July 11, 2015

What’s in a name?

The Herald was, unsurprisingly, unable to resist the temptation of leaked data on house purchases in Auckland.  The basic points are:

  • Data on the names of buyers for one agency, representing 45% fo the market, for three months
  • Based on the names, an estimate that nearly 40% of the buyers were of Chinese ethnicity
  • This is more than the proportion of people of Chinese ethnicity in Auckland
  • Oh Noes! Foreign speculators! (or Oh Noes! Foreign investors!)

So, how much of this is supported by the various data?

First, the surnames.  This should be accurate for overall proportions of Chinese vs non-Chinese ethnicity if it was done carefully. The vast majority of people called, say, “Smith” will not be Chinese; the vast majority of people called, say, “Xu” will be Chinese; people called “Lee” will split in some fairly predictable proportion.  The same is probably true for, say, South Asian names, but Māori vs non-Māori would be less reliable.

So, we have fairly good evidence that people of Chinese ancestry are over-represented as buyers from this particular agency, compared to the Auckland population.

Second: the representativeness of the agency. It would not be at all surprising if migrants, especially those whose first language isn’t English, used real estate agents more than people born in NZ. It also wouldn’t be surprising if they were more likely to use some agencies than others. However, the claim is that these data represent 45% of home sales. If that’s true, people with Chinese names are over-represented compared to the Auckland population no matter how unrepresentative this agency is. Even if every Chinese buyer used this agency, the proportion among all buyers would still be more than 20%.

So, there is fairly good evidence that people of Chinese ethnicity are buying houses in Auckland at a higher rate than their proportion of the population.

The Labour claim extends this by saying that many of the buyers must be foreign. The data say nothing one way or the other about this, and it’s not obvious that it’s true. More precisely, since the existence of foreign investors is not really in doubt, it’s not obvious how far it’s true. The simple numbers don’t imply much, because relatively few people are housing buyers: for example, house buyers named “Wang” in the data set are less than 4% of Auckland residents named “Wang.” There are at least three other competing explanations, and probably more.

First, recent migrants are more likely to buy houses. I bought a house three years ago. I hadn’t previously bought one in Auckland. I bought it because I had moved to Auckland and I wanted somewhere to live. Consistent with this explanation, people with Korean and Indian names, while not over-represented to the same extent are also more likely to be buying than selling houses, by about the same ratio as Chinese.

Second, it could be that (some subset of) Chinese New Zealanders prefer real estate as an investment to, say, stocks (to an even greater extent than Aucklanders in general).  Third, it could easily be that (some subset of) Chinese New Zealanders have a higher savings rate than other New Zealanders, and so have more money to invest in houses.

Personally, I’d guess that all these explanations are true: that Chinese New Zealanders (on average) buy both homes and investment properties more than other New Zealanders, and that there are foreign property investors of Chinese ethnicity. But that’s a guess: these data don’t tell us — as the Herald explicitly points out.

One of the repeated points I  make on StatsChat is that you need to distinguish between what you measured and what you wanted to measure.  Using ‘Chinese’ as a surrogate for ‘foreign’ will capture many New Zealanders and miss out on many foreigners.

The misclassifications aren’t just unavoidable bad luck, either. If you have a measure of ‘foreign real estate ownership’ that includes my next-door neighbours and excludes James Cameron, you’re doing it wrong, and in a way that has a long and reprehensible political history.

But on top of that, if there is substantial foreign investment and if it is driving up prices, that’s only because of the artificial restrictions on the supply of Auckland houses. If Auckland could get its consent and zoning right, so that more money meant more homes, foreign investment wouldn’t be a problem for people trying to find somewhere to live. That’s a real problem, and it’s one that lies within the power of governments to solve.

