Reflections on ASSA 2023

The program included multiple high-quality paper presentations and discussions. Here we select several talks related to MCRE research fields that have left great impressions on the audience.

On the issue of energy saving, the paper by Byrne & Goette shows the effect of providing an app to promote a reduction in water consumption. Through their randomized controlled trial, they showed that monetary rewards can lead to a significant reduction in water usage in the household. What was particularly striking was the last mile problem they found: out of the households that had earned the monetary reward, only around half claimed the money which was only one button click away. We learn here that the reward could be more of a mental goal, rather than one that is aimed at financial gains.

In the topic of housing, Han, Ngai, and Sheedy study the increase of a property transaction tax in the Greater Toronto Area. They find that there is a decrease in buy-to-own purchases, while buying-to-rent increases. The shift could be explained by the fact that renters are less exposed to the transfer tax, because the burden only occurs once through a permanent increase in rents, while homeowners are exposed every time they move. Thus, renting becomes relatively more attractive. The increase in demand from renters weighs stronger than the increase in transaction price due to the transfer tax, which makes buying to rent more attractive after the reform. Maisy Wong presented her paper with Fernando V. Ferreira on neighborhood choice after COVID-19. The study focused on university graduates and was conducted by providing students with information about housing. Results show that changes in network preferences lead to a sizable movement away from the city center to neighborhoods just outside. The pandemic has potentially led many households to rethink how they value different types of amenities, especially potential movers such as graduating students.

In the field of urban growth, the paper by Albert Saiz and Luyao Wang studies how physical geography barriers affect traffic times and flows in Boston. They show that for the whole city, barriers not only lead to delays to trips, but also worsen downtown congestion for everyone. For locations near the barriers that lack traffic-diffusion ability, they suffer from a high risk of congestion. Policymakers may consider specific solutions for congestion arising from constraining physical geographies. We also learn that researchers need to be careful when comparing the environmental and social outcomes of urban transportation systems across cities - we must take into account the different configurations of physical barriers across urban environments.

Research in the domain of working from home (WFH) was well represented throughout the conference. A future of hybrid WFH seems certain, but WFH’s effect on productivity certainly is not. For instance, an RTC presented by Ruobing Han finds the attrition rate to decrease, whereas satisfaction and self-assessed productivity increase. Diving a bit deeper, Emma Harrington showed that the forced switch to WFH during the pandemic increased call center workers’ productivity, but only for those that were originally hired as on-site workers. The fact that employees working from home prior to the pandemic decreased in productivity suggests adverse selection, a hugely relevant side note when moving towards selective working from home schemes. Moreover, WFH decreased career advances significantly. These sessions makes you wonder if and how WFH decisions will become a strategic decision in the near future. A poster presentation by our own Martijn Stroom suggests that in all cases, a holistic view of WFH is required. Commonly overlooked, he shows that the physical space you conduct your work in at home, influences your productivity. Specifically, ventilating your home office will increase productivity, general satisfaction, willingness to continue to work from home, and decrease burnout propensity.

An out-of-the-box yet noteworthy mention was the presentation on the hidden alpha. In this paper, the authors show that hidden connections between fund managers and firm officers on Facebook were associated with abnormal returns. The efforts to identify the hidden connections paid off, as they concluded that the more hidden these connections were (public profiles: visible; one private profile: invisible; both private profiles: double invisible), the stronger the association. They further show no abnormal returns for investments between publically connected fund managers and firm officers and the fund managers with hidden profiles are not simply better performers.

Research in the field of REITs and commercial real estate investment sections also contains several great freshly developed papers in four different fields. Research on the effect of ESG on the commercial real estate market by Avis Devine, uses the GRESB data and NAREIT data to develop the connection between ESG disclosure and the performance of private equity real estate return. A paper exploring the effect of pricing signals by Simon Büchler documents how the by-to-redevelop decision of investors is influenced by the capital intensity gap and economic activity mismatch of the nearby properties. In terms of the return correlation of private and public real estate market co-movement, David C.Ling discovered that idiosyncratic shocks of the private real estate market have a significant effect on the REIT returns. In the climate risk topic, Zifeng Feng found that REITs with higher climate risk exposure, denoted by abnormal temperature, tend to have lower cash flows and firm values. This session provides the latest insight into the frontier trend of the commercial real estate market.