Hedge Fund Managers With Psychopathic Tendencies Make for Worse Investor

Hedge Fund Managers With Psychopathic Tendencies Make for Worse Investors. Leanne ten Brinke, Aimee Kish, Dacher Keltner. Personality and Social Psychology Bulletin. First published date: October-19-2017. https://doi.org/10.1177/0146167217733080

Abstract: It is widely assumed that psychopathic personality traits promote success in high-powered, competitive contexts such as financial investment. By contrast, empirical studies find that psychopathic leaders can be charming and persuasive, but poor performers who mismanage, bully, and engage in unethical behavior. By coding nonverbal behaviors displayed in semistructured interviews, we identified the psychopathic, Machiavellian, and narcissistic tendencies in 101 hedge fund managers, and examined whether these traits were associated with financial performance over the course of 10 diverse years of economic volatility (2005-2015). Managers with greater psychopathic tendencies produced lower absolute returns than their less psychopathic peers, and managers with greater narcissistic traits produced decreased risk-adjusted returns. The discussion focuses on the costs of Dark Triad traits in financial investment, and organizational leadership more generally.

Vindeby, The World’s First Offshore Wind Farm Retires: A Post-Mortem

World’s First Offshore Wind Farm Retires: A Post-Mortem. M J Kelly, Department of Engineering, University of Cambridge, United Kingdom. Date: 18/10/17
https://www.thegwpf.com/worlds-first-offshore-wind-farm-retires-a-post-mortem/



The first-ever offshore wind farm, Vindeby, in Danish waters, is being decommissioned after twenty-five years, DONG Energy has announced.[1] By its nature it was an experiment, and we can now see whether or not is has been a successful alternative to fossil or nuclear-fuelled electricity.

It consisted of eleven turbines, each with a capacity of 0.45 MW, giving a total export capacity for the wind farm of 5 MW. The hub height of each turbine was 37.5 m and blade height 17 m, small by today’s standards. Because of its date of construction, it would have been all but totally reliant on conventional energy for its manufacture and installation. The original stated project cost was £7.16 million in 1991, which is equivalent to approximately £10 million today.[2]

During its lifetime, it delivered 243 GWh to the Danish electricity grid. This means that the actual amount of electricity generated was 22% of that which would have been generated if it had delivered 5 MW all the time for 25 years. In technical terms, it had a load factor of 0.22. From the same source we see the initial expectation was that 3506 houses would be powered annually, with a saving of 7085 tonnes of carbon dioxide per annum.[3] There was no clear indication of Vindeby’s expected lifetime. Since the average household’s annual use of energy in Denmark[4] is 5000 kWh, we can calculate that the windfarm’s anticipated energy output was 438 GWh over its 25-year lifetime. The actual total of 243 GWh was therefore only 55% of that expectation.

The (annual average) spot price for electricity from both the European Energy Exchange and Nordpool quoted over the period 2006–2014 dropped approximately linearly from €50–55/MWh in 2006 to €32–37/MWh in 2014.[5] If we assume that this trend was constant over 1991–2017, we can see that the average wholesale price paid for the Vindeby electricity was of order of €50/MWh. On this basis the revenue of the windfarm was approximately €12 million: perhaps €15 million at today’s prices. This means that the windmill spent 75% of its life paying off the £10 million cost of its construction, and most of the rest paying for maintenance. In terms of effective energy revenue, the return on input cost was close to 1:1. The individual project may have been just profitable, but the project is insufficiently productive as will be seen below.

Other windfarms have performed even worse. Lely, an smaller farm sited off the Netherlands coast, was decommissioned last year.[6] It consisted of four turbines of 0.5 MW capacity, and cost £4.4 million in 1992. One nacelle and blades failed in 2014 because of metal fatigue.[7] It produced 3500 MWh per year, implying a load factor of 20%. At the same €50/MWh as above, it would have earned €4.2 million, less than the initial project cost, let alone the additional cost of any maintenance, by any way of reckoning.[8]

The reader should note that the analysis above assumes that the scrap value of the wind turbines will pay for the decommissioning process, and so does not degrade the ratio any further: presumably the bases will remain in the sea. This assumption has been made explicit for the Cowley Ridge wind farm in Alberta, Canada, for which the actual electricity energy delivered into the Canadian grid is not in the public domain, so this similar exercise cannot be repeated.[9]

For a typical fossil-fuel plant, effective energy revenue return on input cost is of the order of 50:1 if one considers the plant alone and about 15:1 when one includes the cost of the fuel. For a nuclear plant the ratio is more like 70:1, and the fuel is a negligible part of the overall cost. The energy generation and distribution sector makes up approximately 9% of the whole world economy, suggesting that the global energy sector has an energy return ratio of 11:1.[10] It is this high average ratio, buoyed by much higher ratios in certain areas (e.g.15:1 in Europe), that allows our present world economy to function.

