Freakonomics Radio
EXTRA: Why Rent Control Doesn’t Work (Update)
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.
48:22
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Quick takeaways
- Economists argue that rent control exacerbates housing scarcity by discouraging new development and misallocating rental resources.
- Experts suggest improving housing supply through zoning reforms and streamlined processes as a more effective solution than rent control.
Deep dives
Rising Rent Crisis
The issue of rising rents, particularly in urban areas, has intensified over the years, with the national median rent increasing by 26% since 2019. Coastal cities like New York have become particularly emblematic of this crisis, prompting renewed interest in rent control as a possible solution. While the idea of controlling rental prices may seem appealing, most economists argue that rent control ultimately exacerbates housing scarcity. Economists contend that allowing market forces to dictate prices is a more effective way to allocate housing resources.
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