4 ms·
There are two, closely related paradoxes: There's the Downs-Thomson paradox[1], which is usually quoted as adding capacity to highways to the road network will
by deathanatos 9y ago
There are two, closely related paradoxes:
There's the Downs-Thomson paradox[1], which is usually quoted as adding capacity to highways to the road network will not reduce congestion, and the one I believe you mean. What the paradox actually states is that "the equilibrium speed of car traffic on a road network is determined by the average door-to-door speed of equivalent journeys taken by public transport." That is, as you add capacity to road networks, you disincentivize people from taking public transport, because the roads are quicker, until the two level out in terms of cost/benefit.
I'm not certain how directly applicable it is to the housing market. Essentially, what is the housing market's "public transport"? I suppose you could argue it's still public transit, since there is a trade-off between the more expensive, but closer housing and the cheaper but farther away public housing. But I'm also in favor (and I think most of the people in the HN SF crowd are) of better public transit in the Bay Area and better housing/zoning policy. (Either would help me and many others: a better public transit network would reduce the need for housing in cities closer & further up the Bay.)
There's also Jevons paradox[2], which says that when "technological progress increases the efficiency with which a resource is used (reducing the amount necessary for any one use), but the rate of consumption of that resource rises because of increasing demand." This is mostly concerned with reducing use of the resource though, and I fully expect that better zoning policy would result in more and cheaper housing, more use of said housing, and more demand — all in line with Jevons paradox, but none of which seems detrimental when compared to the current situation.
[1]: https://en.wikipedia.org/wiki/Downs%E2%80%93Thomson_paradox https://en.wikipedia.org/wiki/Downs%E2%80%93Thomson_paradox
[2]: https://en.wikipedia.org/wiki/Jevons_paradox https://en.wikipedia.org/wiki/Jevons_paradox
- dredmorbius 9y agoHousing's "more roads" is simply density. In transport, more roads means more capacity to carry traffic, and hence, more induced traffic. The death-spiral effect comes from the fact that each additional car on the road produces far more congestion than its operator alone experiences (negative externalities). True costs aren't born by the operator, so gridlock ensues. For housing, or rather, urban development generally, the challenge is that denser cities with more inhabitants (generally) give rise to greater opportunity. This is where the action is, for whatever definition of action you have. I'm not entirely sure what produces the death-spiral of cities pricing themselves out of their own housing markets, as SF is doing, but I'm inclined to think that the general trend of holders of investment assets to seek inflation of those assets' values is a key element. That is, you have a house, you've sunk a lot of money into it, you want its value to increase (hey! free money, right?). This turns into collaterisable assets for loans or other opportunities as well. There's also the fact that high-value urban real-estate markets make for good options to bank wealth appropriated elsewhere, or for money-laundering. Values are high, tend to remain high, the market is liquid, and urban cores are far more stable for real estate prices than outlying areas. Hence, the housing stock value is bid up further. Land value tax might help address that. Something I'm looking at. Originally suggested by Adam Smith and David Ricardo, though championed by Henry George.
- jtmcmc 9y agoyes prop 13 is an active problem with housing in the bay area as well.
- dredmorbius 9y agoDefinitely an element, yes.
- afarrell 9y agoI wish there was an investment vehicle where you could sell a portion of the equity of your own home for a share of equity in construction projects in your area.
- astrange 9y agoYou could get a second mortgage and use it to buy REITs. (In CA funding YIMBYs would be more productive.)
- dredmorbius 9y agoLand value tax.
- milesvp 9y agoIf you're interested in 'real world' emperical and experimental data on under utilized resources due to low rents the economist for eve online has some pretty convincing data based on actual game changes they made. Basically they had a problem of high value 'factories' being undeveloped since there was only opportunity costs associated with their not producing goods. Government rents were increased such that factories were only profitable for people utilizing them, and they saw a huge increase in total gdp.
- dredmorbius 9y agoThanks, that's a wonderful example. I keep hearing that gaming comes up with interesting case studies, but rarely specifics such as this.