The lesson learned from the considerations discussed above is that wind farms like these early examples could not power a modern economy unless assisted by substantial fossil-fuelled energy.

Interestingly, DONG Energy, which built Vindeby, is proposing the much newer and bigger Hornsea Project One in the North Sea. This wind farm will have 174 turbines, each with a hub height of 113 m, 75 m blades and a nameplate capacity of 7 MW. It is due to be commissioned in 2020.[11] The project capacity is 1218 MW, and it has a current cost estimate of €3.36 billion. No clear statement of expected lifetime has been provided, but DONG has stated that 862,655 homes will be powered annually. Assuming the average per-household electricity use in the UK[12] to be 4000 kWh, this implies a constant generation of 394 MW over the year, which is 32% of capacity, which is probably realistic.

The agreed wholesale price of the Hornsea energy over the next twenty-five years is £140/MWh. Even assuming a very generous load factor of 50%, Hornsea’s lifetime revenue would be about £20 billion, suggesting a ratio of revenue to cost of 6:1 (reduced further by any maintenance costs), still barely half the average value that prevails in the global economy, which is more than 85% fossil-fuel based.

The secret of the fossil fuel success in the world economy is the high calorific value of the fuel. A ton of coal costing £42.50 produces of the order of 2000 kWh of electricity in a new coal-fired power plants (up 30% from older plants). This sells for £400 wholesale, with an energy return on energy invested (EROEI) of 10:1. A therm of natural gas costs £0.40, and produces 30 kWh of electricity, which sells for £6, representing an EROEI of 15:1.  Fuel-less technologies do not have this advantage.

The disappointing results from Vindeby, and the likely results from Hornsea and similar projects must be seen in the context of the increasing wealth of a growing world population. If all the world’s 10.3 billion people alive in 2055 were to lead a European (as opposed to American) style of life, we would need 2.5 times the primary energy as used today. If, say, half of the energy is suddenly produced with an energy return on investment of 5.5:1 (i.e. half the present world average), then for the same investment we would get only 75% of the energy and we would need to cut energy consumption: the first 10% reduction could come by curtailing higher education, international air travel, the internet, advanced medicine and high culture. We could invest proportionately more of our economy in energy production than we do now, but that will still mean a step backward against the trend of the last 200 years of reducing the proportion of the total economy taken by the energy sector.[13] To avoid this undesirable scenario we would need new forms of energy to match the fossil/nuclear fuel performance.

In this context it is useful to remember that global economic growth is very sensitive to the cost of energy. The energy cost spikes in the mid-1970s and in 2010 form the boundaries between the 5% growth rate of the global economy from 1950–1975, the 3% from 1980–2008, and the 2.5% since 2012. There is a lot at stake in the choice between cheap fossil fuels and expensive renewables.

Notes
[1] http://www.dongenergy.com/en/media/newsroom/news/articles/the-worlds-first-offshore-wind-farm-is-retiring

[2] http://www.4coffshore.com/windfarms/vindeby-denmark-dk06.html

[3] http://www.dongenergy.com/en/media/newsroom/news/articles/the-worlds-first-offshore-wind-farm-is-retiring

[4] http://orbit.dtu.dk/files/4203486/ICT_ECEEE_2009_paper.pdf

[5] http://www.pfbach.dk/firma_pfb/pfb_decreasing_wholesale_prices_2015_11_11.pdf

[6] http://www.4coffshore.com/windfarms/lely-netherlands-nl27.html

[7] http://www.offshorewind.biz/2016/12/07/lely-wind-farm-fully-decommissioned-video/

[8] http://www.caddet-re.org/assets/no61.pdf

[9] http://www.power-eng.com/articles/2016/05/transalta-shuts-cowley-ridge-wind-farm-in-alberta-may-repower-it.html

[10] http://www.thegwpf.com/michael-kelly-a-challenge-for-renewable-energies/

[11] http://www.4coffshore.com/windfarms/hornsea-project-one-united-kingdom-uk81.html

[12] https://www.statista.com/statistics/517845/average-electricity-consumption-uk/

[13] Until the industrial revolution, the UK economy operated on an energy return investment of 2:1: see C. W. King, J P Maxwell and A Donovan, ‘Comparing world economic and net energy metrics, Part I: Single Technology and Commercial Perspective’ Energies 2015: 12949-74. The 2:1 ratio applies in some parts of Africa today: when half the economy is spent providing food and fuel, it leaves little over for other activities.

