Gary Smith (economist)

A widely cited Brookings paper, co-authored with his wife Margaret H. Smith, applied this reasoning to ten U. S. metropolitan areas in 2005 and concluded that there was not a nationwide real estate bubble. In cities like Indianapolis and Dallas, residential real estate looked like a terrific long-run investment in that the rent savings were much larger than the expenses. A follow-up study by Smith found that, not only in these 10 metropolitan areas, but in cities throughout California, areas with relatively low price/rent ratios were the most resistant to the drop in home prices between 2005 and 2010.

Smith earned his B. S. in mathematics from Harvey Mudd College and enrolled in Yale University’s graduate economics program. After taking classes from James Tobin and William Brainard, he decided to focus on macroeconomics. He earned his Ph.D. in economics from Yale in 1971 and was hired as an assistant professor. In a demonstration of the law of comparative advantage, Smith taught the first-year graduate course in macroeconomics while Tobin taught the first-year graduate course in microeconomics. The economics department polled students about what courses they would like added to the curriculum and the runaway winners were Marx and the stock market. Smith wasn’t interested in Marx, but the chair of his thesis committee was Tobin, who would be awarded the Nobel Prize in Economics, in part for his analysis of financial markets. So, Smith volunteered to create a stock market course and asked Tobin to recommend a textbook. His immediate answer was John Burr Williams’ The Theory of Investment Value, which had been published more than 30 years earlier, in 1938, and was not really a textbook. It was Williams’ Ph.D. thesis and had been rejected by several publishers for being overly academic (it had algebraic symbols!). Harvard University Press published it, but Williams had to pay part of the printing cost himself.

Gary Nance Smith (born 1945) is the Fletcher Jones Professor of Economics at Pomona College. His research on financial markets statistical reasoning, and artificial intelligence, often involves stock market anomalies, statistical fallacies, and the misuse of data have been widely cited.