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Thomas Lumley (@tslumley) is Professor of Biostatistics at the University of Auckland. His research interests include semiparametric models, survey sampling, statistical computing, foundations of statistics, and whatever methodological problems his medical collaborators come up with. He also blogs at Biased and Inefficient See all posts by Thomas Lumley »

Comments

  • avatar
    Shane Field

    Shouldn’t we be able to get some idea of the error involved when using surnames to determine ethnicity? We expect journalists to reveal particular information when reporting on an opinion poll. Likewise, journalists and the people carrying out studies like this should disclose certain information.

    9 years ago

    • avatar
      Thomas Lumley

      Maybe? The error averaged over all Auckland will be pretty small, though. It’s not going to be one of the weakest links in the chain of evidence, the way it is with opinion polls.

      9 years ago

  • avatar
    Sammie Jia

    i actually saw a comment in FB, which is interesting. If the number of surnames can be a measure, how about surnames with Mc-,Mac- prefix, can people comment house owners with those surnames are the overseas investors from Scotland ;)

    9 years ago

    • avatar
      Megan Pledger

      Mac/Mc is a surname prefix that was used by the Irish as well as Scottish.

      However, the O’/O/Ó prefix is solely Irish.

      The nice thing about Maori surnames is that the Electoral role gives some idea about the distribution of non-Maori surnames amongst Maori.

      9 years ago

  • avatar
    Megan Pledger

    I guess one point that could be made is that the data was leaked because the leaker thought there was a problem. And the problem isn’t likely to be that there are too many resident Chinese people buying property.

    ~~~~~~~~~~~

    Even if more houses were available there would still be high prices for houses in the inner suburbs and CBD because noone wants to live miles away with dodgy transport options.

    But the other problem is that investors aren’t actually renting places out, they are leaving them empty.

    9 years ago

  • avatar
    Sammie Jia

    Also, there is a Herald’s editoral article,
    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11479754

    The author said,
    “There needs to be a high degree of caution, however. First, Mr Twyford’s finding has to be substantiated by statistics whose accuracy cannot be challenged.”

    Thomas, can this be challenged?

    9 years ago

    • avatar
      Megan Pledger

      No data has been collected about foreign ownership of NZ land until quite recently. It makes it easy for the govt to dodge issues when no data is collected on the issue.

      If NZ-resident/citizen Chinese see property as a good investment and are wanting to buy more of it then foreign investment actually impacts them more (relatively) than NZ-resident/citizen non-Chinese.

      9 years ago

  • avatar
    Steve Curtis

    Isnt this a similar approach to decile ratings of schools- a measure based on incomes of parents.
    They have no direct data of the household incomes of all the pupils in a particular school, so they use the census.
    A matching is done with a student address to a census mesh block. Census data will give an average income for that block and that becomes thats students ‘assigned household income’.
    The assumptions that are made are that the average income for your street is a proxy for your actual income. It certainly doesnt allow for ‘dinks’ ( the demographic kind) or solo parents with larger broods.

    Instead of assigning income based on the street you live in they are assigning ethnicity based on surnames.

    Side story is that China is running out of surnames, unusually schoolchildren are made to memorise a ‘list of 100 surnames’ that are supposed to be used.

    They even have a phrase for ‘the common man’ laobaixing, or “old hundred names”

    The most popular names are Wang ,Li or Zhang

    9 years ago

    • avatar
      Thomas Lumley

      Yes, the matching of name with ethnicity is rather like the decile matching, but that’s not really the controversial aspect. I’ve got no problem with the idea that you can assess % Chinese ethnicity from surnames. It’s the relationship between % Chinese and % foreign that’s both going beyond the data and politically unfortunate.

      9 years ago

      • avatar
        Steve Curtis

        Its not really a stats issue , but maybe 15 years or so back Chinese students were highly overrepresented in the Auckland medical student intake.
        So the selection criteria were changed from being almost solely on examination marks to one which included a personal profile.
        The policy reasons were to have a student demographic which matched the population at large.
        The touchstone has changed but the desire to ‘do something about it’ has not

        9 years ago

        • avatar
          Megan Pledger

          I remember the selection criteria being changed about 25 years or so ago, so maybe it was at Otago, but the rational then was to get more students with people skills rather than exam swots (who at the time were geeky white boys).