Changes in the Public Acceptance of Immigrants and Refugees in Germany in the Course of Europe’s ‘Immigration Crisis’

Christian S Czymara, Alexander W Schmidt-Catran; Refugees Unwelcome? Changes in the Public Acceptance of Immigrants and Refugees in Germany in the Course of Europe’s ‘Immigration Crisis’, European Sociological Review, , jcx071, https://doi.org/10.1093/esr/jcx071

Abstract: Based on an innovative design, combining a multi-factorial survey experiment with a longitudinal perspective, we examine changes in the public acceptance of immigrants in Germany from the beginning of the so-called ‘migration crisis’ to after the sexual assaults of New Year’s Eve (NYE) 2015/2016. In contrast to previous studies investigating similar research questions, our approach allows to differentiate changes along various immigrant characteristics. Derived from discussions making up the German immigration discourse during this time, we expect reduced acceptance especially of those immigrants who were explicitly connected to the salient events, like Muslims and the offenders of NYE. Most strikingly, we find that refugees were generally highly accepted and even more so in the second wave, whereas the acceptance of immigrants from Arab or African countries further decreased. Moreover, female respondents’ initial preference for male immigrants disappeared. Contrary to our expectations, we find no changes in the acceptance of Muslims. We conclude that (i) public opinion research is well advised to match the particular political and social context under investigation to a fitting outcome variable to adequately capture the dynamics of anti-immigrant sentiment and that (ii) the vividly discussed upper limits for refugees seem to be contrary to public demands according to our data.

Birth order: no meaningful effects on life satisfaction, locus of control, interpersonal trust, reciprocity, risk taking, patience, impulsivity, or political orientation

Probing Birth-Order Effects on Narrow Traits Using Specification-Curve Analysis. Julia M. Rohrer, Boris Egloff, and Stefan C. Schmukle. Psychological Science. First published date: October-17-2017. DOI 10.1177/0956797617723726

Abstract: The idea that birth-order position has a lasting impact on personality has been discussed for the past 100 years. Recent large-scale studies have indicated that birth-order effects on the Big Five personality traits are negligible. In the current study, we examined a variety of more narrow personality traits in a large representative sample (n = 6,500–10,500 in between-family analyses; n = 900–1,200 in within-family analyses). We used specification-curve analysis to assess evidence for birth-order effects across a range of models implementing defensible yet arbitrary analytical decisions (e.g., whether to control for age effects or to exclude participants on the basis of sibling spacing). Although specification-curve analysis clearly confirmed the previously reported birth-order effect on intellect, we found no meaningful effects on life satisfaction, locus of control, interpersonal trust, reciprocity, risk taking, patience, impulsivity, or political orientation. The lack of meaningful birth-order effects on self-reports of personality was not limited to broad traits but also held for more narrowly defined characteristics.

Not aware of the improvement, but drinking alcohol significantly betters observer-ratings for Dutch language, specifically pronunciation

Dutch courage? Effects of acute alcohol consumption on self-ratings and observer ratings of foreign language skills. Fritz Renner, Inge Kersbergen, Matt Field, and Jessica Werthmann. Journal of Psychopharmacology. First published date: October-18-2017. DOI 10.1177/0269881117735687

Abstract

Aims: A popular belief is that alcohol improves the ability to speak in a foreign language. The effect of acute alcohol consumption on perceived foreign language performance and actual foreign language performance in foreign language learners has not been investigated. The aim of the current study was to test the effects of acute alcohol consumption on self-rated and observer-rated verbal foreign language performance in participants who have recently learned this language.

ethods: Fifty native German speakers who had recently learned Dutch were randomized to receive either a low dose of alcohol or a control beverage that contained no alcohol. Following the experimental manipulation, participants took part in a standardized discussion in Dutch with a blinded experimenter. The discussion was audio-recorded and foreign language skills were subsequently rated by two native Dutch speakers who were blind to the experimental condition (observer-rating). Participants also rated their own individual Dutch language skills during the discussion (self-rating).

