Katherine Levine Einstein on Neighborhood Defenders
Dec 14 2020

Neighborhood-Defenders-200x300.jpg Why is affordable housing in such short supply? Author and political scientist Katherine Levine Einstein of Boston University talks about her book Neighborhood Defenders with EconTalk host Russ Roberts. Einstein focuses on the ability of local residents to use the zoning and permit process to prevent development of housing or to reduce the amount of housing that can be built.

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Explore audio highlights, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.

READER COMMENTS

John Alcorn
Dec 14 2020 at 3:08pm

Kudos to Katherine Levine Einstein and co-authors for meticulous empirical research about sociology, psychology, and politics of neighborhood zoning! Case studies provide insight into major policy problems.

Surprisingly, the conversation barely touches on market remedies to harms from increases in density. Is Coasean bargaining — e.g., developers compensate neighborhood residents for congestion — never more efficient than traversing a zoning board’s obstacle course? It sounds like campaign contributions are a partial, weak substitute for Coasean bargains.

Neighborhood defense functions as a closed system by making it very hard to construct new infrastructure (e.g., roads, airports) and other complements to new housing.

Prof. Levine Einstein looks to States, or to the Federal government, to fix local zoning, by superior regulations and subsidies with strings attached. However, these overarching policies would backfire. In the real world, regulations typically restrict supply. Subsidies increase demand. If you restrict supply and subsidize demand, you get high prices.

Bryan Caplan’s dictum: Keep your eye firmly on production. Open supply will achieve “access” to housing.

A specific effective reform would unbundle housing and schooling. But that bundle is an entrenched political equilibrium.

If Coasean bargaining is impractical, and if bigger government involvement will backfire, and if unbundling housing and schooling is unthinkable, then we’re stuck with hoop jumping, palm greasing, and insufficient construction.

Ethan
Dec 14 2020 at 4:04pm

Great topic in which I have a lot of first hand experience in my small corner of the world.

There is something that has always bugged me about gentrification as a term and as a phenomenon.  I think anyone that uses the term is hinting at a racial subtext and calling out an era in which red-lining and other racial power dynamics were absolutely a force in some parts of the country.  But I am skeptical that this plays a major role in the process today.  I think this subtext is used to stifle anyone that even hints at the idea of supporting demolishing old housing or improving a neighborhood for fear of being racist.  The conversation hinted on the other end of the racial issue, in which people may not want new housing for racial reasons, which is of course execrable.  But the racial specter is also invoked, as the guest did, when she hinted at Boston neighborhoods being developed that have been historically black.  Can someone, anyone PLEASE, tell me in what way specifically the gentrification would be harmful?  New housing, better restaurants, more shopping options, nicer streets, broader tax base? Besides a few renters being displaced, which I admit is hard, especially as people get older, the positive externalities of a neighborhood removing blight seems like a net positive for most everyone.  I know Chris Arnade would claim that we need to be more cognizant of the costs, but it really bothers me that gentrification is almost made to sound like a trail of tears will result building is done.  Also, is it feasible that the disparity is an economic one? And race is being invoked as a spurious correlation? I would love to learn why I am mistaken, but I have not seen any evidence that development is bad.

Second, I think a generally ignored phenomena of all the delay mentioned is cronyism by the developer.  I live in a small college town where building anything takes two years of wrangling by the developer to get the community to agree.  This is ultimately good for the developer.  In fact there is only one in the town that builds.  I know many people who have lived in their housing, and they are not slum lords, but they face no competition and they take advantage of renters.  They are the only ones who can pay the carrying costs have the know how to estimate how much navigating the process will cost.

In this town I rented a house that cost a fortune in which the landlord had not put a penny into the single family home (on a large lot) since college housing has boomed (Mid 90’s maybe?) and she had no incentive to so.  Even if she wanted to turn the family home into a three story 4 unit building she could not afford the studies and massive investment in ensuring the town was happy enough to allow it.  The large developer has every incentive to make sure she cannot face those costs.

Grace
Dec 15 2020 at 12:23pm

Can someone, anyone PLEASE, tell me in what way specifically the gentrification would be harmful?

People in the area may have been able to just get by and pay their rent/mortgage. But then the property tax goes up, the rent goes up and they can no longer afford it. It’s usually not “A few” displaced people, it’s a large chunk of the neighborhood. Affordable housing gets redeveloped but no new affordable housing goes up to replace it. You get situations like San Francisco were only rich people can live in the city and surrounding suburbs (where jobs and services are) and the poor people in the service industry that serve the rich people have to commute 1-2 hours to work, shop, access services or have to pay $1200 to rent a small room in someone else house. (I personally have lived this experience)

If during the gentrification process, the affordable housing there presently could be preserved and more affordable housing was added along with the new trendy shops, that would be another thing. Also having a variety of affordable rates. $1200/m may be affordable to some but to others that’s way out of range.

 

Todd
Dec 14 2020 at 5:34pm

A very interesting discussion about the challenges to housing development presented by governmental intervention.  Dr. Levine Einstein goes on at great length about all of the hardships brought about by governmental intervention into developing and then shares this comment:

“I really think that the Federal and state government and massive funding from those levels of government is going to be a lot more effective in providing subsidized housing that we desperately need compared with using zoning requirements that actually make it more challenging to build. ”

I doubt that more of the same is going to improve this situation.  Weren’t massive federal subsidies tried with LBJ’s Great Society in the 60s and ended up being a terrible idea?

As I listened I could hear the following in Dr. Roberts voice:

There are no solutions, only trade-offs.
The curious task of economics…
The discussion with author of the Idealist and how good intentions of “Idealists” ended up ruining the lives of the people who they intended to help.

As I get older, I find myself less and less confident in the ability of the federal/state governments to solve problems through large interventions.  I tend to see solutions coming from allowing people to exercise their individual rights and government restraining some administrator’s ideal on others.

John.J
Dec 14 2020 at 7:55pm

One overlooked dimension is the time invested by the owner of an owner-occupied house in a neighborhood.

A relative has lived in Raleigh, NC since the early ’80s. They were shocked to witness the mass migration to the Southern states and how long-established neighborhoods were bulldozed in the name of progrcess driven by the Northerners who had only lived there at most a few years.

They thought a voting method where the owner would get one vote for each year they had lived there was a more equitable way of determining which projects would proceed.

Rob
Dec 15 2020 at 12:05pm

It doesn’t seem to me like people should get any extra say just because they’ve lived somewhere longer. That’s just a recipe for stagnation and turning places people want to live into museums, even more than we do already.

I’m closer to the view that people shouldn’t get any say over what gets built on other people’s property except in the most extreme cases. If you don’t like how a place is naturally evolving, move.

