The problem with even the best economic analysis (admittedly the only kind on this substack) is that people don't live in an economy -- they live in a neighborhood, a community, a town, a nation. Or, rather, they did. At some point, "do I want my town to fill up with people who don't like me and aren't like me even if there are proven economic benefits?" flips from 'yes' to 'no'.
Similarly, many people could double the rent they make from the spare room by kicking out grandma and renting to a hard-working family of four, and can make even more by renting out the garage and building an ADU in the backyard, but not everything is about money. Not for everyone.
But Brian, why do we assume that house owners have strong economic interests at all behind their nimby-ism? I know I'm a NIMBY by nature (luckily I don't live in a place where it would matter), but my stance does not depend on my economic understanding of things (which is weak). It's pure visual preference. I'm not planning to sell my real-estate. But should the "historical milieu saving" restrictions in my part of town be lifted and new high-rises get built around my house, I would be forced to sell and move to another place, losing a lot of value (whatever it is - costs of moving, having to live father away from workplace, loss of the garden that I've been cultivating for many years and that is just starting to reach maturity). I'd have to move because my visual preferences for the surroundings are very strong. A large percentage of the people inhabiting this part of town are like me - they came for the romantic surroundings (it's not extremely beautiful, but it's kind of romantically old and slummy). They would all have to go. The cost of apartments is not what they care about when they discuss building restrictions.
Really, it's amazing that so many economists buy into a collusion story on housing because the collusion isn't even close to being plausible, and a similar story would never be so widely accepted by economists in other contexts.
It would be interesting to separate how people living in newly developing communities with a lot of open land feel about this relative to people living in fully developed communities. I would expect it is the fully developed communities where people don't expect to see a drop in rents, and the fairly logical reasoning is that redevelopment will replace old housing units with new units and the development cost and quality of those new units are likely to be higher and command higher rents. It's like the difference between asking - if we increase the number of rental cars in your area by 50%, what happens to rental prices? - vs. if we junk half of the existing rental cars in your area, which are 5 year old Honda accords, and replace them with twice as many Telsa Model S's, what happens to rental prices? Apartment renters are accustomed to seeing expensive new buildings replace inexpensive old buildings, and that upward affect on rent is more immediately visible than the longer term impact of greater overall housing supply.
Don't people mainly want housing regulation so their neighborhood can be as close to a resort as possible? Maybe they don't really care about their house price for their own wealth rather than a way to price other people out of their market. The lower the cost of housing near you the more likely you and your kids are going to have to interact with less desirable people and the pathologies that come with them.
One would think they would take this deal even knowing it was economically costly.
I forget where I saw this, but apparently the by-far largest concern people have with new development seems to be a rise in traffic. People really really hate traffic. The idea that they may end up spending less time on the road even if there is more traffic (because some amenity ends up much closer) seems to escape most folks.
If you haven’t read Alain Bertaud’s “Order without design” work yet I strongly advise you to do so. He also did an econtalk with Russ back a few years ago.
The easiest way to figure out why people oppose building is to go to a zoning meeting. I have never heard "want my house price to go up" mentioned once, and I don't think people are hiding their preferences.
We just had another kid and we decided to have my wife stay home for awhile. In addition, our private school down the street has purchased a new location, and between a longer commute, higher tuition, and extra kids with less income, we thought we would give the public school down the street a shot. After all, the kids that live on our block their age all go there and the parents like it so it would be good for making friends.
So I register and...they claim they are "full". They did offer to put my kid on a bus to a far away elementary school somewhere else in the district (which is the size of the county) for all the good that would do.
Apparently this is a big problem in the town. I had heard people mention overcrowding in the schools and traffic when schools get out is something I've experienced first hand, but where I come from the school districts are town based and they would never send a kid to another part of the county. There is very little chance of a new school being built anytime soon to relieve pressure so my kid can go to the school they are zoned for. Our town has experienced rapid growth and its grown far faster then the public goods like schools and roads can keep up.
So I totally get it when people oppose new building because the schools are overcrowded. If you think schooling is worth $15k+ a year, and you don't want to put your kid on a bus to a faraway school with none of their friends, new building represents a potential huge loss to your quality of life.
