GEUC 4011Senior Final Year Project

Lily Chia-Hsun LeeKaren Wenyu Jiang

William StruttLouie Dokyun Kang

Road Map

• Research Question• US Politics• Literature Review• Methodology• Results

Research Question Hypothesis

The correlation between the variation of real estate prices and the voter preferences in the USA.

The more unstable the housing variation is, the more likely the Democratic party will gain the majority party.

Characteristics of US Politics

• Two major political parties

• The House of Representatives

• The United States Senate

• Voting System of the two Houses

Democratic

a) Liberal b) Left Wingc) Famous democrats: Kennedy, Franklin Roosevelt, Bill Clinton,

Obama.

1) Favour on higher minimum wages.2) Increase in government spending3) Less on military expenditure 4) Tax Equality, government welfare5) Viewed as environmentalists, however there is contradiction

Republican

• Conservative • Right Wing • Famous Republicans: Teddy Roosevelt, Ronald

Reagan, George Bush, Abraham Lincoln, Richard Nixon

• Military Expenditure• Less on government welfare and support. • Mixed Environmental Stance

House of Representatives

• Power to pass legislation• Impeach officials• Initiate revenue bills • Power to elect the President if no majority

vote is achieved

United States Senate

• Trial of impeached officials• Consent and advice of treaties• Appointment of US officials• Each state represented by two senators

regardless of population.

Compare and Contrast

House

• Larger (435 seats)• Shorter service term (2 years) • More restraint • Narrow constituency • Specialists • Less media coverage • Less "prestigious"• Expeditious debate • More partisan

Senate

• Smaller (100 seats)• Longer service term (6

years)• Less restraint• Broader constituency • Generalists • High media coverage • More "prestigious"• Slow debate • Less partisan

Service Term Differences

Senate

• Staggered service of 6 years • Separated into classes• Elections in November in even numbered years

House

• Service of 2 years• Election time coincides with Senate election • Primary Election Method

Constituency of the HousesRepresentatives Senate

Narrow Constituency“Single” Member” District District Focused

Broad ConstituencyPrimary ElectionGeneral ElectionPopular Vote

Democrat Republican

Philosophy Liberal Conservative

Economic Ideas Favor minimum wages and progressive taxation. i.e. higher tax rates for higher income brackets.

Believe taxes shouldn’t be increased for anyone (including the wealthy) and that wages should be set by the free market.

Stand on Military issues

Decreased spending Increased spending

Stand on gay marriage

Support (some democrats disagree) Oppose (some Republicans disagree)

Stand on abortion Should not be made illegal; support Roe v. Wade (some Democrats disagree)

Should not be legal; oppose Roe v. Wade(some Republicans disagree)

Stand on Death penalty

While support for the death penalty is strong among Democrats, opponents of the death penalty are a substantial fraction of the democratic base.

A large majority of Republicans support the death penalty.

Social and human ideas

Based on community and social responsibility

Based on individual rights and justice

• Economist, Nobel laureate, and Democratic Party member Joseph Stiglitz blamed the Bush/Greenspan tax cuts designed to benefit the richest Americans but not to lift the economy out of the recession that followed the collapse of the Internet bubble, forcing Greenspan to then cut rates to maintain growth and employment

Jimmy Carter(1977-1980)

Bill Clinton(1993-2000)

Ronald Reagan(1981-1988)

George H. W. bush(1989-1992)

George W. Bush(2001-2008)

Barack Obama(2009-Present)

List of presidents of the United States (1980 - 2012)

Influential changes & Registrations in housing price between 1980 - 2012

Jimmy Carter(1977-1980)

1980: The Depository Institutions Deregulation and Monetary Control Act of 1980 granted all thrifts

Ronald Reagan(1981-1988)

1986: The Tax Reform Act

1986–1991: New homes constructed dropped from 1.8 to 1 million, the lowest rated since World War II.

George H. W. bush(1989-1992)

1991: US recession, new construction prices fall

Bill Clinton(1993-2000)

1994–1997: Flat Housing prices.

1995: New Community Reinvestment Act regulations break down home-loan data by neighborhood, income, and race

1998: "Financial Services Modernization Act" killed in Senate because of no restrictions on Community Reinvestment Act-related community groups written into law.

George W. Bush(2001-2008)

1997–2005:Mortgage fraud increased by 1,411 percent.

President G.W. Bush sets goal of increasing minority home owners by at least 5.5 million

2007 Subprime mortgage financial crisis Subprime industry collapse.

Barack Obama(2009-Present)

March 1–June 18: 406 people were arrested for mortgage fraud in an FBI sting across the U.S., including buyers, sellers and others across the wide-ranging mortgage industry.

Methodology

• Correlation vs. Causation • Linear regression

– P value– R value

• Data – Variation

• Results – Variation 1, 2, 3 – Quarterly variation

Correlation Vs Causation

Correlationstatistical relationship

between two variables

Causationrelationship where one

variable causes a change in another variable

Correlation Causation

Spurious Factor

X Y

Z

Economy Democracy

Women’s rights

?