Winston
Dec 19 2020 at 1:26pm

Telling people to “just move” in response to changes they don’t like assumes zero transaction costs and ignores the negative externalities of moving, especially for families with children.  Also, your argument fails to account for the positive externalities of social cohesion brought about by neighborhoods with relative stability.  There needs to be a balance between stability and dynamism

Rob
Dec 23 2020 at 8:43pm

Isn’t that the trade off of living in a thriving and growing community? That in order for things to grow, change has to occur? If one is moving because apartments go up in a city, then maybe somewhere more rural will be better suited to one’s family.

(Different Rob)

Meyer Jacobson
Dec 14 2020 at 10:08pm

I am sympathetic to the guests concerns but couldn’t help but be turned off from her constantly referring to this that want to stop development as rich white people. Russ tried to steer her towards class issues and other reasons aside from race. Focusing on race also means she is missing other causes and missing some important issues and solutions. Disappointing.

Interesting that Russ was more focused on cities that stop development and Ms. Levine Einstein seemed more focused on suburban development issues.

 

Todd
Dec 15 2020 at 9:23am

Excellent observation.  I also observed that the rich white suburban communities that she was referring to would consider themselves some of the most progressive communities in the nation and not the segregationists that Dr. Levine Einstein viewed them as.  Additionally, if rich politically influential people have built the current system, what makes her think an administration change at the federal level will change the current situation.  The most rich and politically connected communities will remain as they are, segregated and closed off to all but the most elite.

Rob
Dec 15 2020 at 12:07pm

What’s the reason to think their preferences aren’t, at least in part, racially motivated, as well as motivated by a desire for class segregation?

Seems very plausible.

Kevin Ryan
Dec 17 2020 at 4:27am

Russ likes to raise the Bootleggers and Baptists coalition when this topic is discussed, but I think what gets overlooked is that this applies on both sides of the argument.

Specifically, economists may well have good reason to favour development.  But I would suggest that the developers are inherently Bootleggers – no insult intended, they are naturally following their self-interest.  But what is then useful is a good quasi-Baptist cause to hitch to the drive for less restrictive development.  Anti-racism fits this bill pretty well at this present time – helped by the fact that it is probably present to some degree in most of us, and its existence is impossible to disprove.  Easier to push this than to admit that you don’t really care about the interest s of the current homeowners if/as they are blocking a greater good

Christopher
Dec 15 2020 at 12:15pm

I too think Levin Einstein invoked race unnecessarily and to a degree that is unlikely to win her allies outside the identitarian left. Having lived in several wealthy, NIMBY communities, I am confident that most of these ‘neighborhood defenders’ would much prefer a two-parent black family of similar income level to move into the house next door, rather than see that neighboring house converted to a fourplex rented to white households who are, say, single parents or college aged roommates. While there may occasionally be some racial motivations to opposing development, and racism certainly they played a major role in zoning’s history, I believe most of the contemporary NIMBY animus towards more density is based on classism and a fear of neighborhood change threatening their largest investment (which is likely their retirement plan too).

I was also a little disappointed that the discussion didn’t touch on parking minimums, which are a pernicious factor in the housing crisis equation. Anecdotally, fears of parking scarcity are the most common appeal made in my city when new developments are proposed. Most cities that have begun to allow ADUs to be constructed are requiring one or two off street parking spaces to accompany the units. This undoubtedly reduces the number of ADUs built by a large degree. All because homeowners think they have a right to the public asphalt. We need to find a clever way to introduce a pricing mechanism to street parking that varies based on demand. We need to stop subsidizing the storage space for an asset which often sits idle for 23 hours a day, is a leading contributor to climate change, and which is antithetical to the whole idea of walkable communities.

Back to zoning: To me, it seems like we need simplified zoning imposed at the state level in which the lowest tier of neighborhood zoning allows for uses such as single family homes, granny flats, townhomes, fourplexes, and neighborhood commercial uses (bakeries, day care, dry cleaning, coffee shops). Developments in these lower scale categories should be able to be built by-right, with no community whining, grift or undue delay. Near transit and arterial streets, there should be a zone of higher intensity that would allow walk up apartment buildings and be more permissive of commercial uses (there could also be more high density/high rise zones and ones more focused on industrial or office uses). This is similar to how it’s already done in places like Japan and Germany.

John P.
Dec 15 2020 at 1:45pm

I found this discussion frustrating. It was frustrating partly because there seemed to be an underlying, unstated assumption that the “neighborhood defenders” are necessarily wrong to want what they want. And it was frustrating partly because there was little or no acknowledgement that higher-density and/or lower-income housing has some negative externalities, such as upward pressure on tax rates and downward pressure on property values.

In addition, I’m not ready to concede that the guest accurately portrayed the neighborhood defenders as the side with the greater power in struggles with developers. The neighborhood defenders may be noisy, but in a dispute, the developer is usually the better-organized, better-advised, better-funded, and more-focused player, and (in my experience) the one much more likely to sue a local government.

Christopher
Dec 15 2020 at 6:14pm

City councilors have to worry about reelection and placating the louder members of their constituency, who are disproportionately well off homeowners. Who’s showing up to meetings to represent the interests of the theoretical future residents of a new housing development? While very large developers with deep pockets might have sway to win over some council members, the small local developer or the current homeowner who wants to convert their single home into a duplex doesn’t have that ability and are easily rolled over by the neighborhood preservationists. I’ve seen it happen many times in my city.

Christopher
Dec 15 2020 at 6:34pm

Also: although the position is quite rational from a self interested point of view, the typical neighborhood defender is wrong to “want what they want”. It’s pure rent seeking. It’s the same reason populists are wrong when they argue against immigration. Sure it’s rational to fear reduced wages from labor competition and the discomforting social changes brought about by allowing people who didn’t win the birth-geography lottery to become your neighbors. That doesn’t make it right to deny them the opportunity to live in your neighborhood and to enjoy the amenities you enjoy but did not create.

Kevin Ryan
Dec 16 2020 at 4:08pm

I think you are quite right to draw this analogy with immigration, and I wish that Russ would find a way of raising this more explicitly in one of his Econtalks on restrictions on real estate development

Floccina
Dec 16 2020 at 3:22pm

The powerless are those who would like to live in the area but cannot afford it.

Kevin Ryan
Dec 16 2020 at 4:11pm

Quite so;  and at the risk of my making the same point twice, this is analogous to the lack of power of potential immigrants in the absence of open borders

Patrick Morris
Dec 27 2020 at 1:16pm

John, as a San Franciscan, who has lived through decades of building department corruption, including recent arrests by the FBI, I couldn’t agree more. Officials and their cronies who line their pockets always push the “affordable housing” and NIMBY buttons. It’s frustrating to not hear this aspect addressed.

Al McCabe
Dec 15 2020 at 7:08pm

Early in my educational career, like primary school, a teacher explained to me that judging people by race was a wrong and a mistake because it is so easy to recognize it, generalize by it, and the impact of the judgement is so impactful.