Results: Participants who consumed alcohol had significantly better observer-ratings for their Dutch language, specifically better pronunciation, compared with those who did not consume alcohol. However, alcohol had no effect on self-ratings of Dutch language skills.

Conclusions: Acute alcohol consumption may have beneficial effects on the pronunciation of a foreign language in people who have recently learned that language.

Infants React with Increased Arousal to Spiders and Snakes

Itsy Bitsy Spider…: Infants React with Increased Arousal to Spiders and Snakes. Stefanie Hoehl, Kahl Hellmer, Maria Johansson and Gustaf Gredebäck. Front. Psychol., October 18 2017, https://doi.org/10.3389/fpsyg.2017.01710

Abstract: Attention biases have been reported for ancestral threats like spiders and snakes in infants, children, and adults. However, it is currently unclear whether these stimuli induce increased physiological arousal in infants. Here, 6-month-old infants were presented with pictures of spiders and flowers (Study 1, within-subjects), or snakes and fish (Study 1, within-subjects; Study 2, between-subjects). Infants’ pupillary responses linked to activation of the noradrenergic system were measured. Infants reacted with increased pupillary dilation indicating arousal to spiders and snakes compared with flowers and fish. Results support the notion of an evolved preparedness for developing fear of these ancestral threats.

Supplementing multivitamins and iodine to deficient children and learning to play a musical instrument raises the IQ

Raising IQ among school-aged children: Five meta-analyses and a review of randomized controlled trials. John Protzko. Developmental Review, Volume 46, December 2017, Pages 81-101. https://doi.org/10.1016/j.dr.2017.05.001

Highlights
•    There have been 36 RCTs attempting to raise IQ in school-aged children.
•    Nutrient supplementation includes multivitamins, iron, iodine, and zinc.
•    Training includes EF and reasoning training, and learning a musical instrument.
•    We meta-analyze this literature to provide a best-evidence summary to date.
•    Multivitamin & iodine supplementation, and learning a musical instrument, raise IQ.

Abstract: In this paper, we examine nearly every available randomized controlled trial that attempts to raise IQ in children from once they begin kindergarten until pre-adolescence. We use meta-analytic procedures when there are more than three studies employing similar methods, reviewing individual interventions when too few replications are available for a quantitative analysis. All studies included in this synthesis are on non-clinical populations. This yields five fixed-effects meta-analyses on the roles of dietary supplementation with multivitamins, iron, and iodine, as well as executive function training, and learning to play a musical instrument. We find that supplementing a deficient child with multivitamins raises their IQ, supplementing a deficient child with iodine raises their IQ, and learning to play a musical instrument raises a child’s IQ. The role of iron, and executive function training are unreliable in their estimates. We also subject each meta-analytic result to a series of robustness checks. In each meta-analysis, we discuss probable causal mechanisms for how each of these procedures raises intelligence. Though each meta-analysis includes a moderate to small number of studies (< 19 effect sizes), our purpose is to highlight the best available evidence and encourage the continued experimentation in each of these fields.

Deciding for oneself, we are averse to loss; deciding for one other, aversion is significantly reduced

Decision making for others: The case of loss aversion. Sascha C. Füllbrunn and Wolfgang J. Luhan. Economics Letters, https://doi.org/10.1016/j.econlet.2017.09.037

Highlights
•    We test whether loss aversion plays a role in risky decisions making for others.
•    Deciding for oneself, we find loss aversion levels similar to the literature.
•    Deciding for one other only, we find loss aversion to be significantly reduced.
•    Deciding for oneself and one other at the same time, we find no difference.

Abstract: Risky decisions are at the core of economic theory. While many of these decisions are taken on behalf of others rather than for oneself, the existing literature finds mixed results on whether people take more or less risk for others then for themselves. Recent studies suggest that taking decisions for others reduces loss aversion, thereby increasing risk taking on behalf of others. To test this, we elicit loss aversion in three treatments: making risky decisions for oneself, for one other subject, or for the decision maker and another person combined. We find a clear treatment effect when making decisions for others but not when making decisions for both.

