5 ms·

So glad we don't need to re-write the first chapter of almost every economics 101 textbook!

malkosta 7mo ago
Yes, it describes human nature better than psychology. We can’t fight even knowing about it.
tkel 7mo ago
They also teach you about elasticity in econ 101. It's foolish and anti-intellectual to insist that the housing market has only two factors, while simultaneously condescending about your understanding of economics shows that you really don't understand economics, it's more about your ego.
- JumpCrisscross 7mo ago
  > It's foolish and anti-intellectual to insist that the housing market has only two factors Elasticitiy moderates the effect. It doesn't reverse it. Increasing housing supply decreases housing costs. A lot of people are venally or ideologically motivated against accepting this. Our housing crisis is a political choice. (Note: I'm a homeowner.)
  - mr_00ff00 7mo ago
    This reminds of a fun fact I remember learning in university. Elasticity is the relationship between demand and supply, and there are actually very rare instances where it can be negative (where demand increases with price). These are called Giffen goods. https://en.wikipedia.org/wiki/Giffen_good https://en.wikipedia.org/wiki/Giffen_good Explanation (that I remember) Inelastic demand is when a good is demanded so much, that an increase in price has little affect on the total quantity (people still demand it, think like addictive substances) So a perfectly inelastic product would be a straight line where any amount is demanded at any price. So having the curve keep going it would get a positive slope, where higher price makes demand go up. If I remember the example I was given was food during a famine. Supply is already low, but an additional pressure on price is the known shortage. The idea being that as the price goes up people see it as harder to get. It’s been so long since I studied the subject so I might have gotten some things wrong here.
    - JumpCrisscross 7mo ago
      Cool! Thanks!
    - thaumasiotes 7mo ago
      > These are called Giffen goods. The terminology is actually split; sometimes they're called Giffen goods and sometimes they're called Veblen goods. The two types have identical behavior, so there's no good reason to have two different names, but in concept Giffen goods are something poor people buy, while Veblen goods are something rich people buy. (There is a difference if you're willing to look at responses to changes other than a change in the price of a good: if you give a household more money, it will increase consumption of Veblen goods, but decrease consumption of Giffen goods.)
  - peder 7mo ago
    > A lot of people are venally or ideologically motivated against accepting this. That’s the story of the last 10 years among certain types that keep regurgitating obviously wrong concepts.
    - JumpCrisscross 7mo ago
      > That’s the story of the last 10 years The urban orthodoxy is around demand rationing. Supply-side arguments are incredibly new. The evidence cuts in one direction. (Unless we want a hukou system.)
- Aurornis 7mo ago
  The parent comment never claimed that the housing market only has two factors. You’re arguing against a strawman of your own creation.
- deleted 7mo ago
  [deleted]
muyuu 7mo ago
it's crazy that people nowadays seriously question basic market pressure being a thing
- lesuorac 7mo ago
  Eh, people really need to be questioning econ 101 more often. It's built upon untrue assumptions - infinite buyers / sellers - perfect information - no switching / transaction costs --- The article itself has 3 different year ranges provided so I'm not sure how you can use it as evidence. Plus overall the rent is still up by a lot since 93% - 4% is still at least 80%. - Rents increase by 93% from 2010 to 2019 - Housing increase from 2015 to 2024 (this overlaps with when rents increased ...) - Rents fell from 2021 to 2026 by 4%
  - pembrook 7mo ago
    Ah yes, that 150 year old meme reflexively copy-pasta'd by internet commenters since the days of usenet to refute basic concepts like supply and demand. "Lol economists are dumb they think humans are robots!" No they don't. Sorry, we won't be throwing away an entire field of human endeavor based on a straw man caricature that isn't true. We don't call physicists dumb and throw out their ideas because the real world isn't a perfect vacuum either. They know this, don't be silly.
    - lesuorac 7mo ago
      We do throw out everything from physics 101. The movement of satellites is not modeled using distance = speed * time. It would do well to consider if econ 101 is an accurate way to model the world since for other domains the 101 course is not.
      - pembrook 7mo ago
        Yet the overwhelming factor in modeling the movement of those satellites is still distance = speed * time. The existence of nuance and external factors don't negate the original principle. The equivalent to arguments made by 'economics deniers' in this thread would be if you argued: the satellite moving at 7.8 km/s actually causes the earth to spin 8 km/s faster, so trying to make the satellite move faster makes it go slower! Applying acceleration doesn't help! No. Making the satellite move faster generally makes it move faster. Building more housing generally makes it cheaper. Let's not do the HN thing and get lost in pedantry.
ghostly_s 7mo ago
the snark is quite rich when reading beyond the headline makes clear this was anything but a free market solution.
- mgfist 7mo ago
  OP wasn't talking about free markets but supply and demand.
- thesmtsolver2 7mo ago
  You should read again. The reforms made the market more free.
tkel 7mo ago
There's loads of other inefficiencies as well. Moving is a huge hurdle. It's difficult to find housing that meets dozens of conditions, and even then you don't respond to supply + demand imagined equilibrium, you pay more or pay less to live near friends or family. It's something you only do a handful of times in your whole life. Trying to use the same analysis as for buying a can of beans is absurd. You might need to take econ 201 before you understand why econ 101 is wrong about housing.
- paulnpace 7mo ago
  I'm not clear: does Econ 201 inform us as to how demand and supply are not related to price?
  - fragmede 7mo ago
    it says "it's complicated".
  - tkel 7mo ago
    Yes, you learn why supply + demand curves do not actually describe many markets
    - paulnpace 7mo ago
      So, if instead of installing a bunch of apps, setting up search filters, and refreshing browser tabs on my phone ever 15-30 minutes, then the instant something meets my parameters I immediately leave work and, if possible, make a deposit on a new place, I open an app and find 5000 places meeting my requirements, meet them when I'm not working and on my time, and tell them I like a different one better so I'll hold off before making a decision, makes no difference on the price?
- triceratops 7mo ago
  > It's difficult to find housing that meets dozens of conditions Correct. That's why when there's more housing you're more likely to find what you need.
- 7mo ago
cm11 7mo ago
I don't think this is simple econ 101. Yes with more houses we should expect lower prices, but also with high prices we should expect more houses produced. All that is econ 101, but that second econ 101 prediction isn't happening. I would guess that some will chalk it up to vaguely (though not necessarily wrong) jerks/idiots blocking it. Whether it's because nimbyers want to keep their home values (what we should expect from econ) or it's broken city politics, there are lots of things going on here. It's more complicated.

