Tuesday, March 7, 2017

"On Balance Harmful" - Evaluating Second Generation Rent Control

In a new post in City Commentary, economist Joe Cortright delves into the academic literature that is used to justify the implementation of rent stabilization policies. Frequently cited scholars such as Anthony Downs, Michael Lewyn, and Richard Arnott have all expressed doubts about the efficacy of rent stabilization policies, even as they have asserted those policies may be less harmful than hard rent caps. Lewyn in particular notes that while so-called "temperate" rent control policies do not appear to have an adverse impact on supply, they also don't have much of an impact on rents. In 2003 Arnott directly addressed those who use his research to promote rent control, stating in The Swedish Economic Policy Review that rent stabilization policies "have been on balance harmful, especially when account is taken of the political difficulty of removing rent controls when they are only temporarily justified." Cortright also expresses concern that the bills currently being debated in Oregon, HB 2001 and HB 2004, do not have mechanisms in place to stop cities from enacting more harmful forms of rent control that do restrict supply. Read more.