Here are the top 3 posts since we began on August 7 2018, in order.
1. Hidden in plain view Could the unexplained change in ‘other valuation differences’ reported by Just Group between 2016 and 2017 be possibly explained by the fact they changed their deferment rate assumption to comply with new PRA requirements? They aren’t telling us.
2. Asleep at the Institute Roughly, “the Institute has just published a paper that (a) shows complete ignorance of developments in financial economics and (b) is almost certainly the product of entrenched commercial interests.”
3. Mulheirn vs Harding The much vaunted shortage of homes is a myth. “The theory and the data clearly indicate that a shortage of homes has not contributed to the 150 per cent rise in UK real prices over the past two decades. ”
On the last one, one common explanation of the house price rise, popular both with the general public and with actuaries, is ‘supply and demand’.
A moment’s reflection suggests this is silly. First, it’s not the supply or demand that changes the price, it is expectations about supply or demand. There might be no issue with current supply at all, but if the available information suggests a shortage of supply in a few years’ time, that will be reflected in the price now.
Second, expectations about supply and demand would not explain a prolonged change in price. Assuming nothing else changes, the expectations would be immediately reflected in the price.
Objectors will object that this assumes market efficiency, i.e. the tendency for market prices to reflect available information, and perhaps they have a point, but enough for now.
