Beside being an interesting discussion of economics, this postpresents a novel idea: a surge in divorce rates caused all the household based statistics to go bonkers, causing an incorrect policy response that pushed us unto the housing crisis. It certainly fits with the data and the sequence of events, so it’s hard to believe that divorce rated didn’t at least contribute to the housing mess. This illustrates a general problem in macroeconomics: there can be implicit assumptions buried deep in the models that, in changing circumstances, make the model’s output misleading. This is less than comforting and another reason to be skeptical of macroeconomic forecasts.
Divorce & The Housing Crisis