Later when I got to college, I learned that vast amounts of the social science studies and literature is about race, because the data is so easy to collect, generalize by, and the judgments made are so impactful.

Floccina
Dec 16 2020 at 3:05pm

I went to a planning meeting once and most of the objections were down right comical. It’s like the people with the craziest ideas come out for those meetings.

John Alcorn
Dec 18 2020 at 10:28am

In a previous comment, I wondered aloud, Why don’t housing developers bargain to agreement with neighborhood defenders, and compensate them for any expected increase in congestion? Why don’t market solutions emerge?

In the meanwhile, I noticed that psychologists have addressed this type of question. A brief detour will clarify the issue. In a recent op-ed in The New York Times, George Loewenstein and Cynthia Cryder discuss proposals, by distinguished economists N. Gregory Mankiw (a moderate conservative) and Robert E. Litan (a progressive), to increase uptake of new vaccines by paying people to vaccinate. In other words, the economists propose to use financial incentives to remedy mistrust.

Psychologists Loewenstein and Cryder argue — experimental evidence in hand — that incentives backfire in contexts of mistrust:

“Humans don’t respond to incentives like rats pressing levers for food; they try to interpret what being offered payment means. In this case, the offer risks implying that the vaccine is not a thing of value. [… .] when people aren’t sure whether something is good or bad, the prospect of payment helps them decide, in the negative. [… .] People are also likely to infer from payment that the vaccine could be risky. [… ] payments might also make people less likely to get vaccinated for the selfless goal of helping others. Research shows that paying people to take altruistic actions often backfires.”

I must admit, it looks these psychological mechanisms are directly relevant also to neighborhood mistrust of new housing development. Attempts to use financial incentives (side payments) could exacerbate neighborhood defenders’ mistrust of development.

DK
Dec 21 2020 at 10:15pm

I don’t think bargaining will necessarily solve things due to the holdout problem or groups in opposition asking for untenable concessions under the guise of negotiation knowing full well the developer can’t pencil out the project.

John Alcorn
Dec 22 2020 at 1:23pm

Eric Posner and Glen Weyl propose a radical market reform to solve the holdout problem: See the EconTalk, “Glen Weyl on Radical Markets” (21 May 2018). The gist: Property owners designate the value of their property for tax liability, but must sell the property if a buyer then offers more.

A radical idea that has yet to inspire a movement.

Bill Tubbs
Dec 18 2020 at 12:34pm

Enjoyed the discussion, thanks, but somewhat disappointed in the lack of genuine solutions at the end (other than more people attending hearings for example).

What about the very nature of property rights in large urban centres?  The notion that an individual can buy indefinite usage rights to a portion of land and the notion that these include the right to influence the nature of any development next door or in the surrounding area. Surely, this could be looked at as part of the problem.  Or put another way, the notion that a home-owner should not expect to have to move at some point because the land/location changed or no longer satisfies their preferences.

Obviously, there are important benefits to ownership rights and it’s hard to revoke existing rights but ownership does not have to be a pure ‘black-and-white’ concept. Is there any way to reform property rights so that they shift away from complete ownership towards (but not completely to) a lease thus allowing the city to retain more control of land use and zoning in the long term?

Ben Riechers
Dec 19 2020 at 11:15am

I almost drove off the road when Dr. Levine Einstein suggested that the Biden Administration should have a role in local zoning codes.  I am still hanging on to the possibility that we are a country where leaders persuade people rather than dictate to them.

Part of persuasion is the involvement of stakeholders in the decisions. Decision-Making 101: Involve all the people who are critical to getting the decision right AND all the people critical for the execution of the solution.  What are the ideas that the people facing these challenges have?  Do they want to be parked in big apartment buildings?  Maybe we should give a housing allowance to the poor (regardless of race) and get the government out of the marketplace.

Feedback, feedback, feedback.  The more that decision-making is local the more likely it can mimic the power of free markets in a free society and one of its most powerful attributes is the speed at which feedback is incorporated into products and services. The federal government is terrible at feedback. How many programs are still in place that have been universally recognized as having failed to achieve their objectives and in fact, are often counterproductive.

Instead of arguing theories, show us the successes we should mimic.  What can we learn from them?  What went well?  What not so well? What resolutions did those cities and counties establish to guide their decision making? How big are they?  Were they industrial, service oriented, or maybe bedroom communities?  Were they college towns?  Were they capitols of states?  While governments, especially central governments in democracies, are slow, people can act rather quickly.  Show us the way and we will follow like sheep.  Force us and it will be like herding cats, angry cats.

Finally, I am really tired of experts, politicians, and people who should know better taking one variable out of 1,000 and telling us that managing that one variable will have a positive and linear relationship with a desired outcome.  And can we stop promoting the government’s use of race to decide policy.  Part of the reason it is against the law is that it is morally repugnant.

Lisa Turner
Dec 20 2020 at 5:32pm

I had trouble long before she brought up the Biden administration, I was astonished when she, who had been appointed to a planning board, kept going after people who came to voice their opinions on what was going to change in their community.  She states, “what we really need to achieve more optimal outcomes. ”  More optimal by whose judgement?  She seemed to think there were better people to decide about what happens in a community than the people who live there, which makes me very sad.  More tyranny of experts, with no regard for the lives affected.

I think that yes, the noisiest and sometimes the craziest come out to public hearings, but also the people who are most concerned about a change because it will affect them the most.  I think they have more of a right to try to shift the outcomes than people who don’t live there, or who don’t care about it enough to go to a public hearing.

I was also disappointed when she listed the demographics of those who spoke for and against proposed changes without comparing those demographic percentages to the people who lived in the potentially affected communities.  People who own homes are older, they chose to buy a house in a neighborhood where they wanted to live, so of course the people who don’t want the change in zoning are going to be older than the ones who want it, young people are less likely to own those homes.  The demographics of who is speaking at a public hearing is only relevant in comparison to the group they are representing.

Eric
Dec 21 2020 at 2:42pm

Lots of great comments, including some differing views on whether or not the concerns of existing homeowners ought to be incorporated into the process. On this point, it would have been nice to hear Russ acknowledge – as he has recently in other episodes – that intangibles such as beauty, a sense of place, a sense of belonging, etc. are also things that matter to human beings (regardless of race, which unfortunately is intertwined with this issue in a complex way). As the commenter Winston alluded to above, issues such as housing development are where the rubber meets the road in terms of how much we let the dynamism of the larger economy into our lives. Contrary to the guest’s suggestion, I’d rather see these issues get sorted out at a local level versus at higher levels of government.

DK
Dec 21 2020 at 10:21pm

I’m all for preserving a neighborhood vibe but at what expense? We have a housing crisis on our hands in the most vibrant metro areas where people either can’t access upward mobility, are living in substandard housing (like Oakland’s Ghost Ship), or are homeless. Does that enhance the neighborhood? Go too far in ‘preservation’ and you risk relegating the city to a museum for the landed class.

