Another Appraiser Bias Academic Paper

[ZZGAMAZZ]

There's a saying that people with big ears or was that earlobes are considered intelligent. Next time notice that.
As for nose hairs, is it just me but they seem to be more apparent when I get older.

Two realtors and one barber in the past year, all 3 female Asians, commented on the size of my ears.

 

[ZZGAMAZZ]

Brent, et al are probably working on their Phd's. Here are the problems I noticed right out of the gate:

1. So how do they know appraisers are white, black, or green?

3.3. Identifying Appraiser Race
Although the property owner’s race is disclosed in the New Century data, we do not directly observe the race
or ethnicity of the appraiser. However, we can infer the appraiser’s race and ethnicity using the Bayesian
Improved First Name Surname (BIFS) classifier approach, which is similar in spirit to the methodology used
by regulators to determine consumer race and ethnicity (Consumer Financial Protection Bureau, 2014). As
noted by Ambrose, Conklin, and Lopez (2021), Bayesian-based classification methods have also been used
to infer an individual’s race or ethnicity in various court cases (e.g., Guardians ***’n of N.Y.C. Police Dep’t
v. Civil Serv. Comm’n, 1977).

2. And this is why they should be laughed out of the esteemed "Journal." In the 'work' data they show their graphs, and probably they don't know their R^2's are shown. Their data correlation has R^2s of 0.02 to 0.18. [The GSE's studies on appraiser race discrimination have these similar R^2 0.02 and 0.04 correlations that 'prove' nothing].




View attachment 104635

3. Well, how significant is their correlation? This is what AI's Perplexity says about correlation:

View attachment 104636

....................
My best friend has a Phd and my daughter was a candidate, so I know a little about the process. I'm sure these 'finance academics' think they found the Holy Grail (just like the gal from NM), that will move them up the Phd ladder, but I'd be surprised this survives peer review, but who knows what passes as academic intelligence now a days in universities. When I was in high school, when a buddy tried to push something that was obviously false, one of our favorite retorts was, "Keep f-ing that chicken."

Well, then, Somebody gotta call out the lack of credibility regarding item #2. Not just that, but the "ABSENCE" of a correlation, itself, should have been the topic of the presentation, despite that the theory might not have been supported by the data. I think I will try to get the J School that i attended thousands of years ago involved. GREAT POINT.

 

[George Hatch]

Well, I guess it isn't over. Published in Review of Finance yesterday.

Abstract:
Do Appraiser and Borrower Race Affect Mortgage Collateral Valuation?

We examine racial bias in property appraisals using a national sample of refinanced mortgages from 2000 to 2007. Our data allow us to observe the race of the appraiser and homeowner in a setting where the appraiser’s valuation conveys critical information to the lender. After conditioning on a rich set of controls and individual appraiser fixed effects, we observe lower appraised values (relative to benchmark valuation estimates) for Black owned homes. Hispanic and Asian owned homes are also under appraised, but to a lesser extent. We find no evidence that minority valuation discounts lessen when the homeowner and appraiser share the same race, suggesting implicit bias is not solely attributable to White appraisers. We also show that minority valuation discounts are not driven by a small subset of appraisers; rather, they are widespread.

https://academic.oup.com/rof/article/doi/10.1093/rof/rfaf046/8316104

A biiiiiiiig flaw I see from the get-go; Basing a current paper on any data pre-2008 financial crises screams "I know nuthin' about real estate."

Same thing the cat lady did. They didn't look at individual appraisal reports or identify how these values came in lower. They just used an AVM of some sort as their benchmark.

Indirect inferences at best. Not a direct observation of who did exactly what. I mean, other than their conclusion that all appraisers are biased.

 

[Elliott]

The "Bias" paper is a 60-page example of spurious correlation, except worse. Not dissimilar to,

 

[Fernando]

Two realtors and one barber in the past year, all 3 female Asians, commented on the size of my ears.

Normally when one gets old, ear lobes gets long or should I say sag. With age, I get smarter in appraising. Just not faster.