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By Bilal Hafeez 04-12-2019
In: post | Newsletter

Macro Hive Deep Dives: Climate Change Eats US Real Estate / TV Eats Traders / AI Eats College-Educated Workers

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(total reading time: 3 mins)

I’m always on the look out for thought-provoking academic papers, and this week’s three easily meet that criteria. One looks at whether climate change and the prospect of sea levels rising are impacting coastal US real estate. The answer is yes, but with some important caveats. Crucially by linking climate change to real estate, we can start to imagine how politics and long-term economic trends could be affected.

The second piece looks at how sensational news headlines impact the behaviour of traders. The impact on investment returns will surprise you. Finally, we have an excellent piece that looks at AI patents and job descriptions to determine who will lose out to AI. Turns out it will be college-educated workers. So income inequality could end up coming down, but not for the reason most think.





Climate Change Hits Property Prices (2 min read) One of the clearest effects of climate change is sea level rise (SLR). The scientific community expects a global average SLR of around 3-6 ft. over the next century. This could affect over 6 million American homes and put one trillion dollars of coastal US real estate at risk. A new paper, Disaster on the Horizon: The Price Effect of Sea Level Rise, by Asaf Bernstein, Matthew Gustafon, and Ryan Lewis finds that exposed properties are starting to sell at a discount.

(4th December, 2019 │Bilal Hafeez)





How TV Affects Traders (3 min read)  You’d think traders are so focused on making money they pay little attention to TV. But that’s not the conclusion of Joel Peress and Daniel Schmidt in their recently published Journal of Finance paper, Glued to the TV: Distracted Noise Traders and Stock Market Liquidity. They find that sensational, non-market related news headlines distract amateur traders, and this ends up impacting the behaviour of small stocks.

(3rd December, 2019 │Bilal Hafeez)



College-Educated Workers, AI is Coming For You (3 min read) Advances in artificial intelligence (AI) are eliciting much fear from society, especially considering the potential impact on the workplace. So far, most projections of job loss levels have taken a top-down approach, which can produce wildly varying results. But a new paper, “The Impact of Artificial Intelligence on the Labor Market”, by Stanford University’s Michael Webb, takes a more grounded route.

Webb looks at current patents linked to AI. He establishes what tasks the associated technologies will perform and then compares them with the tasks performed in different occupations. His hypothesis? Large overlaps between the two suggest potential job loss and wage reduction.

(2nd December, 2019 │Bilal Hafeez)






(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)