Rent-control initiatives on ballots in cities and states across the country. Nationwide analysis about whether downtown office buildings emptied by the COVID-19 pandemic can be turned into apartments. Heated debates between developers, local officials, and existing homeowners who agree about the need for more affordable housing but not how or where to build it.
“You don’t have to be an urban economist to spend a lot of time thinking about housing,” says Rebecca Diamond, the Class of 1988 Professor of Economics at Stanford Graduate School of Business. “This is just on everyone’s mind.”
True. But, because Diamond is an urban economist, everything she thinks — and writes — about housing is interesting, informative, and potentially impactful, according to colleagues and collaborators. And it has been ever since she began her career. Diamond’s “job market paper” — the work that academics use to market themselves to potential employers — explored the migration of college-educated workers to cities and is now considered seminal in the field. The paper set “the new standard for urban economists,” according to the American Economic Association, which awarded Diamond its prestigious Elaine Bennett Research Prize in January 2023.
“I first met Rebecca when she finished her PhD,” says Enrico Moretti, an economics professor at the University of California-Berkeley. “She was one of the stars of that year. I was very impressed, and I’ve been impressed ever since.”
At Stanford GSB, Diamond directs the Cities, Housing, and Society Lab, which investigates how place, labor markets, and public policy influence people’s lives and impact inequality. Her research reads almost like a playbook for policymakers and even ordinary people who worry about purchasing power in an economy in which things like attending college, keeping a job, and owning a house — once the standard steppingstones of the American dream — have instead become the kind of dreams you wake up from, far-fetched fantasies that seem increasingly out of reach.
Want to know how far your money would go in metropolitan areas across the United States based on your level of education? Diamond answers those questions in a paper called “Where is Standard of Living the Highest? Local Prices and the Geography of Consumption” (low-income families have a higher standard of living in cities such as Traverse City, Michigan, and Champaign, Illinois). Worried about how foreclosures affect families forced to move from their homes? Diamond has covered that, too, breaking down the different outcomes on homeowners, tenants, and landlords (foreclosures hit marginal homeowners hardest, precipitating — in addition to increased financial distress — moves to worse neighborhoods and higher rates of divorce).
The questions Diamond asks in her research “matter for the real world in big ways,” says Moretti, a coauthor on the standard of living paper, which took about five years to produce. “These are fundamental topics at the core of our understanding of the U.S. economy.” But Diamond does more than ask good questions, Moretti says. She provides answers that, because of the thoughtfulness of her work, are “very credible and therefore very influential.”
Although economics runs in Diamond’s family — her father won the Nobel Prize in October— Diamond was first drawn to the field after taking an econ class to check off a social studies requirement in pursuit of a major in physics at Yale University.
“I’ve always been interested in what quantitative methods can teach us about the world,” she says. But, economics, which she ultimately added to her major, “felt more relevant to my day-to-day life than quantum mechanics.”
Diamond earned her PhD in 2013 from Harvard, where her official sub-fields were labor economics and industrial organization. But she soon began studying issues related to wages, inequality, and housing — the meat and potatoes of urban economics, an increasingly popular area of study that reaches across traditional fields. “It’s hard to know why exactly you end up going down the rabbit holes you go down,” Diamond says. “But the more I learned about housing, the more the issue seemed relatively understudied, like low-hanging fruit.”
Digging into the Data
Diamond made a name for herself in urban economics almost immediately.
“In a relatively short time, Rebecca has made important contributions to our understanding of how economic forces shape cities,” says Matthew Turner, a professor of economics at Brown University, and president of the Urban Economics Association for which Diamond is the North American program chair. “She has done this by fitting state-of-the-art econometric techniques to important problems in urban economics.”
Diamond also uses data. Lots and lots of data. In one of her best-known papers, “The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco,” she, former Stanford GSB professor Timothy McQuade, and Franklin Qian, PhD ’21, used what they described as a “unique, rich, and previously unused dataset” from Infutor, a consumer identity company, to assess the impact of a rent control policy on actual tenants — specifically, people who lived in San Francisco between 1980 and 2016. The Infutor data gave the researchers the addresses of those people over time, which they then compared to property records, building permits, and assessor’s documents.
