moral hazzard

Rakesh Bhandari bhandari at phoenix.princeton.edu
Wed Nov 24 01:39:31 PST 1999



>Another result of the study was that you could find one single variable
>which was a very good predictor of bankruptcy rates in counties of New
>Jersey. Anyone care to guess?
>
>dd

More seriously:

The percentage a county is minority (esp black) is positively correlated with the bankruptcy rate? But maybe not since I would think percent minority is correlated with rate of unemployment, which is not correlated with bankruptcy (or at least the R2 is surprisingly small). So why not the reverse: mean income and/or percentage of the population that is white is positively correlated with bankruptcy rates. In those counties there is more status emulation--as well as background knowledge of the option of bankruptcy--that encourages the running up of debt; plus there is greater knowledge about how to use bankruptcy laws. Or perhaps bankruptcy rates are highest among students and graduate students so the New Brunswik area may enjoy the highest bankruptcy rate.

Interested to find out.

Rakesh



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