16, 2003. The effects of rent control, and of price controls in general are discussed in Chapter 3 of my Basic Economics, 3rd edition. The fact that nearly half the rent-controlled apartments in San Francisco had only one tenant is from page 21 of San Francisco Housing DataBook, a study commissioned by the city in 2001 and published in 2002 by consultants called Bay Area Economics, while information on the age of rent-controlled housing in the city is from page 56. The lack of construction in post World War II Melbourne because of rent control laws is from page 125 of Rent Control: Costs and Consequences edited by Robert Albon. That construction of apartments resumed in communities in Massachusetts for the first time in 25 years after the state banned rent control in 1994 is noted on page 4 of William Tucker’s study, “How Rent Control Drives Out Affordable Housing,” published in the May 21, 1997 issue of Policy Analysis, No. 274. This study is also the source for the statement that cities with rent control tend to have higher rents than cities without rent control (see pages 1 and 6). The quote about the investment in luxury housing in Europe is from page 69 of the study Rent Control in North America and Four European Countries by Joel F. Brenner and Herbert M. Franklin. The rent control exemption granted to vacant New York apartments that rent for $2,000 a month or more was mentioned on page 62 of the article “Is There a New York Housing Crisis?” from the Summer 2006 issue of City Journal. The withdrawal of rental units in Toronto after the imposition of rent control in that Canadian city is mentioned on page 21 of Zoning, Rent Control and Affordable Housing by William Tucker. The decline in London’s rental advertisements after rent control was enacted in that city is from page 11 of the January 24, 1975 issue of The Times of London, in an article titled “The Doors Have Closed on Furnished Accommodation.” The thousands of abandoned buildings taken over by the city of New York are mentioned on page 99 of The Homeless by Christopher Jencks. The fact that the number of abandoned housing units in New York City is more than sufficient to house the number of homeless people there is from page 123 of Rude Awakenings by Richard W. White, Jr. The fact that more than one-fourth of households living in rent-controlled apartments in San Francisco had

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incomes of $100,000 or more is from page 24 of the previously mentioned study San Francisco Housing DataBook. The fluctuations in the interest rates of conventional thirty-year mortgages from 1973–2005 are shown on page 7 of the October 2006 issue of Monthly Labor Review, in an article titled “Recent Employment Trends in Residential and Nonresidential Construction.” The fact that home prices in San Mateo County rose an average of $2,000 a day in March 2005 was reported on the front page of the San Mateo County Times of April 15, 2005, under the title “County’s Home Prices Bust Record.” Data on the growth of interest-only mortgage loans are from pages A1 and A16 of the May 20, 2005 issue of the San Francisco Chronicle, in an article titled “High Interest in Interest-Only Home Loans”; and also from an article titled “Keep Eyes Fixed on Variable Mortgages,” from the July 15, 2006 issue of the New York Times, pages C1 and C6. The fact that home prices in the United States declined for the first time in more than a decade in 2006 was reported on page D1 of the October 26, 2006 issue of the Wall Street Journal, under the title “Home Prices Keep Sliding; Buyers Sit Tight.” Soaring foreclosure rates among several California counties were reported on page C1 of the October 14, 2006 issue of the San Francisco Chronicle, in an article titled “Foreclosure Activity Skyrockets in East Bay.” The report on adjustable-rate mortgages and the $40,000 cost to banks to foreclose on a loan is from pages C1 and C6 of the March 31, 2007 issue of the New York Times in an article titled “Lenders May Prove Adjustable.” The 800 percent increase in the number of California homes reverting to bank ownership in 2007 was reported on pages C1 and C2 of the San Francisco Chronicle from July 25, 2007 under the title “Foreclosures Go Through the Roof.” The 87 percent increase in foreclosures filed nationally in June 2007, as well as the near tripling of foreclosures in the Bay Area are reported on pages C1 and C2 of the July 12, 2007 issue of the San Francisco Chronicle in an article titled “Foreclosure Activity Rises Dramatically.” The $7.9 billion in losses related to mortgage transactions sustained by Merrill Lynch were reported in the October 28, 2007 issue of the New York Times, in an article titled “Guesstimates Won’t Cut It Any More,” in Section 3, pages 1 and 8. The bailout of Germany’s IKB Deutsche Industriebank AG was reported on page A18 of the Wall