John Alcorn
Dec 22 2020 at 1:49pm

Robert C. Ellickson (Yale Law School) has a major empirical research project about property law and residential mobility. The project is organized around case studies of Silicon Valley, greater Austin TX, and greater New Haven CT. He has posted several working papers from his project at SSRN.  Some preliminary findings:

“Many covenants undoubtedly generate value, particularly when a restricted development is young. As covenants age, however, they are likely to become outmoded. […] the rigidity of land uses in much of urban America creates colossal problems. This inflexibility harms the national economy, inflates housing costs, and inhibits internal migration. Although public land use controls have been the primary cause, private covenants unquestionably also have contributed. Lawmakers should recognize that covenants commonly have value while in their teens, but not in their dotage.” (Stale Real-Estate Covenants)

“[…] local zoning politics typically freezes land uses in an established neighborhood of detached houses. The consequences are profound. Single-family neighborhoods constitute a solid majority of urban land in the United States. Within these frozen neighborhoods, real estate markets cannot respond to changes in supply and demand conditions. The Article marshals a variety of evidence to prove that the zoning strait-jacket exists. It also discusses possible exceptions to it. The most plausible is proximity to a newly opened transit node, an event that may transform zoning outcomes, even in a neighborhood of houses.” (The Zoning Straightjacket)

“Municipal zoning, shockingly, may be the most consequential regulatory program in the United States. The Article develops metrics for measuring the extent to which a locality’s zoning practices are exclusionary, that is, limit the possible construction of least-cost housing. It applies the metrics to actual zoning ordinances and zoning maps, materials that legal scholars have seldom closely appraised. [… .] Federal initiatives would be risky because mistakes, if made, would be national in scope. Many Beltway lobbyists likely would urge Congress to enact massively wasteful policies, such as a National Housing Trust Fund or mandatory inclusionary zoning.  […] In 1922, Herbert Hoover, a Stanford graduate and then Secretary of Commerce, appointed an Advisory Committee on Zoning. The Committee quickly published a Zoning Primer, and in 1924 issued the Standard State Zoning Enabling Act. Hoover’s support helped fuel the spread of zoning in the United States. The Committee’s work was based on a potentially sound premise: the risk that unregulated real estate markets produce too many nuisance-like land uses. Since the 1920s, however, many local governments have learned to use zoning powers to inflict new negative externalities. Silicon Valley localities do this, for instance, when they limit the housing opportunities of non-residents, and prevent their metropolitan area from enjoying the many benefits of greater density. It is time for state legislators to take notice. […] To counter neighborhood NIMBYism, state legislatures should either preempt local discretion over what can be built, or reward localities that allow denser housing.” (Zoning and the Cost of Housing)

Patrick Morris
Dec 27 2020 at 1:10pm

Three points in rebuttal, specifically about oft-said “NIMBY” San Francisco:

1/ San Francisco’s development office is and has been driven by corruption (witness the recent arrest of our Public Works Director Muhommaed Neru, for one), an open secret to anyone who lives in San Francisco. Building “affordable housing” and other projects is often not resented for NIMBY reasons, but about our dishonest system.

2/ The last large scale building of “Affordable housing” brought S.F. the Tenderloin. Hardly a success, as many horror stories of past tourists convey.

3/Our street is full of large 3-4 story homes, many inhabited by retired couples. Prop 19 is a start, but should be other incentives to free up these large, mostly empty homes.

Brennan Reilly
Jan 6 2021 at 10:27pm

I don’t understand the desire to abrogate property rights.  When I bought my home, I bought it knowing the zoning rules that limited development of my neighbor’s property.  If those rules allowed a disco or restaurant or donut shop or apartment, I would have demanded a lower price (or not bought at all).  I live in a zoned city inside of unzoned Houston, so those tradeoffs are routine here.  The desire to rezone for denser development is just a taking from those who bought under the prior regime.  If you want to do that, then buy me out in a voluntary transaction.

Comments are closed.


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AUDIO HIGHLIGHTS
TimePodcast Episode Highlights
0:33

Intro. [Recording date: November 13th, 2020.]

Russ Roberts: Today is November 13th, 2020 and my guest is political scientist and author Katherine Levine Einstein of Boston University. She is the author , with David Glick and Maxwell Palmer, of Neighborhood Defenders: Participatory Politics and America's Housing Crisis.

I want to thank Plantronics for providing today's guest with the Blackwire 5220 headset.

Katherine, welcome to EconTalk.

Katherine Levine Einstein: Thanks for having me.

0:58

Russ Roberts: Now, your book drills down deeply into one aspect of the housing market that I think is incredibly important and under-appreciated. And, it's a factor that I confess I hadn't thought enough about. Let's start with the title , Neighborhood Defenders. What does that phrase mean and why are neighborhood defenders important?

Katherine Levine Einstein: Yeah, so the way that housing gets built in most places involves a public permitting process. So, essentially in most communities, because of the way that land use regulations are set up, wh enever you want to build more than one unit of housing, more often than not, you have to get special permission either in the form of a special permit or a variance to essentially have the governing body sign off and say, 'Yes, you can build this here.'

And, so in most communities that involves a public hearing where members of the public, their views are officially solicited as part of the process. And, so in a lot of accounts, we think of some of the people who show up to these hearings as NIMBYs--people who have Not In My Backyard sentiments about housing.

And, we take a slightly different tack in thinking about the folks who show up to these hearings often in opposition to the construction of new housing. So, in our book, we call them 'neighborhood defenders.' And, we borrow this term, actually, from research on school desegregation and the folks who sort of fought it back in the 1960s and 1970s.

And, the reason that we think that 'neighborhood defenders' actually is maybe a better term to use for opponents of housing as compared to NIMBYs, is it better captures both their motivations and the reason that they're successful in persuading public officials.

So, first on the motivation side, the term NIMBY implies sort of a selfish motivation. It implies, Not In My Backyard, a very individually motivated view. And, in our research, we actually find that the folks who show up to oppose the construction of new housing often view themselves as representing their community's interests and are motivated by protecting their neighborhood, their surroundings. Right? So, their motivations are not so individualistic.

The second reason that we think neighborhood defenders is a helpful terminology, is it helps us to understand why these folks are so successful at persuading planning board officials, zoning board official, city counselors. So, if those public officials saw these opponents of new housing as just purely selfishly , individualistically motivated, they would be unlikely to hold the same political impact as a group of folks who are sort of representing the neighborhood's interests. And, so we think the term is useful both for understanding motivations and this broader political influence.

Russ Roberts: Yeah. I'm going to push back on both parts of that if I might . I'm kind of surprised at the way you described them, because in your book, you're not quite, as I would say, sympathetic to the defenders as that description suggests. So, I just want to alert listeners that that probably is not going to be the central theme of our back-and-forth.