The results of that research, published by the American Economic Review in 2019, have been part of the rent-control conversation ever since. Diamond and her coauthors found that, in the short term (five to ten years), rent control helped prevent displacement in San Francisco, with racial minorities benefitting most. But building owners did not “passively accept the burdens of the law,” they wrote. Instead, according to their data, rent-controlled buildings were 8% more likely to be converted to condos or so-called Tenancy in Common properties, leading to a 15% decline in the rental supply in the city and to a housing market that catered more to higher-income individuals.
Diamond used Infutor data again in her foreclosure piece with Boston University economist Adam Guren, which studied the impacts of foreclosure cases on nearly 200,000 people who lived in Cook County, Illinois, between 1990 and 2016. Combining Infutor’s address information with foreclosure, property, crime, bankruptcy, and divorce records allowed Diamond and Guren to compare outcomes for two groups of people who were at risk of foreclosure: those whose cases were heard by “strict” judges (who are more likely to allow banks to foreclose on a property) and those whose cases were heard by “lenient” judges (who are more likely to encourage a loan modification plan, a short sale, or a deed in lieu of foreclosure, in which someone voluntarily returns their home to a lender).
Their findings indicate that foreclosure costs much more than the amount homeowners typically have to pay to fight the proceedings (approximately $10,300, according to a U.S. Department of Housing and Urban Development study from 2010). Compared to people who have not been foreclosed upon, those who have experienced foreclosure are more likely to move multiple times in the future — a sign of housing instability — and 20% less likely to own their own home again. And the moves they make are generally to neighborhoods with lower incomes and lower-performing schools. People who experience foreclosure are also more likely to be behind on debt payments, to declare bankruptcy, and to get divorced.
“We really knew close to nothing about what foreclosure did to households,” Diamond says. “You could read popular press accounts, but all of that was anecdotal. It’s not that [such stories] are not useful, but when you’re deciding policy, you need to see the full distribution.”
In her lab, which she started in 2020 with funding from an anonymous donor, Diamond has continued down the path she began to blaze with her job market paper (“a classic,” Moretti says). Diamond hopes the space will be a catalyst for the cross-pollination of ideas about urban issues and housing in particular; to that end, she runs a monthly workshop for graduate students from across campus. Funding for the lab also has allowed her to hire additional research assistants and graduate students.
Qian began his work for Diamond as a research assistant while earning his PhD in economics and later became a co-author on the rent-control paper. Now an assistant professor of finance at the University of North Carolina’s Kenan-Flagler Business School, Qian says Diamond is “super insightful.”
“You’re wowed on every occasion you interact with her,” he says. He points to the modeling Diamond came up with for the rent-control paper. Once the authors had data about tenants who benefitted from rent control and landlords who tried to avoid its reach, they still needed a way to calculate what all that data meant.
“There wasn’t an obvious, ready-to-use model,” he explains. But Diamond found an analog in an agricultural study that compared outcomes for farmers who had to choose whether to plant crops in their fields or leave them fallow. “She recognized that could be adapted to our context,” Qian says. “It was really brilliant and enabled us to solve a very difficult part of that problem.” Diamond was more matter-of-fact, calling the model in the other paper “clever.”
“Farmers thinking about when to plant crops has a surprising similarity to renters deciding whether to move away from their rent-controlled apartment,” she says.
In addition to housing and standard-of-living questions, Diamond’s work has explored food deserts, the gender earnings gap among Uber drivers, immigrant contributions to innovation, insurance, and teacher discretion in grading. Her collaborators praise her in every context.
McQuade, who was at Harvard with Diamond and a fellow faculty member at Stanford GSB for several years, says his co-author has a “keen eye” for research topics and “really good technical abilities.” She’s also a “humble and collegial” friend, he adds.
Moretti is equally as effusive. “I always learn something” from her, he says. “Rebecca is one of the stars of economics, and her brightness keeps increasing over time.”
Photos by Elena Zhukova