JEL classification: C9; D3; D8
Keywords: Decision making for others; Risk taking; Loss aversion; Experiment

Acquiescence: People can explicitly recognize that their intuitive judgment is wrong but, nevertheless, stick with it

Risen JL. Acquiescing to intuition: Believing what we know isn't so. Soc Personal Psychol Compass. 2017;e12358. https://doi.org/10.1111/spc3.12358

Abstract: When people identify an error in their initial judgment, they typically try to correct it. But, in some cases, they choose not to—even when they know, in the moment, that they are being irrational or making a mistake. A baseball fan may know that he cannot affect the pitcher from his living room but still be reluctant to say “no-hitter.” A person may learn that flying in an airplane is statistically safer than driving a car and still refuse to fly. Dual-process models of judgment and decision making often implicitly assume that if an error is detected, it will be corrected. Recent work suggests, however, that models should decouple error detection and correction. Indeed, people can explicitly recognize that their intuitive judgment is wrong but, nevertheless, stick with it, a phenomenon known as acquiescence. My goals are to offer criteria for identifying acquiescence, consider why people acquiesce even when it incurs a cost, discuss how lessons that are learned in cases when acquiescence is clearly identified can be exported to cases when acquiescence may be harder to establish, and, more broadly, describe the implications of a model that decouples error detection and error correction.

Why museum visitors touch the exhibits when they do not have permission to do so

Rehabilitating unauthorised touch or why museum visitors touch the exhibits. Fiona Candlin.  The Senses and Society, Volume 12, 2017 - Issue 3, Pages 251-266. http://dx.doi.org/10.1080/17458927.2017.1367485

Abstract: In 2014 The Senses and Society published a special issue on “Sensory Museology.” Registering the emergence of this new multi-disciplinary field, the editor usefully observed that “its most salient trend has been the rehabilitation of touch.” Arguably, however, touch has only been rehabilitated as an area of study insofar as it is authorised by the museum. Scholars have rarely considered the propensity of visitors to touch museum exhibits when they do not have permission to do so. In this article I suggest that the academic emphasis on authorised forms of contact privileges the institution’s aims and perspective. Conversely, researching unauthorised touch places a higher degree of emphasis on the visitors’ motivations and responses, and has the capacity to bring dominant characterisations of the museum into question. I substantiate and work through these claims by drawing on interview-based research conducted at the British Museum, and by investigating why visitors touch the exhibits without permission, what they touch, and what experiences that encounter enables.

Keywords: Sensory museology, touch, museums, exhibits, visitors, vandalism

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Thus, the visitors therefore touched the objects on display to establish that were real and not replicas, to find out about the material qualities of an exhibit and the processes by which it was made, and to get a grasp on the skill involved in its manufacture. They also touched to make contact with the past. It is possible that a consciousness of being connected to past eras and peoples is what prompts visitors to touch, but judging from the interviews it seems that this experience is predicated on actual contact. Visitors needed to put their hands into the places that their predecessors touched, or to use their bodies to mimic the shapes of the initial makers and users in order to conceive of, or to bridge the enormous geographical and historical distances that lie between them and the objects’ contexts of production.
[...]
For the visitors, touching the sculptures of animals and humans had a markedly different dynamic to that of touching architectural exhibits such as columns or sarcophagi. It did not provide a connection with the past, rather the representational character of the sculptures outweighed the consideration of who made the carvings, when, and under what conditions. These sculptures were not primarily conceived as products of human endeavor, but as quasi-men, women, and animals.
[...]
A similar logic applied to the way that visitors touched other figures, both clothed and unclothed, and animals. Visitors behaved in ways that were appropriate to the real-life version of that thing, for example, stroking a horse’s nose, but precisely because it is a carving, they were free to push the boundaries of what is acceptable or safe.

A Replication of Thomas Piketty's Data on the Concentration of Wealth in the US. By Richard Sutch

The One Percent across Two Centuries: A Replication of Thomas Piketty's Data on the Concentration of Wealth in the United States. Richard Sutch. Social Science History, Volume 41, Issue 4, Winter 2017 , pp. 587-613. https://doi.org/10.1017/ssh.2017.27