But I do want to talk about a couple of things that you just said. One is: I agree with you. It's a more accurate term than Not In My Backyard on paper, because like you say, most of the time they're invoking neighborhood concerns; they're not saying, 'I want to defend my property value.' But, they they wouldn't. That doesn't sound good. So, they do couch their defense in a more altruistic sense. Longtime listeners will know about this--one of my favorite phrases, coming from Bruce Yandle--bootleggers and Baptists. The bootleggers like the ban on Sunday liquor sales because it increases demand for their services, and the Baptists like it because it's the Lord's day. So, the politician can say, 'I'm defending the Baptist,' while taking money from the bootlegger.

So, we often couch our self-interested urges in altruistic or more moralistic terms. So, this to me is one of those cases. Of course, it could be both. But, obviously some people are self-motivated.

And I want to add--I don't think you talked much about this in the book--I want to add politicians and planning board members and council people in these processes, to self-interested people because you suggested that they will stop a development because it's good for the neighborhood. But I think they're just often just voting for things that they think their constituents want--for whatever reason. Do you want to react to that?

Katherine Levine Einstein: Yeah. So, I think a couple of really important points there. So, first , community interest sounds good on its face, but as I mentioned, we borrowed this term neighborhood defender from literature on school desegregation. And, I think we tend not to think of most of the opponents of school desegregation in the 1960s in a really sympathetic light today, sort of as we think about more progressive racial attitudes. And, so I would argue that community interests can actually be quite sinister when we think about potentially showing up to these hearings wanting to maintain communities as privileged white communities.

So, you are absolutely right to characterize--what we talk about in the book is not always in the most sympathetic light: that we think that the folks who show up to these hearings are often using their privileged position in society to keep other people from moving into their communities.

The second point you raised that people are good at disguising their motivations . I totally agree with. I think fundamentally, one of the questions that I get asked a lot about our research is, like, 'How much does racial fear motivate people to show up to these hearings?' And, sometimes you'll get people saying, like, really explicitly racist stuff about new housing developments, to low-income people moving into their communities.

But, for the most part, people know that if they say something super racist or classist at one of these hearings, one, it could potentially trigger on the race side potential fair-housing issues and fair-housing litigation.

But, even putting aside that threat of litigation, it also undermines your efficacy to use that language. So, I agree with you that people may be very strategic in their thinking about either their own racial fears or their own selfish property-value concerns, but they know that that's like less persuasive as language.

7:20

Russ Roberts: So, the book is a--you've done--it reminds me a little bit of Allan Meltzer's History of the Federal Reserve. I think Allan is the only person in human history to have read all the minutes of the entire Federal Reserve Board--while he was alive anyway, up to his death--or at least a long time. You've poured over a lot of minutes' of these hearings. Talk about the kind of concerns that people raise that you've noticed. And your database is Massachusetts, but there's a lot of similarities across areas.

Katherine Levine Einstein: Yeah. So, for this research we read thousands of pages of meeting minutes to understand who pa rticipates in these forums. And so we learn a lot about their demographics, their positions on housing, and the reason that they take on these positions. Right? In some cases we actually have the exact transcripts of these hearings, so we can learn a lot of real richness for sort of why people support or oppose housing. Yeah.

Russ Roberts: I just want to be clear, I hope we mentioned --I've lost my mental balance here. We were talking about the fact that, to get these permits and to get these exemptions, say, from certain zoning regulations, there has to be a public hearing. So, that gives an opportunity for the community to come in. So, carry on.

Katherine Levine Einstein: Totally. I should add, too, because of sunshine laws and open meeting laws in most states, the proceedings from those meetings are recorded. So, if listeners want to do this in their own home community, they're able to pour through the meeting minutes for their places as well and learn about these kinds of proceedings.

But, we focus on Massachusetts in large part because their sunshine laws require unusual level of detailed in these meeting minutes. So, in about 50% of the cases, we're able to get detail for why people took the positions that they did.

And, I think notably--again, and this gets back to some of what we were talking about in terms of how people couch their concerns--very few people raise property values, or it's explicitly racist or classes concerns. Instead, when people are opposed to housing, they're much more likely to raise environmental concerns, or traffic concerns, or sort of vague concerns about density. So, those are the concerns.

On the support side, we find that actually people who show up--the small number of people, about 14% of people--show up to these hearings in support of new housing. And, those folks are relatively more likely to raise affordability concerns.

Russ Roberts: Who are those people that show up? Because, one of the more fascinating parts of this, of course, is that the people who might be buying these units when they're--or renting them--when they're available, are typically not--we don't know who they are. They don't know who they are at the time, because the thing is not built. The people who come are people in the neighborhood. Who in the neighborhood comes out and says, 'Yeah, build more stuff in my neighborhood and add traffic?'

Katherine Levine Einstein: Yeah. No, it's a really great question, right? So, to take a step back, and sort of how do we know who these people are? The unusual thing about Massachusetts' meeting minutes data is you're able to get the names and addresses of everyone who speaks at one of these forums. And, when you have someone's name and address, you're able to merge them with a lot of different administrative data. And, so we're able to link them with the Massachusetts voter file and also property records. So, we can learn a lot about their demographics. We can learn how old they are, whether they're male or female, what their party registration is, how long they've lived at a particular address, how old they are. And, using sort of name-matching algorithms, we're actually able to estimate the probability that they belong to a particular racial or ethnic background.

And, so using those data we're able to show that overall, the folks who show up to these hearings are a really privileged set of folks relative to their neighborhoods and their overall communities. They tend to be whiter. They're a little bit more likely to be men. But, actually the biggest disparities we find is they're dramatically more likely to be over the age of 50 by about over 20 percentage points. And, they're dramatically more likely to be homeowners, relative to renters. Right? So, those are sort of the big demographic disparities.

So, on to this question: Okay, who of those folks is actually showing up to support housing? We find that it tends to be that folks who are renters, folks who are younger, folks who are nonwhite tend to, on average--and folks who are renters, too. So, those folks are much--not 'much'--somewhat more likely to show up in support of the construction of new housing relative to homeowners, white people, and older people at these hearings.

Russ Roberts: Yeah. That makes sense.

11:41

Russ Roberts: Now, one of the most interesting parts of this analysis, and the whole structure of the project, is that is the tension that--I call it a paradox. We like to think that democracy is a good thing, and participation is a good thing, and listening to the voice of the people is a good thing. But, a big theme of this book is that the people who show up and who are influential, presumably--who the council and the board hear--are a subset. And they're not a representative subset. So, talk about that tension between the idea behind saying 'a public hearing.' Wouldn't you want a public--I mean: Let the public be heard. And yet it's not really the public.

Katherine Levine Einstein: Yeah. So, this is a huge problem in urban planning and urban policies at the federal, state, and local level. Baked into so many of these policies is the presumption that community engagement makes the planning process better: That's sort of like--that's what we really need to achieve more optimal outcomes. And, there's good reason for this: that if we look back to this disaster that was urban renewal, where there was no community engagement--it was a developer-dominated process--there were a lot of real problems and really racially disparate effects of those policies.