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Street Journal of October 31, 2007 in an article beginning on the front page titled “Bernanke, in First Crisis, Rewrites Fed Playbook.” The increase in the number of Californians resorting to risky no-down-payment mortgages was reported on pages C1 and C8 of the February 7, 2007 issue of the San Francisco Chronicle, under the title “Home Buyers Going Deeper into Debt.” The phrase “pretty funky financing” was quoted on page C1 of the July 25, 2007 issue of the San Francisco Chronicle, in an article titled “Foreclosures Go Through the Roof.” The statements from the mayor of South San Francisco were quoted on pages 1 and 11 of the September 9, 2007 issue of the San Mateo County Times, in an article titled “Homeowners Seek Help on Loan Issues.” The decline in apartment occupancy rates in the San Francisco Bay Area in the early twenty-first century when low interest rates boosted home sales was reported on page F1 of the September 16, 2007 issue of the San Francisco Chronicle in an article titled “Competition Heats Up.” The decline in the annual rent/price ratio between the years 1996–2006 was reported on page A2 of the January 3, 2008 issue of the Wall Street Journal under the title “Home Prices Must Fall Far to Be in Sync with Rents.” The decline in rents along the San Francisco peninsula after 2001 was reported on page F1 of the September 16, 2007 issue of the San Francisco Chronicle, in an article titled, “Competition Heats Up.” The subsequent rise in both rents and occupancy rates in San Jose and other Bay Area communities since 2006 is from the same page of the same article. The steep increase in rent prices for apartments of all sizes in San Francisco was observed on pages F1 and F4 of the September 16, 2007 issue of the San Francisco Chronicle under the title “Squeeze Hits Landlords.” The reference to these apartments as “exorbitantly priced hovels” is from page F1 of the same article. The 12 percent increase in the average rent in San Jose in just one year is reported on page C1 of the article “Renters Pay the Price for Crisis” from the October 18, 2007 issue of the San Francisco Chronicle. The higher risks incurred in the development of condominiums, as compared to houses, are mentioned on page A1 of the August 25, 2007 issue of the Wall Street Journal, under the title “Condo Troubles Further Squeeze Property Lenders.” The auctioning of Bay Area townhouses/condominiums by builders at reduced rates is from pages C1

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and C8 of the October 18, 2007 issue of the San Francisco Chronicle in an article titled “Is Builders’ Profit Going, Going, Gone?” The increase in the value of bank loans for the development of condominiums was shown in a chart on page A1 of the August 25, 2007 issue of the Wall Street Journal, in an article titled “Condo Troubles Further Squeeze Property Lenders.” The sharp rise in the amount of Corus Bankshares’ nonperforming assets over the course of a single year is from page A4 of the same article. The fact that in 2007 condo “reversions” exceeded condo conversions for the first time since the 1980s was reported on page W10 of the September 21, 2007 issue of the Wall Street Journal, in an article titled “The Invasion of the Renters.” The fact that “urban renewal” destroyed more housing than it created has been noted in many places, perhaps first in The Federal Bulldozer, 1964 edition, pages 62, 64–67, 221 and 229, by Martin Anderson, which also found that two-thirds of the people displaced by Urban Renewal were blacks or Puerto Ricans at that time. The efforts to save money by Jewish immigrants on New York’s lower east side during the nineteenth century are noted on pages 71–72, 83–84 of How the Other Half Lives, by Jacob Riis. The statement that most Jewish immigrants to America in the late nineteenth and early twentieth centuries had their passage to America paid for by family members already living there is from page 113 of Perspectives in American History, Volume IX (1975), in an article titled “Immigration of Russian Jews to the United States: Background and Structure.” Information on the prepaid passage of Irish immigrants is from pages 394–395 of Perspectives in American History, Volume X (1976), in an essay titled “The Irish Famine Emigration to the United States.” Overcrowding on the lower east side of New York when it was a predominantly Jewish neighborhood was discussed on page 128 of an article by Irving Kristol in the September 11, 1966 issue of the New York Times Magazine titled “The Negro Today is Like the Immigrant Yesterday,” which began on page 50. Living conditions for the Jews in this slum are detailed on page 148 of World of Our Fathers by Irving Howe, and page 30 of Government and Slum Housing by Lawrence M. Freidman. Improvements in the housing of Southern blacks in the nineteenth century are discussed on pages 108–109, 111 of Competition and Coercion by Robert Higgs. Data on the continuing segregation of the

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descendants of northern and southern Europeans in the United States are from page 154 of Affirmative Discrimination by Nathan Glazer. The spread of cholera through nineteenth century Irish neighborhoods was discussed on page 114 of Boston’s Immigrants by Oscar Handlin and page 181 of To the Golden Door by George Potter. Violence in Irish neighborhoods in various cities is discussed on page 238 of To the Golden Door by George Potter; on pages 126 and 142 of Immigrant Milwaukee, 1836–1860 by Kathleen Neils Conzen; and on pages 30, 46–48 of The Irish in America by Carl Wittke. Official government policies promoting racial segregation are discussed on pages 24–25 of a 1978 book titled The Builders by Martin Mayer. The high costs paid by California home-buyers due to planning laws are quoted from page 13 of the Cato Institute’s Policy Analysis, No. 602, an October 17, 2007 study by Randal O’Toole titled “Do You Know the Way to L.A.?: San Jose Shows How to Turn an Urban Area into Los Angeles in Three Stressful Decades.”

CHAPTER 5: RISKY BUSINESS

The increase in the number of vehicles receiving the highest safety rating in 2007 was reported in an article beginning on page D1 of the November 15, 2007 issue of the Wall Street Journal under the title “Number of Safest Vehicles Nearly Triples.” Information on low-income residents doing their shopping and banking in higher-income neighborhoods is from pages 10 and 28 of The Thin Red Line: How the Poor Still Pay More, written by David Dante Troutt and published in San Francisco in 1993 by the West Coast Regional Office of Consumers Union. The subtitle refers to an earlier study, The Poor Pay More by David Caplovitz. Neither study explains the systemic economic causes behind the things they describe but this was done by economics professor Walter E. Williams in an article titled “Why the Poor Pay More: An Alternative Explanation” which appeared in Social Science Quarterly in September 1973, pages 375–379. The commissions charged by Banco Popular and the risks assumed by check-cashing agencies are mentioned on pages B1 and B4 of the March 6, 2001 issue of the Wall