It sure looks like proximity to Canada really cuts that foreclosure rate. Maybe people know that they'll be really cold if they get kicked out, so they avoid it.But it actually doesn't reveal much. Using the latitude of each (of the 48 contiguous) state's most populous city and comparing it to the foreclosure rate produces a weak and statistically insignficant relationship. With the exception of Florida (and to a lesser extent, Georgia), the South, so often maligned for filling out the bottom of socially desirable rankings, has suffered relatively little from the mortgage mess. Louisiana has the fourth lowest foreclosure rate in the country. Tennessee, Virginia, Maryland, Kentucky, Mississippi, Alabama and both Carolinas are all among the 25 lowest foreclosure rate states.
When Alabama and Mississippi do well, it's a pretty sure bet that intelligence isn't a strong determinate of what is being measured. That is the case here. The correlation between estimated average IQ and the foreclosure rate by state is .32 (p=.02). Thus intelligence 'explains' 10% of a state's foreclosure woes. Pretty minor, especially in comparison to a state's per capita illegal immigrant population, which, by contrast, accounts for 52% of the foreclosure rate.
Another Mangan commenter, Mark, suggests race is probably more germane to foreclosure rates than the size of the illegal immigrant population is:
I would be interested to see a chart of foreclosure rate correlated with percentage of population that is black or hispanic. I think it would show that foreclosures, just like levels of crime, poverty, poor school performance, and other social ills all seem to mysteriously correlate with the proportion of the population that is black/latino. Correlation with illegal status is probably just a proxy for correlation with racial status.Not so in this case. The correlation between the NAM population and the foreclosure rate is .35 (p=.01). The size of the black and Hispanic population only accounts for 12% of a state's mortgage mess.
Like the identity theft problem (but much more consequential), the mortgage meltdown and ensuing economic recession are inextricably linked to our lack of immigration enforcement. Without the millions of illegal immigrants--one-fifth of whom worked in construction--lowering labor costs while simultaneously putting upward pressure on housing prices by increasing demand, the real estate bubble could never have grown so large. To meet the uptick in demand for houses, more homes had to be constructed, which created a need for more construction workers. The need was met by the immigrants who were in large part pushing the increase in demand for more housing starts in the first place. The problem of low paid people buying expensive houses was circumvented by removing safeguards (like the down payment) in place to prevent such financial recklessness from occuring in the first place.
Permitting masses of unskilled, uneducated immigrants to settle in the US was a bad idea during putatively good times. It's an even worse idea now. As Randall Parker pithily puts it:
Somehow we have to confront the fact that the law of supply and demand works in the labor market just as it does in other markets. A swelling low skilled labor force increases the ranks of those living in poverty while also increasing fiscal burdens of governments to pay growing social services costs. Worse yet, the influx of millions of low skilled workers, their poor performance in American school systems, and their competition for jobs and housing is lowering the quality of life for natives.The connection Richard Nadler tried to draw between immigration and the wealth of states turned out to be based on illusory economic growth. Lending to people who will never be able to cover their loans does not increase total wealth, even if the financial instruments that are spawned by the activity trick the market into temporarily believing that to be the case.
The complete data set is available for download here.