And, so it's understandable that urban planning and the policy makers who are responsible for implementing urban policies really shifted in favor of this community engagement approach.

But, I think the problem is we didn't really fully think about who gets empowered when we moved to this community engagement approach. And, that it isn't just the community writ large, but a powerful subset of the community. And, so I think one of the things that we hope our book does is it pushes people to think about the distributional consequences of moving to this neighborhood-oriented planning process.

In my own--I don't know what to call this--my practitioner life, I actually serve on my town's planning board. And, I can sort of say this now firsthand: It is like this gold standard of urban planning, that anytime you're proposing any kind of new zoning rule or change to the zoning bylaw, that there has to be a lengthy community engagement process. It is still viewed as this unambiguous good to have community engagement. And, I really want us to think critically about, sort of: what happens when we do have community engagement? Do we actually get better policies that reflect broader community interests when we hold these forums, when we hold these hearings?

Russ Roberts: The other part I found fascinating as an economist is the role of what economists call externalities--the classic idea in economics that when my actions affect you, my choices may not be "optimal"--a phrase I've come to hate, but economists use it all the time. You used it in passing. I don't think you used it the wrong way. But, people use it all the time in economics.

So, basically the idea is that, 'Well, we want the process to take account of not just my desire to, say, build a new building and make money, but your desire as an existing resident of that area to deal with the fact that your view is blocked now, or a tree that you love looking at is now going to be cut down, or your street is going to get more crowded because there's parking problems, and so on.'

And, so the idea behind a public hearing to capture these spillover effects makes a lot of sense. But, what it does, unfortunately, is it doesn't do it in a way that economists, or, I assume, political scientists think is great. Meaning: it doesn't calibrate how much the net gains are or whatever, and make sure that--rather the loudest, most persistent people tend to be influential.

Katherine Levine Einstein: Yeah. I mean, I think one of the real challenges of the way that we build housing now is it's become this hyper-local process where the people who show up to hearings about a two-family housing development, they're going to be the people who live in the surrounding couple of blocks. Right? Someone across town is not going to show up to that hearing to say, like, 'Yay, we need more housing.' That's just not a normal expenditure of someone's time.

And, so the problem is we aren't really, when we have those kinds of approval processes, taking into account city level or regional interests. Like, land use is such a localized process.

And, so, yeah, I think that the language of externalities is exactly right: that we don't think about the externalities to the rest of the city or to the region as we make these very hyper-local housing decisions.

Russ Roberts: It's a classic public choice issue with--Mancur Olson was I think the person most associated with this idea that small, intensely-motivated and intensely-interested groups get a lot more political influence than the people who might be harmed or benefited but it's relatively small amounts. And, so the loudest voices come from that small group.

Of course, sometimes that's good. It protects them from being exploited. There are many good things about that. But, cronyism is the downside of that. And, this is, to me your book is a really detailed picture of how that cronyism runs amok.

Katherine Levine Einstein: Yeah. You know, I think--you touch on this important issue of protecting the small--and vocal minorities, right?--from incursions from development. And, part of what we pushed for in the final chapter of our book and something we've still been thinking a lot about after having written this book is whether we should be thinking about the policy implications of these neighborhood meetings differently in privileged communities and more disadvantaged communities that are facing gentrification pressures. When we think about neighborhoods like in the city of Boston--like Roxbury and Dorchester, communities that are primarily communities of color that have borne a really disproportionate share of the city's development pressures--that maybe we should think differently about protecting those communities and their ability to fight development, as compared to more privileged parts of the city and, like, the inner core suburbs that have basically been untouched by a lot of these development pressures.

Russ Roberts: Yeah. That's hard to do of course in a general way, at least to specify it in general.

17:57

Russ Roberts: Let's talk about the other thing I think that was so extraordinary about your book. And, we've talked about many of these issues with Jenny Schuetz of the Brookings Institution in an EconTalk episode about how regulation and zoning may cause a more expensive--but your focus, your laser-like focus on the role of hearings really highlights a piece of the process that I think is extremely underappreciated. And, that's the role of delay. So, talk about delay.

Katherine Levine Einstein: Yeah. So, when we think about what happens at these hearings, typically the way that a hearing goes is that the developer presents their plans. And, then members of a planning or zoning board, they ask their questions. And then proceedings are turned over to the members of the public, who, as we document in our research, are overwhelmingly opposed to the construction of new housing.

And, so then the question is, 'Okay, what happens? How does this actually affect the housing prices, and whether or not housing gets built?' And, what we contend is that, sometimes the opposition is so fierce that it just outright kills a project and something doesn't get built at all.

But, more often what it does is it actually produces delay. So, now that I sit on a planning board, I can really understand this impulse: that after you've been yelled at for three hours by your neighbors, your inclination is to come to some sort of compromise solution. To say, 'Oh,' you know, 'let's do another parking study and a traffic study and come back in three months and we can talk about the plan again.'

And, you know, then in three months, when someone else is upset about trees, then you can say, 'Let's talk to the tree warden and we'll come back in three months. And, then we can,'--and, then after three months, after the developer has dealt with the carrying costs for six months, done these expensive studies, maybe altered the development in some way that reduces the overall number of units or increases parking--after that whole process, the project gets approved.

And, what I think a lot of urban planners have said is that: That's good. That means that the neighborhood's interests were heard, and it was a community engaged process that led to a better project.

What I think has been underappreciated is how that delay dramatically increases the cost of building in communities that are sort of notorious for this kind of delay, like San Francisco, and makes it harder to build and makes it so that we have less housing than what we need.

Russ Roberts: Yeah. And, we should mention that we're recording this in the middle of the pandemic when rents have plummeted in a lot of the cities that we're talking about. They will, I think, return to their former levels once the pandemic ends. But, ironically perhaps, this is a pretty good time to be a renter in a major American city, or a buyer. The prices are, I presume, are down also, not just rents. But I know rents are down. The role of delay--it's not just the delay, you point out. It's that the hearing itself often reshapes the project, almost always in a smaller direction.

Katherine Levine Einstein: Yeah, absolutely. So, one example that really stands out to me is a proposed four-unit development that was in the city of Cambridge in 2015, right near Porter Square, right near Mass Transit access. Each of the units was supposed to have just one parking space. And, after sort of this lengthy development review process, the developer ended up in negotiations with a neighbor, coming back and saying, 'Okay, we're going to do three housing units each with two parking spaces,' in response to the neighbor.

And, when we think about that process, getting repeated hundreds and hundreds of times over, thousands and thousands of times over if we're thinking of the country as a whole, that's going to have a marked effect on the housing supply in the places where these kinds of community opponents are most active.

