Freakonomics Radio EXTRA: Why Rent Control Doesn’t Work (Update)
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Jul 29, 2024 
Rebecca Diamond, an economics professor at Stanford, and Harvard's Ed Glaeser delve into the pitfalls of rent control. They discuss a new proposal from the Biden administration and why economists believe it spells disaster. The conversation uncovers historical contexts and unintended consequences of rent control measures, illustrating their impact on housing supply and affordability. With insights from case studies and real-world effects, they tackle the ongoing debate about the balance between tenant support and market realities.
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Rent Control History
- Rent control emerged during World War II to prevent exploitation of housing shortages.
- It aimed to maintain fairness, but many cities repealed it post-war due to decreased urgency.
Early Criticisms of Rent Control
- Early economic research by Friedman and Stigler (1946) highlighted rent control's negative impacts.
- It discourages new housing development and creates arbitrary space allocation.
Rent Control Misallocation
- A New Yorker stayed in a large rent-controlled apartment long after needing it, highlighting space misallocation.
- Nat Sherman, a tobacconist, paid very low rent for an underutilized apartment.
