Controlling Laws
What State Housing Policies Do Voters Want? Evidence from a Platform-Choice Experiment
Christopher Elmendorf, Clayton Nall & Stan Oklobdzija
University of California Working Paper, April 2024
Abstract:
How much has rising political attention to problems of housing affordability translated into support for market-rate housing development? A tacit assumption of YIMBY ("Yes In My Backyard"') activists is that more public attention to housing affordability will engender more support for their policy agenda of removing regulatory barriers to dense market-rate housing. Yet recent research finds that the mass public has little conviction that more housing supply would improve affordability, which in turn raises questions about the depth of public support for supply-side policies relative to price controls, demand subsidies, or restrictions on "Wall Street" investors, to name a few. In a national survey of 5,000 urban and suburban voters, we elicited perceptions of the efficacy of a wide range of potential state policies for "helping people get housing they can afford." We also asked respondents whether they support various housing and non-housing policies. Finally, as a way of estimating the revealed importance of housing-policy preferences relative to the more conventional grist of state politics, we elicited preferences over randomized, three-policy platforms. In a set of results that recall the politics of the inflation-ridden 1970s, we find that homeowners and renters alike support price controls, demand subsidies, restrictions on Wall Street buyers, and subsidized affordable housing. The revealed-preference results further suggest, contrary to our expectations, that price controls and anti "Wall Street" restrictions are very important to voters. Contrary to the recommendations of housing economists and other experts, allowing more market-rate housing is regarded as ineffective and draws only middling levels of public support. Opponents of market-rate housing development also care more about the issue than do supporters. Finally, we show that people who claim that housing is very important to them don't have distinctive housing-policy preferences.
Housing values and jurisdictional fragmentation
John William Hatfield, Katrina Kosec & Luke Rodgers
Public Choice, forthcoming
Abstract:
We investigate the impact of the number of local governments in a metropolitan area on housing values within the United States. We find that metropolitan areas with one standard deviation more counties have housing values that are almost 11% higher. This difference may be driven by the fact that we also find higher wages (accounting for worker characteristics) in areas with more local governments. Moreover, we find that areas with more local governments have more business-friendly policies, such as freer labor markets, but similar levels of taxation and spending. The number of local governments does not seem to significantly impact environmental quality, educational outcomes, or crime.
Houston, you have a problem: How large cities accommodate more housing
Anthony Orlando & Christian Redfearn
Real Estate Economics, July 2024, Pages 1045-1074
Abstract:
We document how a select set of large and growing metropolitan areas have accommodated growth in their housing supply over 40 years. In particular, we examine how housing provision has evolved for the largest four metropolitan statistical areas (MSAs) in California and Texas. Despite differences in their topographies and regulatory environments, we find several common dynamics. As these MSAs grow, we see that fewer new net units are built at the periphery and a smaller share of the new units are built as single-family detached houses. As a greater share of new net units are built in infill locations, more units are built using higher-density -- and more costly -- multifamily housing construction techniques. Interestingly, we see these housing supply patterns in both "pro-growth" MSAs and "highly regulated" MSAs. Among all of our sample MSAs, we also find a declining share of Census tracts that participate in accommodating growth. Our results are consistent with the existence of a convex housing supply curve. We believe that this secular trend will pose genuine challenges to many urban housing policies aimed at improving affordability.
Can Gender-Blind Algorithmic Pricing Eliminate the Gender Gap?
Ozge Demirci
Harvard Working Paper, June 2024
Abstract:
Insurance companies frequently use consumer attributes, such as gender or age, when setting a price for their services. Young male drivers, for example, are often charged more than young females for car insurance, as they are expected to be riskier. In 2019, California banned auto insurance companies from using information on gender in their pricing algorithms. I study how this ban affects the gender gap in prices, using a difference-in-differences strategy with older individuals and other states as control groups. I find that the ban reduced the gender gap in the insurance premiums paid by young drivers by around 55 percent, but it failed to eliminate it completely. My analysis of the pricing algorithm of a large insurance company in California indicates that algorithms are adjusted in a way that characteristics that are correlated with the riskiest gender group receive larger weights after the policy. For instance, drivers using specific car models associated with young males were charged up to 22 percent more after the ban. My findings illustrate the limitations of anti-discrimination policies that impose group-blind pricing, with implications for the design of fairer regulations for algorithms.
The political economy of paternalism
Kai Konrad
Public Choice, forthcoming
Abstract:
Some citizens place a high value on making decisions for themselves. Other citizens are happy to delegate decisions to a government agency. Such differences in political attitudes to paternalism can be explained in a strict rational-choice model with citizens' heterogeneous tastes in the economic sphere. Citizens with more eccentric tastes and with high decision-making abilities tend to favor a libertarian regime. If majority preferences matter, heterogeneity in economic preferences and analytical abilities can also explain whether the political regime is more paternalist or more libertarian. As decision-making skills are a learnable capability, the strategic complementarity of individuals' investments in analytical skills in the context of political regime outcomes suggests a feedback mechanism that can cause multiple expectations equilibria. Both a libertarian regime or a paternalist regime can emerge.
Old Moats for New Models: Openness, Control, and Competition in Generative AI
Pierre Azoulay, Joshua Krieger & Abhishek Nagaraj
NBER Working Paper, May 2024
Abstract:
Drawing insights from the field of innovation economics, we discuss the likely competitive environment shaping generative AI advances. Central to our analysis are the concepts of appropriability -- whether firms in the industry are able to control the knowledge generated by their innovations -- and complementary assets -- whether effective entry requires access to specialized infrastructure and capabilities to which incumbent firms can ration access. While the rapid improvements in AI foundation models promise transformative impacts across broad sectors of the economy, we argue that tight control over complementary assets will likely result in a concentrated market structure, as in past episodes of technological upheaval. We suggest the likely paths through which incumbent firms may restrict entry, confining newcomers to subordinate roles and stifling broad sectoral innovation. We conclude with speculations regarding how this oligopolistic future might be averted. Policy interventions aimed at fractionalizing or facilitating shared access to complementary assets might help preserve competition and incentives for extending the generative AI frontier. Ironically, the best hopes for a vibrant open source AI ecosystem might rest on the presence of a "rogue" technology giant, who might choose openness and engagement with smaller firms as a strategic weapon wielded against other incumbents.