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I agree that there is excess cost relative to a counterfactual where smaller/cheaper houses are legal. That's not what I'm disputing. What I'm disputing is whe

I agree that there is excess cost relative to a counterfactual where smaller/cheaper houses are legal. That's not what I'm disputing. What I'm disputing is whether, overall, we are actually worse off. Fundamentally here's where I claim SA is wrong: Imagine if tomorrow, the price of water dectupled. Suddenly people have to choose between drinking and washing dishes. Activists argue that taking a shower is a basic human right, and grumpy talk show hosts point out that in their day, parents taught their children not to waste water. A coalition promotes laws ensuring government-subsidized free water for poor families; a Fox News investigative report shows that some people receiving water on the government dime are taking long luxurious showers. Everyone gets really angry and there’s lots of talk about basic compassion and personal responsibility and whatever but all of this is secondary to why does water costs ten times what it used to? But in reality, this is not an accurate analogy to the modern world. I'm claiming a better analogy would be this: Imagine if tomorrow, the price of water dectupled. Furthermore, people's income and ability to purchase water remained flat. Yet somehow people started taking longer showers, drinking 10 glasses/day rather than 8, having greener lawns, and just generally staying very well hydrated. In this latter scenario, I'd tell you that somewhere along the way you messed up. Water consumption = money spent on water / price per gallon - if water consumption went up, either the numerator increased or the denominator decreased. If you think I'm wrong, tell me what we have less of.

SilasX 10y ago
Then I don't think original comment was productive: you think the cost increase can be explained by quality improvements; Alexander expressed skepticism on that point, by suggesting how the products offered cannot be explained through a reasonable model of consumer preferences. As much as people value bigger homes, do they value them so much as to pay 10x more for 2x the size even when technology should be improving that? As much as people value better health care, are they actually making a conscious, understandable tradeoff between money and actually-better health care on the metrics they really want? You then mocked that as "fundamentally wrong", "stylized facts" without quoting the specific part where he reduced it to a thought experiment (take 70s health care + $8000) or addressing the logic there.
- yummyfajitas 10y ago
  I'm not saying it can be explained (completely) by quality improvements. I'm saying consumption = (income - investment) / price. That's just an arithmetic identity. Investment has been between 5 and 10% since basically forever. http://www.tradingeconomics.com/united-states/personal-savings http://www.tradingeconomics.com/united-states/personal-savin... So if consumption went up, income must have risen faster than price. That's my only point: you can't simultaneously have stagnating income, rising prices, and rising consumption. Now, if you're saying separately that it would be great if we could legalize lower priced options, I agree with you. That would be great. But all that would do is make (preference-adjusted) consumption go up more, or perhaps make investment go up even more. That doesn't change the fact that this price increase + stagnating income story is false.
  - SilasX 10y ago
    >So if consumption went up, income must have risen faster than price. You're assuming the consumption itself went up rather than paying more for the same stuff. And people are paying a bigger fraction of their incomes for these things. I don't know what this is adding to the discussion besides assuming away the problem, as if nothing ever becomes pointlessly expensive. >Now, if you're saying separately that it would be great if we could legalize lower priced options, I agree with you. That would be great. But all that would do is make (preference-adjusted) consumption go up more, or perhaps make investment go up even more. No, that's an assertion that assumes away one possible resolution: that pointless regulations mandate that only the expensive options be offered. It's unlikely, but your model seems to disallow the very existence of that dynamic.
    - yummyfajitas 10y ago
      Yes, I'm assuming people live in bigger houses than in 1975, drive more cars than in 1975, consume more medicine than in 1975, and get more education than in 1975. Which of these things do you disagree with? I don't know what this is adding to the discussion besides assuming away the problem, as if nothing ever becomes pointlessly expensive. You are arguing against a straw man. I never claimed this. Search my HN posting history; you'll discover I do think education and transit are pointlessly expensive.

SilasX 10y ago

Then I don't think original comment was productive: you think the cost increase can be explained by quality improvements; Alexander expressed skepticism on that point, by suggesting how the products offered cannot be explained through a reasonable model of consumer preferences. As much as people value bigger homes, do they value them so much as to pay 10x more for 2x the size even when technology should be improving that? As much as people value better health care, are they actually making a conscious, understandable tradeoff between money and actually-better health care on the metrics they really want? You then mocked that as "fundamentally wrong", "stylized facts" without quoting the specific part where he reduced it to a thought experiment (take 70s health care + $8000) or addressing the logic there.

yummyfajitas 10y ago
I'm not saying it can be explained (completely) by quality improvements. I'm saying consumption = (income - investment) / price. That's just an arithmetic identity. Investment has been between 5 and 10% since basically forever. http://www.tradingeconomics.com/united-states/personal-savings http://www.tradingeconomics.com/united-states/personal-savin... So if consumption went up, income must have risen faster than price. That's my only point: you can't simultaneously have stagnating income, rising prices, and rising consumption. Now, if you're saying separately that it would be great if we could legalize lower priced options, I agree with you. That would be great. But all that would do is make (preference-adjusted) consumption go up more, or perhaps make investment go up even more. That doesn't change the fact that this price increase + stagnating income story is false.
- SilasX 10y ago
  >So if consumption went up, income must have risen faster than price. You're assuming the consumption itself went up rather than paying more for the same stuff. And people are paying a bigger fraction of their incomes for these things. I don't know what this is adding to the discussion besides assuming away the problem, as if nothing ever becomes pointlessly expensive. >Now, if you're saying separately that it would be great if we could legalize lower priced options, I agree with you. That would be great. But all that would do is make (preference-adjusted) consumption go up more, or perhaps make investment go up even more. No, that's an assertion that assumes away one possible resolution: that pointless regulations mandate that only the expensive options be offered. It's unlikely, but your model seems to disallow the very existence of that dynamic.
  - yummyfajitas 10y ago
    Yes, I'm assuming people live in bigger houses than in 1975, drive more cars than in 1975, consume more medicine than in 1975, and get more education than in 1975. Which of these things do you disagree with? I don't know what this is adding to the discussion besides assuming away the problem, as if nothing ever becomes pointlessly expensive. You are arguing against a straw man. I never claimed this. Search my HN posting history; you'll discover I do think education and transit are pointlessly expensive.