Yes, it's the governments problem for not building enough schools, but that's a whole other can of worms. It seems unlikely for a variety of reasons that people in the town can fix that issue.
Anyway, this is just one of the reasons listed by the NIMBYs in town. I find many of their reasons dumb but others are legitimate. House prices doesn't appear to be a concern at all. Other places I've lived have all had their own particular local issues.
An alternative explanation is that people observe demand-induced supply: shifts in demand raise prices, which creates political support for upzoning, which shifts supply. So people interpret the question about building new housing as moving along an upward-sloping long-run supply curve, due to shifts in demand. Hence, new housing is associated with higher prices.
1. But if it did not benefit current owners would they learn?
2. Some people know. I was once in a meeting of apartment owners and 1 person who owned about 10 apartments expressed anger that local politicians were allowing so much building because they said it would hurt their rental income. So could people like that be the marginal voters.
I agree with those who posit that people care about neighborhoods beyond the economic vale of their home. There are real world tests of neighborhoods to see what happens when conflicting values problems arise: clustered Section 8 housing. I have seen first hand when 10% of homes in a neighborhood classified as Section 8 (heavily subsidized or free housing for the poor), crime tends to skyrocket. Of course, this is anecdotal on my part, but it is also the story that tends to be advertised in the local news. Housing costs become irrelevant to good parents when inordinate crime raises its ugly head, particularly violent crime.
So what are some realistic strategies to make the public less economically illiterate? What has been tested and what are the results? If we really want to solve this problem what can we do?
The case for NIMBYism basically boils down to memetic reproduction. Part of your culture/society/information system is a result of your built environment, so if you want that culture/society/information system to reproduce/continue to exist, you need that built environment to stay the same. This is of course traded off against the need for "progress" to provide adequate evolutionary advantage against competing cultures. I'm sure if Bryan had a chat with Robin Hanson about it there would be some interesting insights uncovered.
The problem with even the best economic analysis (admittedly the only kind on this substack) is that people don't live in an economy -- they live in a neighborhood, a community, a town, a nation. Or, rather, they did. At some point, "do I want my town to fill up with people who don't like me and aren't like me even if there are proven economic benefits?" flips from 'yes' to 'no'.
Similarly, many people could double the rent they make from the spare room by kicking out grandma and renting to a hard-working family of four, and can make even more by renting out the garage and building an ADU in the backyard, but not everything is about money. Not for everyone.
But Brian, why do we assume that house owners have strong economic interests at all behind their nimby-ism? I know I'm a NIMBY by nature (luckily I don't live in a place where it would matter), but my stance does not depend on my economic understanding of things (which is weak). It's pure visual preference. I'm not planning to sell my real-estate. But should the "historical milieu saving" restrictions in my part of town be lifted and new high-rises get built around my house, I would be forced to sell and move to another place, losing a lot of value (whatever it is - costs of moving, having to live father away from workplace, loss of the garden that I've been cultivating for many years and that is just starting to reach maturity). I'd have to move because my visual preferences for the surroundings are very strong. A large percentage of the people inhabiting this part of town are like me - they came for the romantic surroundings (it's not extremely beautiful, but it's kind of romantically old and slummy). They would all have to go. The cost of apartments is not what they care about when they discuss building restrictions.
Great post, Bryan.
Really, it's amazing that so many economists buy into a collusion story on housing because the collusion isn't even close to being plausible, and a similar story would never be so widely accepted by economists in other contexts.
It's almost impossible to get people to be supply/demand literate when their perceived wealth is dependent on them being illiterate.
It would be interesting to separate how people living in newly developing communities with a lot of open land feel about this relative to people living in fully developed communities. I would expect it is the fully developed communities where people don't expect to see a drop in rents, and the fairly logical reasoning is that redevelopment will replace old housing units with new units and the development cost and quality of those new units are likely to be higher and command higher rents. It's like the difference between asking - if we increase the number of rental cars in your area by 50%, what happens to rental prices? - vs. if we junk half of the existing rental cars in your area, which are 5 year old Honda accords, and replace them with twice as many Telsa Model S's, what happens to rental prices? Apartment renters are accustomed to seeing expensive new buildings replace inexpensive old buildings, and that upward affect on rent is more immediately visible than the longer term impact of greater overall housing supply.