Yes, it describes human nature better than psychology. We can’t fight even knowing about it.

tkel 7mo ago

They also teach you about elasticity in econ 101. It's foolish and anti-intellectual to insist that the housing market has only two factors, while simultaneously condescending about your understanding of economics shows that you really don't understand economics, it's more about your ego.

JumpCrisscross 7mo ago
> It's foolish and anti-intellectual to insist that the housing market has only two factors Elasticitiy moderates the effect. It doesn't reverse it. Increasing housing supply decreases housing costs. A lot of people are venally or ideologically motivated against accepting this. Our housing crisis is a political choice. (Note: I'm a homeowner.)
- mr_00ff00 7mo ago
  This reminds of a fun fact I remember learning in university. Elasticity is the relationship between demand and supply, and there are actually very rare instances where it can be negative (where demand increases with price). These are called Giffen goods. https://en.wikipedia.org/wiki/Giffen_good https://en.wikipedia.org/wiki/Giffen_good Explanation (that I remember) Inelastic demand is when a good is demanded so much, that an increase in price has little affect on the total quantity (people still demand it, think like addictive substances) So a perfectly inelastic product would be a straight line where any amount is demanded at any price. So having the curve keep going it would get a positive slope, where higher price makes demand go up. If I remember the example I was given was food during a famine. Supply is already low, but an additional pressure on price is the known shortage. The idea being that as the price goes up people see it as harder to get. It’s been so long since I studied the subject so I might have gotten some things wrong here.
  - JumpCrisscross 7mo ago
    Cool! Thanks!
  - thaumasiotes 7mo ago
    > These are called Giffen goods. The terminology is actually split; sometimes they're called Giffen goods and sometimes they're called Veblen goods. The two types have identical behavior, so there's no good reason to have two different names, but in concept Giffen goods are something poor people buy, while Veblen goods are something rich people buy. (There is a difference if you're willing to look at responses to changes other than a change in the price of a good: if you give a household more money, it will increase consumption of Veblen goods, but decrease consumption of Giffen goods.)
- peder 7mo ago
  > A lot of people are venally or ideologically motivated against accepting this. That’s the story of the last 10 years among certain types that keep regurgitating obviously wrong concepts.
  - JumpCrisscross 7mo ago
    > That’s the story of the last 10 years The urban orthodoxy is around demand rationing. Supply-side arguments are incredibly new. The evidence cuts in one direction. (Unless we want a hukou system.)
Aurornis 7mo ago
The parent comment never claimed that the housing market only has two factors. You’re arguing against a strawman of your own creation.
deleted 7mo ago
[deleted]

