Sewin Chan

Associate Professor of Public Policy; Director of the PhD Program

212.998.7495
Sewin Chan

Sewin Chan is an economist who studies economic and financial risks faced by households. Her research includes mortgages and housing market risk, consumer credit behavior, housing for older people, the responsiveness of workers to financial retirement incentives, the impact of job loss at older ages, and Medicare enrollment decisions. Dr. Chan currently serves on the New York City Age Friendly Commission’s Working Group on Housing, and was previously a member of the U.S. Department of Labor’s Advisory Council on Employee Welfare and Pension Benefit Plans. She holds a B.A. from Cambridge University and a Ph.D. in economics from Columbia University.

The primary purpose of the microeconomics core course is to enable you to use microeconomic thinking, concepts and tools in your professional public service work. Accomplishing this also requires refreshing and strengthening your quantitative skills.

The course begins with the basics of supply and demand and market operations, and uses this as the context for considering consumer and organizational decisions within a given market structure. The course builds to applying economic analysis to a variety of public issues such as the effects of taxation, the market structure of health care, the impacts of the minimum wage, the effects of international trade and various approaches to environmental externalities.

By the end of the course you should be able to articulate the economic context and analysis of a public problem, use economic concepts in managerial and policy decisions, and progress to second level courses confident of your understanding of microeconomics and its tools.

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The Economics of Public Policy analyzes the impact of public policy on the allocation of resources and the distribution of income in the economy. In this course, you will learn how to use the tools of microeconomics and empirical analysis to answer these questions: When should the government intervene in the economy? How might the government intervene? And, what are the effects of those interventions on economic outcomes?  The course will include topics such as: income distribution and welfare programs, taxation and tax reform, government debt, market failures, Social Security, unemployment insurance and health insurance.

 
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Public finance (the economic analysis of revenues and expenditures of the public sector) and public economics (economic analysis of the public sector in a market economy) analyze the impact of public policy on the allocation of resources and the distribution of income in the economy. In this course, you will learn how to interpret economic analyses and how to use the tools of microeconomics and empirical analysis to investigate and predict the effects of public expenditures, regulation and government revenue-raising activities.

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The primary purpose of the microeconomics core course is to enable you to use microeconomic thinking, concepts and tools in your professional public service work. Accomplishing this also requires refreshing and strengthening your quantitative skills.

The course begins with the basics of supply and demand and market operations, and uses this as the context for considering consumer and organizational decisions within a given market structure. The course builds to applying economic analysis to a variety of public issues such as the effects of taxation, the market structure of health care, the impacts of the minimum wage, the effects of international trade and various approaches to environmental externalities.

By the end of the course you should be able to articulate the economic context and analysis of a public problem, use economic concepts in managerial and policy decisions, and progress to second level courses confident of your understanding of microeconomics and its tools.

Download Syllabus

The primary purpose of the microeconomics core course is to enable you to use microeconomic thinking, concepts and tools in your professional public service work. Accomplishing this also requires refreshing and strengthening your quantitative skills.

The course begins with the basics of supply and demand and market operations, and uses this as the context for considering consumer and organizational decisions within a given market structure. The course builds to applying economic analysis to a variety of public issues such as the effects of taxation, the market structure of health care, the impacts of the minimum wage, the effects of international trade and various approaches to environmental externalities.

By the end of the course you should be able to articulate the economic context and analysis of a public problem, use economic concepts in managerial and policy decisions, and progress to second level courses confident of your understanding of microeconomics and its tools.

Download Syllabus

The primary purpose of the microeconomics core course is to enable you to use microeconomic thinking, concepts and tools in your professional public service work. Accomplishing this also requires refreshing and strengthening your quantitative skills.

The course begins with the basics of supply and demand and market operations, and uses this as the context for considering consumer and organizational decisions within a given market structure. The course builds to applying economic analysis to a variety of public issues such as the effects of taxation, the market structure of health care, the impacts of the minimum wage, the effects of international trade and various approaches to environmental externalities.

By the end of the course you should be able to articulate the economic context and analysis of a public problem, use economic concepts in managerial and policy decisions, and progress to second level courses confident of your understanding of microeconomics and its tools.

Download Syllabus

The primary purpose of the microeconomics core course is to enable you to use microeconomic thinking, concepts and tools in your professional public service work. Accomplishing this also requires refreshing and strengthening your quantitative skills.