21:43

Russ Roberts: Reflect a little bit on your role--the personal role, practitioner role. Because, it reminds me of a study that--I don't know if it's accurate, but it's thought-provoking--that referees, say in a basketball game, or umpires in a baseball game, favor the home team ever so slightly. And, let's say, it's true for now. I think there are two reasons for that. One of them is I've always felt there's a subconscious bias in the Commissioner's mind that we want fans to go home happy. So, we want there to be a little bit of a home team advantage so that they turn out and show up in the park. But, the other, of course, is, just as a human being, when people cheer your decisions versus booing them--I think it kind of weighs on you after a while. Like your example, you didn't talk about the book, but the idea of being yelled at for three hours by your neighbors, it's like, 'Well, okay.' It reminds me a little bit of the successful children who nag and nag the parents for some new toy or trip or something, and it's like they wear you down after a while and you want to make them happy. And, they're the ones that you're hearing. So, it's not absurd.

Katherine Levine Einstein: Oh, totally. And, in a lot of these communities, especially if we're getting outside of, like, the really big cities--so, one of the things that I want to emphasize in our research, we're talking to some extent about big cities, but also processes that are happening in much smaller local governments. And, especially, we're thinking about smaller communities--once the pandemic is done, I'm going to have to see these people at my kid's soccer games.

So, like, there is a certain--you see people who show up to these hearings in other capacities. And, I think that can potentially weigh on folks as well.

I think the other analogy I've thought about a lot in this practitioner role is actually the peer review process in academia. And, so as part of the peer review process, academics, they submit their papers to journals; and then their peers--other folks in their field--they provide reviews. And, sort of one of the problems that some people have highlighted in this process is that there's an incentive to be really critical in those reviews, and really dig into the minutiae. And, I get it: you don't want to seem like an idiot who miss something really important. And, so you dig in and try to figure out what's wrong.

And, I think the same impulse is there when you're reviewing a housing project. You don't want to be the zoning board member who is, like, 'Yeah. That looks great. Just carry on, Developer.' There's almost this inclination to find at least some nitty-gritty thing wrong.

And, the problem is when all, like, five people on the board are doing that, you end up with a situation where the developer has to come back in three months, dealing with a bunch of nitty-gritty board officials' complaints that they didn't care that much about, but they felt like they had to say something. They couldn't just say, 'Yep. You're good to go.'

Russ Roberts: Yeah. That's a fantastic, I think, insight into human nature. Reminds me of the--it's such a good story it probably isn't true, but it's so good. They take a 100 kids and they take them to the dentist or to the--who takes out tonsils? Dentists, doctors? I don't even know anymore. I think it's dentists. I'm not a tonsil guy. But, anyway, so you take a 100 people to a medical expert and they say, 'Well, 50 of these, they really should have their tonsils out.' So, then you take the 50 who didn't need them out; you send them to another set of doctors. They say, 'Yeah, about 25 of these, I think need.' Because they feel like, 'I've got to have something to do. I've got to say something. I can't just say Rubber stamp--oh, they're fine, they're fine, they're fine.' And, sometimes it's the case, the doctor might be self-interested because they want to take out the tonsils.

But, here, I think on the surface it's not so self-interested. Right now we're just talking about the emotional, natural impulse to not to look like a pawn of the developer, say.

But, the people who are making these decisions on the boards, are they paid people? Or are they all volunteer?

Katherine Levine Einstein: I think it may depend from place to place, but most of the places that I'm aware of it's actually volunteers. And, this is separately, I think a really interesting area.

Russ Roberts: Whoa. That's crazy. I didn't know that.

Katherine Levine Einstein: Yeah. And, in some places--the city of Boston actually just notoriously had, like, a bribery scandal on their redevelopment board.

But, yeah, one of my colleagues was like, 'How little do you value your time that you're doing this like three-hour, every-other-week volunteer gig to review housing in your community?' And, I do actually think that this is another understudied aspect of local government: how much we rely on volunteer labor of boards to construct policy and do some of the policy implementation, on really important issues.

Russ Roberts: Well, that just blows me away.

26:15

Russ Roberts: But that gets me into the next question. Which is: One of the striking empirical findings in the book is the variety of differences--the variety of regulation and how different it is across jurisdictions. Talk about that for a little bit, and then I'm going to ask you a question about it.

Katherine Levine Einstein: Yeah. Right. So, again, I wanted to make sure to emphasize, too, that the reason that all these regulations in our book--there are many reasons that are important. But, one of the things that we really highlight is that all of these disparate regulations end up as a path for housing developments to have to go through public hearings.

So, when your community that has a ton of different land use regulations, it is very difficult for a developer to build something, what is called 'by-right'--sort of without going through this lengthy public review process. And, so local governments are, like, super-creative in coming up with different ways to regulate. So, there's really standard single family zoning; other people call it apartment bands, where you essentially say the only thing that can be built in this community are single family detached homes. So, that's one approach that is probably the most obvious way of limiting multi-family housing.

But, there's lots of other ways--you can regulate the setbacks, how far apart different houses have to be from each other. You can regulate, like, the parcel shape that you need to have in order to build something. The septic system requirements: how far does new housing have to be from wetlands or buffer zones?

And, so I think one trick in evaluating these land use regulations is some of them seem really reasonable and are frankly, maybe things we should have. Like, I'm not convinced in an era of climate change that we should be building lots of new housing on wetlands in Massachusetts. I think it's at least worth interrogating a bit.

But, we do also know that, in the aggregate, all of those regulations increase housing prices and make it more likely that any new development has to go through this lengthy public review process.

Russ Roberts: So, talk about the variety of choices and how much it differs across jurisdictions. And, of course, a lot of these regulations--there can be an exemption or a waiver. So, there is a natural temptation to make lots of restrictions just in case, because 'We can always issue a waiver if it's a really good project.'

But, of course that means that you're often discouraged from trying at all. And, in practice, it may turn out that you almost never grant the waiver. So, talk about how this varies across communities,

Katherine Levine Einstein: Right. So, yeah, I think that's really important. So, not only do we have variation in, like, 'Do you have regulations on wetland development or not?' But, also within any given type of regulation, we consider, stipulate, whether to build that type of housing, you need to get a special permit or a waiver or not.

And, so one example that really comes to mind, because again, it was something that I, as part of my practitioner life got to review and help to develop is Accessory Dwelling Unit ordinances. So, with a lot of communities across the country, one of the approaches to trying to get more new housing that serves a variety of price points and a variety of ages is to make it easier for property owners to build accessory dwelling units--to essentially add another unit onto their existing property. And so, this is really popular with a lot of urban planners.