Don't people mainly want housing regulation so their neighborhood can be as close to a resort as possible? Maybe they don't really care about their house price for their own wealth rather than a way to price other people out of their market. The lower the cost of housing near you the more likely you and your kids are going to have to interact with less desirable people and the pathologies that come with them.
One would think they would take this deal even knowing it was economically costly.
I forget where I saw this, but apparently the by-far largest concern people have with new development seems to be a rise in traffic. People really really hate traffic. The idea that they may end up spending less time on the road even if there is more traffic (because some amenity ends up much closer) seems to escape most folks.
If you haven’t read Alain Bertaud’s “Order without design” work yet I strongly advise you to do so. He also did an econtalk with Russ back a few years ago.
For some one that can’t take a joke you are pretty funny.
The easiest way to figure out why people oppose building is to go to a zoning meeting. I have never heard "want my house price to go up" mentioned once, and I don't think people are hiding their preferences.
We just had another kid and we decided to have my wife stay home for awhile. In addition, our private school down the street has purchased a new location, and between a longer commute, higher tuition, and extra kids with less income, we thought we would give the public school down the street a shot. After all, the kids that live on our block their age all go there and the parents like it so it would be good for making friends.
So I register and...they claim they are "full". They did offer to put my kid on a bus to a far away elementary school somewhere else in the district (which is the size of the county) for all the good that would do.
Apparently this is a big problem in the town. I had heard people mention overcrowding in the schools and traffic when schools get out is something I've experienced first hand, but where I come from the school districts are town based and they would never send a kid to another part of the county. There is very little chance of a new school being built anytime soon to relieve pressure so my kid can go to the school they are zoned for. Our town has experienced rapid growth and its grown far faster then the public goods like schools and roads can keep up.
So I totally get it when people oppose new building because the schools are overcrowded. If you think schooling is worth $15k+ a year, and you don't want to put your kid on a bus to a faraway school with none of their friends, new building represents a potential huge loss to your quality of life.
Yes, it's the governments problem for not building enough schools, but that's a whole other can of worms. It seems unlikely for a variety of reasons that people in the town can fix that issue.
Anyway, this is just one of the reasons listed by the NIMBYs in town. I find many of their reasons dumb but others are legitimate. House prices doesn't appear to be a concern at all. Other places I've lived have all had their own particular local issues.
An alternative explanation is that people observe demand-induced supply: shifts in demand raise prices, which creates political support for upzoning, which shifts supply. So people interpret the question about building new housing as moving along an upward-sloping long-run supply curve, due to shifts in demand. Hence, new housing is associated with higher prices.
The central tenet of NIMBYism is about intruding on your neighbor’s property rights.
There’s no reason in the world you shouldn’t be allowed to build an ADU in your own backyard if you bought the land.
1. But if it did not benefit current owners would they learn?
2. Some people know. I was once in a meeting of apartment owners and 1 person who owned about 10 apartments expressed anger that local politicians were allowing so much building because they said it would hurt their rental income. So could people like that be the marginal voters.
Opposition to new housing has to be argued on economic terms because that’s pretty much all you can bring to land court.
I agree with those who posit that people care about neighborhoods beyond the economic vale of their home. There are real world tests of neighborhoods to see what happens when conflicting values problems arise: clustered Section 8 housing. I have seen first hand when 10% of homes in a neighborhood classified as Section 8 (heavily subsidized or free housing for the poor), crime tends to skyrocket. Of course, this is anecdotal on my part, but it is also the story that tends to be advertised in the local news. Housing costs become irrelevant to good parents when inordinate crime raises its ugly head, particularly violent crime.
So what are some realistic strategies to make the public less economically illiterate? What has been tested and what are the results? If we really want to solve this problem what can we do?
The case for NIMBYism basically boils down to memetic reproduction. Part of your culture/society/information system is a result of your built environment, so if you want that culture/society/information system to reproduce/continue to exist, you need that built environment to stay the same. This is of course traded off against the need for "progress" to provide adequate evolutionary advantage against competing cultures. I'm sure if Bryan had a chat with Robin Hanson about it there would be some interesting insights uncovered.