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Posted April 24, 2013

Tax and Economics Expert Andrew Hayashi to Join UVA Law Faculty

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Andrew Hayashi, the Nourallah Elghanayan Research Fellow at the Furman Center for Real Estate and Urban Policy at New York University, will join UVA Law on July 1 as an associate professor.

Andrew Hayashi, an expert in tax law, tax policy and behavioral law and economics, will join the faculty of the University of Virginia School of Law this summer.

Contact: Brian McNeill

Hayashi, who is currently the Nourallah Elghanayan Research Fellow at the Furman Center for Real Estate and Urban Policy at New York University, will join UVA Law on July 1 as an associate professor. In the fall semester, he will begin teaching a course on advanced topics in federal income tax.

Hayashi said he is excited to join the Law School's "deep and distinguished" tax faculty.
"From just a research perspective, I'm excited because UVA has a fantastic group of tax scholars — George [Yin], Mildred [Robinson], Ethan [Yale], Paul [Stephan], and Thomas [White], and Ruth Mason who is also joining the faculty this year," he said. "It's really a great time to be at UVA doing tax law and tax policy."

He added that he is also looking forward to working alongside the "riches upon riches" of UVA Law faculty members who, like him, have a focus on law and economics and empirical research.

At the Furman Center, Hayashi studies the effects of tax policy on real estate and housing markets. Specifically, he said, he has been applying behavioral law and economics principles to understand how taxpayers respond to a tax's salience, meaning how visible or prominent it is.

In one study, Hayashi investigated New York City's property tax appeals process and found that when the property tax's salience is reduced — which happens which residents pay the tax out of a mortgage escrow account — they are less likely to appeal their property tax assessment.

"If you pay your taxes out of escrow, you just write a single check to your servicer every month. It's kind of hidden to you — how much you're paying in mortgage insurance, how much the property taxes are," he said. "And then you pay off your mortgage and all of a sudden those bills are coming directly to you."

Though you are paying the same amount in taxes, when you cut the check yourself it changes the salience of the tax, he said." When that happens to people, they become more likely to appeal their property assessments."

Additionally, the Federal Reserve requires mortgage escrow accounts for people borrowing at more than 1.5 percentage points above prime. Consequently, he said, higher-risk borrowers paying their property taxes via escrow are more likely to leave any over-assessment uncorrected, and are therefore effectively being overtaxed.

"That's an example of the kind of research that I do," Hayashi said. "It's thinking carefully about the institutional context, using these behavioral economics insights — that the salience of a tax matters [and that] people aren't completely rational — and then collecting data that allow me to explore how they affect taxpayers' behavior."

UVA law professor Greg Mitchell called Hayashi a "great catch" for the Law School.

"He has strong empirical skills and a sophisticated understanding of economic theory, and he is conducting research on cutting-edge tax compliance issues," he said. "Plus, he is a serious lawyer with real world experience that will make him a great teacher."

Hayashi received his undergraduate degree in philosophy and international economics from Georgetown University in 2002, a master's degree in economics and philosophy from the London School of Economics in 2003, and a law degree and doctorate in economics from the University of California, Berkeley in 2008.

At Berkeley, Hayashi was a Jack Kent Cooke Foundation Graduate Scholar and a Berkeley Law and Economics Fellow. He also received research funding from the Russell Sage Foundation and the Pell Institute for the Study of Opportunity in Higher Education.

Prior to joining the Furman Center, Hayashi was a tax associate at the law firm Davis Polk & Wardwell LLP in New York City, starting around the time of the financial meltdown in 2008.

"I started in private practice in fall 2008, which was a really unusual time, obviously," he said. "In a way, it made me feel very fortunate because the kind of deal work that came through the firm during that period was very different — the bread-and-butter capital markets and M&A-type work that characterizes regular times at big Wall Street firms had slowed. And there were a lot of transactions that were — hopefully — once-in-a-lifetime deals."

Hayashi said he is looking forward to joining the Law School.

"I'm really looking forward to diving into the intellectual and social life of the Law School," he said. "I love universities, and I love the intellectual life of a law school, especially. I come from an econ background and I think that there is a lot of value in that analytic toolkit. But a law school, it's an interdisciplinary place, full of people with a diverse set of perspectives and ways of trying to answer questions. That's really exciting to me, to be going to colloquia and seminars across fields, and to be engaging with UVA Law students, who have such a great reputation."

Hayashi's wife, Kateri DuBay, a postdoctoral researcher at Columbia University, will join UVA's chemistry department in fall 2014.