The course begins with the basics of supply and demand and market operations, and uses this as the context for considering consumer and organizational decisions within a given market structure. The course builds to applying economic analysis to a variety of public issues such as the effects of taxation, the market structure of health care, the impacts of the minimum wage, the effects of international trade and various approaches to environmental externalities.

By the end of the course you should be able to articulate the economic context and analysis of a public problem, use economic concepts in managerial and policy decisions, and progress to second level courses confident of your understanding of microeconomics and its tools.

Download Syllabus

2016

Abstract

We use the American Housing Survey to examine the distribution and occupancy of homes that have, or could be modified to have, accessibility features that allow seniors to successfully remain in the community as they age. Despite the aging population and the growing need for accessible housing, the U.S. housing stock is woefully inadequate: fewer than 4% of housing units could be considered livable by people with moderate mobility difficulties, and a miniscule fraction are wheelchair accessible. Recent construction is no more likely to be accessible than homes built in the mid-1990s, suggesting that the housing market is not responding to the aging demographic profile. Only a small fraction of seniors, even among those with mobility difficulties, and even among recent movers, live in suitable homes. Modifications that potentially improve accessibility are more likely undertaken by households with a senior, but only once that senior develops mobility difficulties.

2015

Abstract

The mortgage default decision is part of a complex household credit management problem. We examine how factors affecting mortgage default spill over to other credit markets. As home equity turns negative, homeowners default on mortgages and HELOCs at higher rates, whereas they prioritize repaying credit cards and auto loans. Larger unused credit card limits intensify the preservation of credit cards over housing debt. Although mortgage non-recourse statutes increase default on all types of housing debt, they reduce credit card defaults. Foreclosure delays increase default rates for both housing and non-housing debts. Our analysis highlights the interconnectedness of debt repayment decisions.

Abstract

The American Housing Survey (AHS) is the most comprehensive national housing survey in the United States. Since 2009, AHS has included six core disability questions used in the American Community Survey. The questions address hearing, visual, cognitive, ambulatory, self-care, and independent living difficulties for each household member. For 2011, AHS added a topical module on accessibility. The module asked about the presence of accessibility features in housing units, including wheelchair accessibility features, and whether the accessibility features were used or not. Together, these data provide an unprecedented opportunity to examine the accessibility of the U.S. housing stock and to ask whether people with disabilities reside in accessible homes.

In this report, we present summary measures of housing accessibility based on the 2011 AHS. To develop these summary measures, we examined United States (U.S.) and international standards and regulations regarding housing accessibility, reviewed the relevant literature, and conducted interviews with a set of disability and housing design experts. These interviews are further described in appendix A. Based on these summary measures, we describe how accessibility varies by housing market characteristics as well as resident characteristics such as age, disability status, and income. We also present evidence on the relationship between the need for and availability of accessible housing units, taking affordability of accessible units into account.

Abstract

This paper examines homeowners’ self-reported values in the American Housing Survey and the Health and Retirement Study from the start of the recent housing price run-ups through recent price declines. We compare zip code level market-based estimates of housing prices to those derived from homeowners’ self-reported values. We show that there are systematic differences which vary with market conditions and the amount of equity owners hold in their homes. When prices have fallen, homeowners systematically state that their homes are worth more than market estimates suggest, and homeowners with little or no equity in their homes state values above the market estimates to a greater degree. Over time, homeowners appear to adjust their assessments to be more in line with past market trends, but only slowly. Our results suggest that underwater borrowers are likely to understate their losses and either may not be aware that their mortgages are underwater or underestimate the degree to which they are.

Abstract

Using a rich database of non-prime mortgages from New York City, we find that census tract level neighborhood characteristics are important predictors of default behavior, even after controlling for an extensive set of controls for loan and borrower characteristics. First, default rates increase with the rate of foreclosure notices and the number of lender-owned properties (REOs) in the tract. Second, default rates on home purchase mortgages are higher in census tracts with larger shares of black residents, regardless of the borrower’s own race. We explore possible explanations for this second finding and conclude that it likely reflects differential treatment of black neighborhoods by the mortgage industry in ways that are unobserved in our data.

