David Ling on research

David Ling is the Ken & Linda McGurn professor of real estate with a 30+ year tenure in the University of Florida Finance, Insurance and Real Estate Department. He is highly regarded worldwide for having authored more than 100 peer-reviewed articles, with more than 7,000 citations and the most widely used Real Estate Principles textbook in global classrooms. He takes a moment to share his perspective on research.

Question: After Central Michigan, you went to Ohio State for an M.B.A. What were you thinking professionally?

Ling: I wanted to go to grad school. They offered me a fellowship — I don’t remember the exact name — but it was a good financial deal. I went to Ohio State, got an M.B.A., and then went to work for Burroughs, which made office machines in the Detroit area. I worked in corporate finance.

Question: How soon after Burroughs did you decide to go back for a Ph.D.?

Ling: After three years. I was working in corporate finance, and it was fine, but it didn’t feel like the end point for me. I kept coming back to the idea that I wanted to teach and do research, and that pushed me back to school.

Question: When did real estate become the focus?

Ling: The big change came when Ohio State hired Professor Patric Hendershott. He taught a Ph.D. seminar on housing economics. I remember thinking very clearly, housing and real estate research was more interesting than the papers I had studied on stocks, bonds, and corporate finance. It felt more connected to the real world. Once I took that class, I started working with him, and he became my dissertation advisor.

Question: What did research look like at that time?

Ling: It was very different from today. You programmed in Fortran. You literally used punch cards. You’d take a box of punch cards to the computer center, and then you’d wait. Sometimes an hour, sometimes longer. You’d get your output, and most of the time there was an error, so you’d fix it and run it again.

Question: How did computing change by the time you finished?

Ling: I was typing at a terminal instead of using cards, which felt like a huge improvement. But, when I got to the University of Florida, I still had to walk across campus to an engineering building to get output. It was slow. Everything took longer, which meant you thought more carefully before you ran something.

Question: Early in your career at Florida, you spent time in Washington. What prompted that?

Ling: I took a leave of absence from UF and went to Washington for six months to work for the National Association of Home Builders as a housing economist. This was during the lead-up to the 1986 Tax Reform Act, which was going to negatively impact commercial real estate.

Question: What were you working on?

Ling: I was building valuation models to analyze tax changes. Things like depreciation schedules, interest deductibility, and how changes in those rules would affect taxable income and property values. By that time, I built most models in Excel. We’d visit Capitol Hill to figure out what policymakers were proposing.

Question: How significant was the 1986 Tax Reform Act for real estate?

Ling: It was hugely negative for commercial real estate. Among other things, tax depreciation deductions were reduced significantly, and that changed valuations overnight. My early research, with Professor Hendershott, focused on understanding what happened and why.

Question: Did that policy experience change how you thought about academic research?

Ling: Yes. It reinforced the idea that if you’re going to say something about policy, you need to be precise. You need models. You need data. You can’t just say, “This will be bad” or “This will be good.” You have to show how and why.

Question: Playing devil’s advocate, there’s criticism that academic research doesn’t always line up with what the industry cares about. How do you respond?

Ling: I think that criticism comes up a lot, and I understand it, but academics can’t publish opinions. If you’re going to claim that something causes something else, you have to prove causality. That’s why academic papers are long, technical, and full of robustness checks. The purpose isn’t to be inaccessible; it’s to be careful. Practitioners want answers quickly. Academic research is slower. It’s trying to be right, not just timely.

Question: Is that a disconnect between academics and practitioners, or is it really about incentives?

Ling: It’s mostly incentives. In academia, you’re rewarded for publishing in peer-reviewed academic journals with acceptance rates less than 10-20%. You’re not rewarded for writing short, intuitive summaries for practitioners. If I write a paper that is eventually published in a highly regarded journal, that helps my career. If I write something that’s more applied and accessible to practitioners, but not published in a high-quality academic journal, there is little reward for that at a research-oriented university like UF.

Question: When you think about research that intersects with practitioners’ interests, are there any examples?

Ling: Yes. One example is research I did with Milena Petrova, a former Ph.D. student, on 1031 tax-deferred exchanges. That was very much motivated by a real-world question: Who actually uses 1031 exchanges, and how big are the tax benefits in practice?

Question: That got traction beyond academia?

Ling: Yes. It was picked up by the Wall Street Journal and other practitioner outlets. That’s an example of research that started with an industry question and ended up producing results that I presented in Washington to the Joint Committee on Taxation, several Congressional committees, researchers at the U.S. Department of Treasury, and other non-academic audiences.

Question: You’ve done work comparing public REITs and private real estate investments. What drew you to that topic?

Ling: Some investors claimed that private real estate investment vehicles, such as joint ventures and real estate funds, produce less volatile (i.e., smoother) returns than publicly traded (listed) REITs. This reported return smoothing, however, results from measurement error. In several research projects, my co-authors and I have shown that REITs tend to outperform private investment vehicles once the private market return data has been corrected for smoothing.

Question: Where do publications like Due Diligence fit into the ecosystem?

Ling: They’re unusual. They create a space where academic research can be translated without losing its integrity. Beyond summarizing relevant academic research, Due Diligence does a great job of analyzing issues of critical importance to industry practitioners.