Freakonomics Radio 373. Why Rent Control Doesn’t Work
Apr 4, 2019
Join Stanford economist Rebecca Diamond and Harvard economist Ed Glazer as they unravel the complexities of rent control. They discuss how, while it seems to aid some renters, it creates higher overall rents by stifling new housing developments. The duo highlights the paradox seen in cities like Cambridge, where removing rent control led to improved housing quality. They also dissect the long-term consequences and economic arguments against such policies, making a strong case for rethinking housing solutions in an age of rising costs.
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Rent Control's Downside
- Rent control, meant to help, creates scarcity and misallocates housing.
- It freezes cities, hindering adjustments to change and trapping people in underutilized apartments.
Rent Control Inefficiency
- A New York resident stayed in a rent-controlled three-bedroom apartment alone after family moved out.
- Tobacconist Nat Sherman paid very low rent for a rarely used six-room apartment, highlighting inefficient space allocation.
Data-Driven Rent Control Analysis
- Traditional economic theories predict rent control's market effects, but lack data on individual tenant experiences.
- Rebecca Diamond's research uses unique data tracking individual migration to assess rent control's long-term impact on renters.