What does “academic consensus” mean, in operational terms? The VAST majority of papers aren’t for or against rent control, they’re an exploration of impact of specific policies on specific populations (the better ones also include comparison to other policies on perhaps-comparable populations, and models of impact for various dimensions of policy). Whether that impact is “good” or “bad” is rarely explored (though many do show that the impact is often misaligned with some stated goals).
I don’t know how to measure how complete the consensus is, but there is general agreement among economists that artificially reducing prices will reduce the motivation to create more supply. I’ve not seen any dissent from the framing that it’s a forced subsidy from owner to tenant, but I don’t think there’s a broad consensus about whether and when that’s desirable.
On aspect of rent control is that it incentives people to invest into the flats that they rent because they can expect that the landlord doesn’t simply raise the prices to drive them out of the flat and makes their investment void.
There’s also an imbalance because for a tenant it’s more costly to change move between flats then it is for a landlord to change tenants. Then imbalance can be used to extract higher rents then could be extrated in the absence of switching costs.
A good economic analysis should compare that value against the reduced motivation to create more supply. It might still be that the reduced motivations to create more supply is more important, but it’s not a slamdunk.
Thanks for the concrete examples! Do you have relevant references for these at hand? I could imagine that there might be better ways to solve these issues, or that they somehow mostly cancel out or relatively low problems, so I’m interested to see relevant arguments and case studies.
I don’t think that operationalizing exactly what I mean by a consensus would help a lot. My goal here is to really understand how certain I should be about whether rent control is a bad policy (and what are the important cases where it might not be a good policy, such as the examples ChristianKl gave below).
What does “academic consensus” mean, in operational terms? The VAST majority of papers aren’t for or against rent control, they’re an exploration of impact of specific policies on specific populations (the better ones also include comparison to other policies on perhaps-comparable populations, and models of impact for various dimensions of policy). Whether that impact is “good” or “bad” is rarely explored (though many do show that the impact is often misaligned with some stated goals).
I don’t know how to measure how complete the consensus is, but there is general agreement among economists that artificially reducing prices will reduce the motivation to create more supply. I’ve not seen any dissent from the framing that it’s a forced subsidy from owner to tenant, but I don’t think there’s a broad consensus about whether and when that’s desirable.
On aspect of rent control is that it incentives people to invest into the flats that they rent because they can expect that the landlord doesn’t simply raise the prices to drive them out of the flat and makes their investment void.
There’s also an imbalance because for a tenant it’s more costly to change move between flats then it is for a landlord to change tenants. Then imbalance can be used to extract higher rents then could be extrated in the absence of switching costs.
A good economic analysis should compare that value against the reduced motivation to create more supply. It might still be that the reduced motivations to create more supply is more important, but it’s not a slamdunk.
Thanks for the concrete examples! Do you have relevant references for these at hand? I could imagine that there might be better ways to solve these issues, or that they somehow mostly cancel out or relatively low problems, so I’m interested to see relevant arguments and case studies.
I haven’t read through the economics literature on rent control myself, the above is just from internet and meatspace policy discussions.
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I don’t think that operationalizing exactly what I mean by a consensus would help a lot. My goal here is to really understand how certain I should be about whether rent control is a bad policy (and what are the important cases where it might not be a good policy, such as the examples ChristianKl gave below).