          9 years ago

  • avatar
    Mike Anthony

    Thanks for the analysis Thomas.

    Despite the methodology seeming a little flaky at first glance, when you start to look at it closely, it’s not quite so bad. Its results must be at least indicative, if not representative.

    Given that, the key number is obviously the delta between 9% and 39%. Such disparities are rare, as I’m sure you know. That is so huge, it has clearly revealed something.

    If nothing else, this says something about NZ levels of private debt; i.e. they may not be as high as we thought, given a lot of these foreign buyers may be cash buyers. That in itself is an interesting discovery..

    9 years ago

    • avatar
      Steve Curtis

      Thats certainly the really interesting part, usually ‘findings’ are trumpeted in the media with much smaller numbers.
      If it was medical research it would have immediate effects such that a new pill that had unexpected side effects to this extent, that would halt the trial.

      9 years ago

      • avatar
        Thomas Lumley

        If it was a medical study they would have measured residency, not just imputed it from ethnicity.

        9 years ago

        • avatar
          Steve Curtis

          Heres some measurements
          :Juwai.com has seen a surge of interest from Chinese buyers keen on the New Zealand market, spokesman Dave Platter told NZME. News Service today.

          The website has surveyed its users and found 36 per cent of people spoken to bought property in New Zealand for investment.

          34 per cent bought for immigration, 18 per cent for education and 7 per cent lifestyle – a total of 59 per cent.
          http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11480869

          9 years ago

  • avatar
    Sammie Jia

    This guy, a Labour contracted statistician
    http://robsalmond.com/personal
    did the statistics for Phil.

    9 years ago

  • avatar
    Simon Arnold

    Of course the thing that makes it clear this is all about politics/journalism rather than dispassionate analysis is that it starts with the data and mines it for the good headlines rather than starting with the issue and attempting to elucidate it.

    9 years ago

  • avatar
    Chris Scott

    Comments like – “But on top of that, if there is substantial foreign investment and if it is driving up prices, that’s only because of the artificial restrictions on the supply of Auckland houses” – raise questions about the bias of this “statistical” commentary. Lets leave this one here as the experts have been arguing over the best way to solve the problem but almost all are doing so based on their own ideological biases (and/or self interests) rather than reflecting what Aucklanders want. (They haven’t been asked for a while but last time they were, they wanted to go up rather than continue the sprawl.)

    To my main point …

    What so many are overlooking is that the IRD and QVNZ could provide data sets that would allow far more insights into who owns what.

    Problem is, that only government could order its use – the opposition could not, so they’ve done the next best thing. Good on them I say.

    Clearly foreign ownership of what many NZers believe “belongs” to NZers is a significant issue. I.e. NZ’s residential property is not a new international commodity class to be bought and sold by foreigners. So why isn’t the government using its considerable resources to answer the questions? Why is it being left to “back of a fag packet” statistical methods?

    Surely statisticians have a duty to point out that government already has the data necessary to resolve this issue? Surely they should be saying, “it does look odd – we must get better data quickly, we know it exists, and put the issue to rest”? Surely entering their own personal biases into the issue is just further muddying the water and making any real analysis even harder to achieve?

    Kind regard, Chris.

    9 years ago

    • avatar
      Thomas Lumley

      The government *does not* have the data necessary to resolve this issue. They could probably get closer than Labour did, but that’s not ‘resolving the issue’.

      I’ve got no objection to the data being collected, but presumably anyone who thinks collecting it is important has some interest in acting on the results, and should probably say what action they have in mind.

      And if you’re going to toss around casual accusations of intellectual dishonesty you might try checking what people’s ideological biases are, first. I’m not the only Labour voter unhappy with the statistics on this one.

      9 years ago

  • avatar

    Data needs to be inputted correctly as they are very important details. For sure the government has powerful data saving tool.

    8 years ago

  • avatar

    With the amount of data the government have there system must be incredible.

    7 years ago