muyuu 7mo ago

it's crazy that people nowadays seriously question basic market pressure being a thing

lesuorac 7mo ago
Eh, people really need to be questioning econ 101 more often. It's built upon untrue assumptions - infinite buyers / sellers - perfect information - no switching / transaction costs --- The article itself has 3 different year ranges provided so I'm not sure how you can use it as evidence. Plus overall the rent is still up by a lot since 93% - 4% is still at least 80%. - Rents increase by 93% from 2010 to 2019 - Housing increase from 2015 to 2024 (this overlaps with when rents increased ...) - Rents fell from 2021 to 2026 by 4%
- pembrook 7mo ago
  Ah yes, that 150 year old meme reflexively copy-pasta'd by internet commenters since the days of usenet to refute basic concepts like supply and demand. "Lol economists are dumb they think humans are robots!" No they don't. Sorry, we won't be throwing away an entire field of human endeavor based on a straw man caricature that isn't true. We don't call physicists dumb and throw out their ideas because the real world isn't a perfect vacuum either. They know this, don't be silly.
  - lesuorac 7mo ago
    We do throw out everything from physics 101. The movement of satellites is not modeled using distance = speed * time. It would do well to consider if econ 101 is an accurate way to model the world since for other domains the 101 course is not.
    - pembrook 7mo ago
      Yet the overwhelming factor in modeling the movement of those satellites is still distance = speed * time. The existence of nuance and external factors don't negate the original principle. The equivalent to arguments made by 'economics deniers' in this thread would be if you argued: the satellite moving at 7.8 km/s actually causes the earth to spin 8 km/s faster, so trying to make the satellite move faster makes it go slower! Applying acceleration doesn't help! No. Making the satellite move faster generally makes it move faster. Building more housing generally makes it cheaper. Let's not do the HN thing and get lost in pedantry.

ghostly_s 7mo ago

the snark is quite rich when reading beyond the headline makes clear this was anything but a free market solution.

mgfist 7mo ago
OP wasn't talking about free markets but supply and demand.
thesmtsolver2 7mo ago
You should read again. The reforms made the market more free.

tkel 7mo ago

There's loads of other inefficiencies as well. Moving is a huge hurdle. It's difficult to find housing that meets dozens of conditions, and even then you don't respond to supply + demand imagined equilibrium, you pay more or pay less to live near friends or family. It's something you only do a handful of times in your whole life. Trying to use the same analysis as for buying a can of beans is absurd. You might need to take econ 201 before you understand why econ 101 is wrong about housing.

paulnpace 7mo ago
I'm not clear: does Econ 201 inform us as to how demand and supply are not related to price?
- fragmede 7mo ago
  it says "it's complicated".
- tkel 7mo ago
  Yes, you learn why supply + demand curves do not actually describe many markets
  - paulnpace 7mo ago
    So, if instead of installing a bunch of apps, setting up search filters, and refreshing browser tabs on my phone ever 15-30 minutes, then the instant something meets my parameters I immediately leave work and, if possible, make a deposit on a new place, I open an app and find 5000 places meeting my requirements, meet them when I'm not working and on my time, and tell them I like a different one better so I'll hold off before making a decision, makes no difference on the price?
triceratops 7mo ago
> It's difficult to find housing that meets dozens of conditions Correct. That's why when there's more housing you're more likely to find what you need.
7mo ago

cm11 7mo ago

I don't think this is simple econ 101. Yes with more houses we should expect lower prices, but also with high prices we should expect more houses produced. All that is econ 101, but that second econ 101 prediction isn't happening. I would guess that some will chalk it up to vaguely (though not necessarily wrong) jerks/idiots blocking it. Whether it's because nimbyers want to keep their home values (what we should expect from econ) or it's broken city politics, there are lots of things going on here. It's more complicated.