Linear regressionModeling the relationship between two

variables

P valuePercentage chance that the results of a statistical test are due to random error

Shows the significance of the data

P value threshold in social science: 0.05

R value• Coefficient of determination

• Strong/ weak correlation

Correlation Negative Positive

None -0.09 to 0.0 0.0 to 0.09

Small -0.3 to -0.1 0.1 to 0.3

Medium -0.5 to -0.3 0.3 to 0.5

Strong -1.0 to -0.5 0.5 to 1.0

010

2030

4050

y1

0 2 4 6 8 10x

02

46

810

y5

0 2 4 6 8 10x

-40

-20

020

40y3

0 2 4 6 8 10x

Case-Shiller Home Price Indices

•The indices are calculated on sales of single-family homes, an approach developed by economists Karl Case, Robert Shiller and Allan Weiss.

• It includes a national home price index, a 20-city composite index, a 10-city composite index and 20 individual metro area indices.

•The national home price index is currently released by Stand & Poor every quarter.

Case-Shiller Home Price Index

Year Nominal Price Index

CPIReal Price

Index

1890 3.66 7.61 100.00

1891 3.30 7.80 88.01

1892 3.36 7.33 95.42

1893 3.50 7.90 92.30

1894 4.08 6.85 123.98

1895 3.70 6.57 117.46

1896 3.21 6.66 100.30

1897 3.31 6.47 106.52

1898 3.53 6.66 110.18

1899 3.37 6.76 103.85

1900 3.85 7.90 101.57

1901 3.23 7.71 87.33

1902 3.81 7.90 100.47

1903 3.87 8.66 93.07

1904 4.05 8.28 101.85

Case-Shiller Home Price Indices

Index Variation

• The biggest Variation between the two years

• The biggest variation of this year

• The biggest variation of last year

Index Variation 1

Real Price Index

2009.1 127.3263

2009.2 129.9978

2009.3 132.8987

2009.4 130.9275

2010.1 126.9637

2010.2 132.0134

2010.3 129.5778

2010.4 124.6619

124.6619

132.8987

132.8987-124.6619=8.2368

Index Variation 2

Real Price Index

2010.1 126.9637

2010.2 132.0134

2010.3 129.5778

2010.4 124.6619

124.6619

132.8987

132.8987-124.6619=8.2368

Index Variation 3

Real Price Index

2009.1 127.3263

2009.2 129.9978

2009.3 132.8987

2009.4 130.9275

127.3263

132.8987

132.8987-127.3263=5.5724

Voting Preference

Republican 0

Democratic1

262/435=0.6023

Linear Regression Result

1950-2010

House vs

Variation1

Correlation Coefficient = 0.1212

P = 0.515

House vs

Variation2

Correlation Coefficient = 0.1625

P = 0.383

House vs

Variation3

Correlation Coefficient = 0.1072

P = 0.566

Quarterly Regression

Quarter 1 January to March

Quarter 2 April to June

Quarter 3 July to September

Quarter 4 October to December

1950 to 2010Senate

P value R value

Quarter 1 0.418 0.157Quarter 2 0.147 0.276Quarter 3 0.212 0.239Quarter 4 0.680 0.08

Correlation Negative Positive

None -0.09 to 0.0 0.0 to 0.09

Small -0.3 to -0.1 0.1 to 0.3

Medium -0.5 to -0.3 0.3 to 0.5

Strong -1.0 to -0.5 0.5 to 1.0

1980 to 2010Senate

P value R value Quarter 1 0.048 0.501Quarter 2 0.440 0.208Quarter 3 0.060 0.481Quarter 4 0.030 0.543

Correlation Negative Positive

None -0.09 to 0.0 0.0 to 0.09

Small -0.3 to -0.1 0.1 to 0.3

Medium -0.5 to -0.3 0.3 to 0.5

Strong -1.0 to -0.5 0.5 to 1.0

1950 to 2010House of Representatives

P value R ValueQuarter 1 0.265 0.214Quarter 2 0.138 0.282Quarter 3 0.025 0.416

Quarter 4 0.446 0.147

Correlation Negative Positive

None -0.09 to 0.0 0.0 to 0.09

Small -0.3 to -0.1 0.1 to 0.3

Medium -0.5 to -0.3 0.3 to 0.5

Strong -1.0 to -0.5 0.5 to 1.0

1980 to 2010House of Representative

P value R valueQuarter 1 0.101 0.425Quarter 2 0.168 0.363Quarter 3 0.018 0.583

Quarter 4 0.065 0.471Correlation Negative Positive

None -0.09 to 0.0 0.0 to 0.09

Small -0.3 to -0.1 0.1 to 0.3

Medium -0.5 to -0.3 0.3 to 0.5

Strong -1.0 to -0.5 0.5 to 1.0

Bigger Picture

Voting Behavior

The Bigger Picture

long term factors• Party identification model

– attachment to party• Social environment: education, ethnicity, religion, gender

Short term factors• Rational choice model

– Voters are rational actors, judgment based on factors….

• Party image• Current issue• policies

END