Abstract

We use a detailed dataset of seriously delinquent mortgages to examine the dynamic process of mortgage default—from initial delinquency and default to final resolution of the loan and disposition of the property. We estimate a two-stage competing risk hazard model to assess the factors associated with post-default outcomes, including whether a borrower receives a legal notice of foreclosure. In particular, we focus on a borrower’s ability to avoid a foreclosure auction by getting a modification, by refinancing the loan, or by selling the property. We find that the outcomes of the foreclosure process are significantly related to: loan characteristics including the borrower’s credit history, current loan-to-value and the presence of a junior lien; the borrower’s post-default payment behavior, including the borrower’s participation in foreclosure counseling; neighborhood characteristics such as foreclosure rates, recent house price depreciation and median income; and the borrower’s race and ethnicity.

Sewin Chan . The Next Coming Crisis of Capitalism: A Review of Capital in the Twenty-First Century by Thomas Piketty Public Administration Review 75(3), May/June 2015
Abstract

This chapter considers the structure of mortgage finance in the United States and its role in shaping patterns of homeownership, the nature of the housing stock, and the organization of residential activity. We start by providing some background on the design features of mortgage contracts that distinguish them from other loans and that have important implications for issues presented in the rest of the chapter. We then explain how mortgage finance interacts with public policy, particularly tax policy, to influence a household's decision to own or rent and how shifts in the demand for owner-occupied housing are translated into housing prices and quantities, given the unusual nature of housing supply. We consider the distribution of mortgage credit in terms of access and price, by race, ethnicity, and income, and over the life cycle, with particular attention to the role of recent innovations such as nonprime mortgage securitization and reverse mortgages. The extent of negative equity has been unprecedented in the past decade, and we discuss its impact on strategic default, housing turnover, and housing investment. We describe spatial patterns in foreclosure and summarize the evidence for foreclosure spillovers in urban neighborhoods. Finally, we offer some thoughts on future innovations in mortgage finance.

Abstract

This chapter examines the fiscal challenge posed by the aging of the U.S. population. We summarize the likely future of U.S. demographics, focusing on the evolution of the dependency ratio. We describe the main U.S. government programs related to aging and assess their fiscal positions. Forecasts for the unfunded liabilities in these programs exceed $40 trillion. We provide a review of economic theory useful for understanding the likely economic impact of budget deficits. We evaluate the fiscal adjustment that is likely to be needed given the 2009 status of the U.S. fiscal position and predicted demographic changes: it is likely to be approximately 8% of GDP, which, while large, is an adjustment that has been managed by many countries in the past. Finally, we provide a brief survey of potential policies to address the fiscal challenge of aging, and of economic research evaluating such policies.

2012

Abstract

Because traditional Medicare leaves substantial gaps in coverage, many people obtain supplemental coverage to limit their exposure to out-of-pocket costs. However, some Medicare beneficiaries may not be well equipped to navigate the complex supplemental coverage landscape successfully because of their lower cognitive ability or numeracy—that is, the ability to work with numbers. We found that people in the lower third of the cognitive ability and numeracy distributions were at least eleven percentage points less likely than those in the upper third to enroll in a supplemental Medicare insurance plan. This result means that many Medicare beneficiaries do not have the financial protections and other benefits that would be available to them if they were enrolled in a supplemental insurance plan. Our findings suggest that policy makers may want to consider alternatives tailored to these high-need groups, such as enhanced education and enrollment programs, simpler sets of plan choices, or even some type of automatic enrollment with an option to decline coverage.

2011

Vicki Been, Sewin Chan, Ingrid Ellen & Josiah Madar . Decoding the Foreclosure Crisis: Causes, Responses and Consequences  Journal of Policy Analysis and Management, 30 (2011): 388-396.
Vicki Been, Sewin Chan, Ingrid Ellen & Josiah Madar . Negative Equity, Yes, But Not the Whole Story. Journal of Policy Analysis and Management, 30 (2011): 398-400.

2008

Abstract

This chapter investigates non-traditional work and retirement patterns among older individuals in the Health and Retirement Study. It first reviews the evidence on retirements that initially involve bridge jobs or some form of partial retirement. It then looks at analysis on retirement reversals in which individuals resume or increase work activity following a period of retirement. Almost one third of the individuals in the sample who are ever partially or fully retired make at least one transition from more to less retired during the period of observation. The chapter also explores the characteristics of individuals making such transitions.

Abstract

This paper provides an answer to an important empirical puzzle in the retirement literature: while most people know little about their own pension plans, retirement behavior is strongly affected by pension incentives. We combine administrative and self-reported pension data to measure the retirement response to actual and perceived financial incentives and document an important role for self-reported pension data in determining retirement behavior. Well-informed individuals are far more responsive to pension incentives than the average individual. Ill-informed individuals seem to respond systematically to their own misperceptions of pension incentives.

