Housing Wealth Effects: Arithmetic Lesson for Neil Irwin and the Washington Post

Knowledge of arithmetic is a skill in short supply for people involved in economic policy debates. This is especially the case for the Washington Post (Wonkblog excepted).

Neil Irwin gives us an example of the problem when he expresses the hope that increasing house prices will provide a large boost to consumption and thereby spur growth. Irwin cites a recent academic paper on the size of the housing wealth effect:

"In a paper last year, Charles Calomiris, Stanley Longhofer, and William Miles...