Abstract: This exercise reproduces and assesses the historical time series on the top shares of the wealth distribution for the United States presented by Thomas Piketty in Capital in the Twenty-First Century. Piketty's best-selling book has gained as much attention for its extensive presentation of detailed historical statistics on inequality as for its bold and provocative predictions about a continuing rise in inequality in the twenty-first century. Here I examine Piketty's US data for the period 1810 to 2010 for the top 10 percent and the top 1 percent of the wealth distribution. I conclude that Piketty's data for the wealth share of the top 10 percent for the period 1870 to 1970 are unreliable. The values he reported are manufactured from the observations for the top 1 percent inflated by a constant 36 percentage points. Piketty's data for the top 1 percent of the distribution for the nineteenth century (1810–1910) are also unreliable. They are based on a single mid-century observation that provides no guidance about the antebellum trend and only tenuous information about the trend in inequality during the Gilded Age. The values Piketty reported for the twentieth century (1910–2010) are based on more solid ground, but have the disadvantage of muting the marked rise of inequality during the Roaring Twenties and the decline associated with the Great Depression. This article offers an alternative picture of the trend in inequality based on newly available data and a reanalysis of the 1870 Census of Wealth. This article does not question Piketty's integrity.

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Very little of value can be salvaged from Piketty’s treatment of data from the nineteenth century. The user is provided with no reliable information on the antebellum trends in the wealth share and is even left uncertain about the trend for the top 10 percent during the Gilded Age (1870–1916). This is noteworthy because Piketty spends the bulk of his attention devoted to America discussing the nineteenth-century trends (Piketty 2014: 347–50).

The heavily manipulated twentieth-century data for the top 1 percent share, the lack of empirical support for the top 10 percent share, the lack of clarity about the procedures used to harmonize and average the data, the insufficient documentation, and the spreadsheet errors are more than annoying. Together they create a misleading picture of the dynamics of wealth inequality. They obliterate the intradecade movements essential to an understanding of the impact of political and financial-market shocks on inequality. Piketty’s estimates offer no help to those who wish to understand the impact of inequality on “the way economic, social, and political actors view what is just and what is not” (Piketty 2014: 20).

Hunting Strategies with Cultivated Plants as Bait and the Prey Pathway to Animal Domestication

Hunting Strategies with Cultivated Plants as Bait and the Prey Pathway to Animal Domestication. Serge Svizzero. International Journal of Research in Sociology and Anthropology, Volume 2, Issue 2, 2016, PP 53-68. http://dx.doi.org/10.20431/2454

Abstract: For various reasons related to human diet, social prestige or cosmology, hunting -especially of large preys- has always been central in foragers' societies. When pre-Neolithic foragers have iven up their nomadic way of life they have faced a sink-source problem about game procurement in the resource-catchment area around their settlements. Baiting, by mean of the cultivation of wild plants in food plots, may have help them to attract herbivores, thus improving the return of hunting activities. These foragers were also motivated by the capture of wild animals alive, in order to keep fresh meat for a while, to translocate these animals or for milk exploitation. For this capture, the use of a passive form of drive hunting seems best suited. The cultivation of food plots within the funnel and the corral might have been used to attract wild herbivores into the drive. Baiting was therefore designed either to increase the hunt or to improve the capture of large wild herbivores such as the Near-Eastern wild caprines that were later domesticated. Therefore baiting should be viewed as a hunting strategy as well as an unconscious selection mechanism since it has inadvertently contributed to the prey pathway to animal domestication

Keywords: Neolithic revolutions, hunter-gatherers, sedentism, animal domestication, unconscious  selection, large herbivores, drive hunting, Near East.

Home sharing driving up rents. Evidence from Airbnb in Boston

Is home sharing driving up rents? Evidence from Airbnb in Boston. Keren Horn & Mark Merante. Journal of Housing Economics, Volume 38, December 2017, Pages 14-24. https://doi.org/10.1016/j.jhe.2017.08.002

Abstract: The growth of the sharing economy has received increasing attention from economists. Some researchers have examined how these new business models shape market mechanisms and, in the case of home sharing, economists have examined how the sharing economy affects the hotel industry. There is currently limited evidence on whether home sharing affects the housing market, despite the obvious overlap between these two markets. As a result, policy makers grappling with the effects of the rapid growth of home sharing have inadequate information on which to make reasoned policy decisions. In this paper, we add to the small but growing body of knowledge on how the sharing economy is shaping the housing market by focusing on the short-term effects of the growth of Airbnb in Boston neighborhoods on the rental market, relying on individual rental listings. We examine whether the increasing presence of Airbnb raises asking rents and whether the change in rents may be driven by a decline in the supply of housing offered for rent. We show that a one standard deviation increase in Airbnb listings is associated with an increase in asking rents of 0.4%.

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Ultimately, our analysis supports the contention that home sharing is increasing rents by decreasing the supply of units available to potential residents