2004

Abstract

This paper investigates the responsiveness of individuals’ retirement decisions to forward-looking measures of pension accumulations. In contrast to previous research, we use within-person variation in retirement incentives and are able to control for unobserved heterogeneity in tastes for retirement by studying a panel of subjective retirement expectations. We confirm that individuals do respond as expected to pension incentives, even when we control for individual fixed effects. However, the magnitude of these responses differs when estimated from models based on within-person versus cross-sectional variation: the inclusion of fixed effects reduces the response by about half.

Abstract

This paper estimates the extent to which reduced employment following job loss among older workers can be explained as a response to altered pension incentives and earnings opportunities. Using data from the Health and Retirement Study, we first examine how workers’ earnings, assets, pensions and the resulting financial incentive to retire are affected by job loss. We find important effects of job loss on the main financial components of workers’ incentive to retire. We then examine retirement behavior after job loss, controlling for these changed retirement incentives, along with any additional effects of displacement not captured by retirement incentives. We find that the observed increased rates of retirement among displaced workers go far beyond these purely financial considerations. Very little of the reduced employment among older job losers can be explained by changes in wages and pension-related retirement incentives. Other barriers to reemployment may be more important explanations for the low employment rates of recently displaced older workers.

Abstract

Objective. To determine whether caregiving grandparents are at an increased risk for depressive symptoms.

Data Source. National sample (n=10,293) of grandparents aged 53–63 years in 1994, and their spouse/partners, who took part in the Health and Retirement Study (HRS).

Study Design. Grandparents were surveyed in 1994 and resurveyed every two years thereafter, through 2000. Over that period, 977 had a grandchild move in or out of their home. These grandparents served as their own controls to assess the impact of having a grandchild in the home.

Data Extraction. Depressive symptoms were measured using an abbreviated form of the Center for Epidemiologic Studies—Depression (CES-D) scale, scored 1–8, with a score ≥4 associated with depression “caseness.”

Principal Findings. At the time of the 1994 interview, 8.2 percent of grandparents had a grandchild in their home. However, there was substantial variation across demographic groups (e.g., 29.4 percent of single nonwhite grandmothers, but only 2.0 percent of single white grandfathers had a grandchild in residence). The impact of having a grandchild in the home varied by grandparent demographic group, with single grandparents and those without coresident adult children experiencing the greatest probability of elevation in depressive symptoms when a grandchild was in residence. For example, single nonwhite grandmothers experienced an 8 percentage point increase in the probability of having a CES-D score ≥4 when a grandchild was in their home, compared to when a grandchild was not in their home, controlling for changes in health care, income, and household composition over time (95 percent CI=0.1 to 15.0 percentage points).

Conclusions. Grandparents have a greater probability of elevated depressive symptoms when a grandchild is in their home, versus when a grandchild is not in their home. Single women of color bear a disproportionate burden of the depression associated with caring for grandchildren. Since an increasing number of grandparents function as a de facto safety net keeping their grandchildren out of formal foster care, identifying strategies to support the health and well-being of caregiving grandparents is an emerging priority.

2001

Abstract

Falling house prices have caused numerous homeowners to suffer capital losses. Those with little home equity may be prevented from moving because of imperfections in housing finance markets: the proceeds from the sale of their home may be insufficient to repay their mortgage and provide a down payment on a new home. A data set of mortgages is used to examine the magnitude of these constraints. Estimates show that average mobility would have been 24% higher after 3 years had house prices not declined, and after 4 years, it would have been 33% higher. Among those with high initial loan-to-value ratios, the differences are even greater.

Abstract

This article uses data from the Health and Retirement Study to examine the employment patterns of workers aged 50 and above who have experienced an involuntary job loss. Hazard models for returning to work and for exiting post-displacement employment are estimated and used to examine work patterns for 10 years following a job loss. Our findings show that a job loss results in large and lasting effects on future employment probabilities. Four years after job losses at age 55, the employment rate of displaced workers remains 20 percentage points below the employment rate of similar nondisplaced workers.

Abstract

This article uses data from the Health and Retirement Study to examine the employment patterns of workers aged 50 and above who have experienced an involuntary job loss. Hazard Models for returning to work and for exiting post displacement employment are estimated and used to examine work patterns for 10 years following a job loss. Our findings show that a job loss results in large and lasting effects on future employment probabilities. Four years after job losses at age 55, the employment rate of displaced workers remains 20 percentage points below the employment rate of similar nondisplaced workers.

1999

Abstract

The frequency of job loss among workers in late career has risen disproportionately in recent years. During the early 1980s, displacement rates for 55-64 year olds were the lowest of any age cohort but by the recession of the early 1990s, they had the highest rates (see Farber [1997]). The effects of job loss on these workers are potentially severe: their earnings capacity, savings, and retirement expectations are likely to be dramatically affected and they may take substantially longer to be re-employed. However, despite these reasons for heightened concern, relatively little is known about the economic consequences of late career job loss among recent cohorts of workers. Empirical estimation of dynamic retirement models and analyses of retirement behavior in general have usually ignored involuntary job losses, and many recent studies of post-displacement outcomes have been limited to younger and mid- career workers. Given the changes in labor force participation, retirement rates and the nature of displacement over the past decade, it is important to document the effects of job loss on more recent cohorts of older workers. This paper presents findings from an ongoing research project that focuses on the economic impacts of late career job loss on employment and retirement patterns, as well as on earnings and assets.

Abstract

The rapid growth of the stock market since 1990 has encouraged the view that corporate equity holdings are becoming the primary asset for a broad spectrum of American households. A closer look at the evidence, however, reveals that real estate continues to eclipse stocks as a share of most households’ portfolios.

Abstract

The extraordinary growth in the stock market over the past several years has significantly increased wealth in the US household sector. The Flow of Funds Accounts data indicate that in the second quarter of 1998 corporate equity holdings in the household sector amounted to $9.4 billion dollars or 28 percent of total household assets. This represents an astounding increase of $5.3 billion over the past five years. For only the second time since the mid-1940s have equity holdings surpassed all other classes of assets in the household sector (although real estate comes close at 27 percent).

Abstract

When individuals or families make retirement planning decisions, including asset allocation choices, it is important for them to consider how all of the assets they own fit together to form an overall portfolio of house-hold wealth. Surprisingly often, one of the most important household assets is left out of retirement planning discussions completely: the family home.

This issue of Research Dialogue examines in detail the central role that residential housing plays in household asset portfolios in the United States. Currently, families don't have much choice regarding the amount of wealth they must "allocate" to their home: either they own their residence or they do not. This stark choice generally leaves homeowners overexposed to significant financial risks that most would prefer not to take. The authors of this article describe financial innovations that, if developed and adopted, would provide families far greater choice regarding how much to invest in a home. The authors show that this greater flexibility could lead to as much as 20% greater wealth at retirement through better diversification of the wealth that homeowners currently must hold in the form of housing.

 

1997

Abstract

A revolutionary housing finance concept can help many more Americans buy the homes of their dreams, while simultaneously furnishing vast, new investment opportunities for financial institutions and investors. The idea: enable consumers to purchase part of a home through a new type of financing called Housing Partnership agreements.

Housing Partnerships: A New Approach to a Market at Crossroads provides a blueprint for the development of this alternative housing finance market, and offers a new and compelling housing finance option: instead of the existing two housing options -- renting or buying an entire dwelling -- would-be home owners can finance a percentage of a property, while the other portion is financed by institutional investors, who provide capital for the house in exchange for a proportion of the final sale price.

The home buyer (Managing Partner) and a financial institution (Limited Partner) would each own a fixed proportion of the home, resulting in co-ownership of the property. The Managing Partner would live in the entire home and when the house is sold, potential proceeds are split with the Limited Partner.

Housing Partnerships: A New Approach to a Market at a Crossroads proposes adapting the same legal form used successfully by commercial enterprises for the residential housing market. Why can't individual home owners, just like businesses, avail themselves to the benefits of this type of ownership? Why is the U.S. housing market the only one in which there is no way to sell any part of the return stream to other investors?

Housing Partnerships: A New Approach to a Market at a Crossroads has ideas to interest a range of readers, from prospective home buyers to realtors, from financial investors to those interested in housing and social policy development.

 

1996

Abstract

Mortgage applications are a detailed and accurate source of household information that is verified by underwriters, making it a more accurate data source than self-reported survey answers. This paper discusses how mortgage data can be applied to areas of economics outside mortgage finance. As a supplement to variables from the application form, the self-selection of mortgage points is used to infer expected mobility. A duration model of housing spells is estimated, and the points indicator is shown to be highly significant in predicting mobility for low loan-to-value borrowers. The findings demonstrate the potential fruitfulness of using this new data source.