And, so then the decision point, if you're trying to make an accessory dwelling unit ordinance, is whether or not you allow it by right. Which essentially means that if a property owner complies with all of the requirements and submits it to the planning department and the building inspector, they're good to go without a public review process, or whether they have to get some special permit or waiver. That's sort of the big decision point. And, having participated in these conversations, I can really see how a lot of planning officials end up saying, 'Let's, as a compromise solution, add in this special permit or waiver, because it'll make it easier to pass this regulation.' Right? If we're trying to make some new regulation, it's a lot easier to get it past a local legislative body if there's protections and these stop gaps built in.

And so, that I think makes it so that the temptation is like, 'Oh, for good projects, they'll get through with no problem. And, this'll stop the bad projects and the greedy developers from getting through.' And, so it's a very understandable impulse.

But, again, when we think about these aggregate effects, what happens is it actually makes it much harder to build an accessory dwelling unit. And, it makes it much less likely that places are going to do that at any large scale.

30:42

Russ Roberts: So, we were talking--I want to come back to this, but I want to make sure we don't forget to mention the magnitude of the delay that you were talking about earlier.

So, when I think of it as an outsider, since I don't know anything about this--I'm not a developer, I've never gone to a hearing--I think, 'Well, okay. So, they have a hearing, a few months go by, they have to comply with some aspect of the regulation that they weren't anticipating. And, so the project gets delayed for a bit.' Now, actually I do have some idea of the delay because I see a building going up. I live in Montgomery County in Maryland, which is a very restrictive place to make new things. And, somebody who tried to open a grocery store--it takes, like, years. Usually it would take like three to six months, I assume, to build a grocery store--I don't know, maybe. But, for some reason it takes forever. And, of course the answer is, 'They didn't get the permit yet. They're working on it.' But, talk about--these things, some of them are ten years. And, after the 10 years, they get a building of four units down to three. But these are often 90 units of affordable housing were planned and they end up with, like, 40, ten years later.

Katherine Levine Einstein: Yeah. I think there's a lot of different examples of this. So, in some examples that we study in the book, you start with these affordable housing developments in communities that desperately need affordable housing. And, as you say, it starts with like a 100 units of housing; but then you have delay after delay. And, so you have a public hearing that initially delays something by six months; and then the people, the neighborhood defenders are still not happy. So, then they file a lawsuit. And, I want to flag that 'lawsuit,' I think if you talk to developers, that is the killer. That is the one that introduces the biggest delays.

And, so typically when you see the project take years and years, there can be series of lawsuits. And, it turns out the barrier in most places to filing these lawsuits is not especially great. Especially when we're thinking about privileged communities that are often likely to file them--

Russ Roberts: Have a lot of lawyers in the audience, already.

Katherine Levine Einstein: Yeah, right. And, so we just go on and on.

And, I want to stress, too, the threat of lawsuit, going back to why are planning board officials so cautious. So, a month before I joined my board, some local community members filed a lawsuit against the board about a development that they approved. And, I could easily imagine a world where immediately after having a lawsuit filed against you, you're going to be a lot more cautious on the next, like, five development projects to make sure that you don't end up with like three lawsuits filed against the board.

So, yeah, I think those delays are really consequential. And, it has long-term dissuasive impacts. So, one of the recent cases that was really high profile in Massachusetts in the city of Newton, a developer called Northland has been trying for years to build a very large, largely affordable housing development in a part of the town. I mean, the whole town desperately needs it, but they've been really trying to build more [inaudible 00:33:45] market rate and affordable housing.

So, there was a lengthy process that finally ended up in a ballot referendum. So, right as the pandemic was starting--so, in March 2020, there was a ballot referendum where it finally got passed, where they finally got, they got a majority of support from the town; and, so it went through and now they can build.

And, so in the immediate aftermath, some people were like, 'This is such a victory for housing in Massachusetts, where you've got majority support to build affordable housing.'

And, I look at that and say, 'If it took an expensive referendum for this developer to build affordable housing, after getting city council approval, how much is any other developer want to go and touch Newton development?' Like, the dissuasive effect for future development is huge. Because, if I'm a developer, I'm going to look elsewhere. I'm not going to want to go through a ballot referendum.

Russ Roberts: So, you have a number of examples in the book where a developer has a mixed set of units in a set of apartment units, where some of them will be, as you said a second ago, market rate, and some will be "affordable." I assume that's a response to a different regulation. Is that correct?

Katherine Levine Einstein: Yeah. So, both--not to get too much into the weeds in this--but in a lot of places, there are local inclusionary zoning ordinances that mandate that for developments above a certain size, a percentage of them have to be subsidized. So, they can't just be market rate.

So, in Boston, that number I think is now 13%, somewhere around there, where if you're a development above a certain size, like 13% of them have to be affordable.

There also are separately--in some states, there's the ability to preempt local zoning. So, if I'm a developer and I want to get around local zoning codes, I can propose a project that has a certain percentage of affordable housing in Massachusetts. And, if I'm proposing it in a community that's privileged, that doesn't have a lot of housing that's affordable, I can actually get around local zoning requirements. So, that's sort of the other reason you might see subsidized housing.

Russ Roberts: Yeah. I hate those laws, those requirements. And, people look at me and they say, 'Oh, you're a terrible person. You just want to help developers more money. They should be forced to provide decent housing for poor people.'

The problem, of course--I'd like to see decent housing for poor people at a reasonable price--the problem is that, for me, this kind of regulation, which is a top-down attempt--it's a top-down attempt to fix something they've already messed up and ruined elsewhere. Which is, once you have minimum square footage requirements and once you have all the delays and other things that we're talking about, the cost of housing is really high. So, we throw the poor people a bone and say, 'Yeah, don't worry. We're going to have 13% of these new units and they'll be cheap for you.' When, in fact, what they should be doing is making it easier for people to build affordable housing through the normal processes. And, so I think those--they give cover, to me, for developers to do things that aren't good. That are hard[?] to do.

Katherine Levine Einstein: Yeah. No, in my understanding of the empirical research--yeah, no, right. The empirical research on inclusionary zoning--so, there's mixed findings on it, but on average what people show is that it doesn't actually improve affordability in communities and may actually make housing more expensive because it makes it more expensive to build in those places.

And, so I think one of the fundamental problems with looking for something like inclusionary zoning to solve affordable housing issues is that it's actually the wrong level of government to be looking to solve this. I really think that the Federal and state government and massive funding from those levels of government is going to be a lot more effective in providing subsidized housing that we desperately need compared with using zoning requirements that actually make it more challenging to build. Like, I don't think land use is the right place to impose stringent affordability requirements. I think there's other levers and other tools available that would be more effective.

37:38

Russ Roberts: So, we digressed for a minute. We were talking about the range of different restrictions that occur across jurisdictions. And, they're quite large: some have a ton and some have only a few. The other thing I was curious about--I don't think it was in your book--is how that's changed over, say, the last 50 years. So, talk about those two things, how they interact.

Katherine Levine Einstein: Yeah. So, one thing, I want to take a step back, is that we don't have great longitudinal data on land use regulations because it is a beast to collect good land-use regulation data. To get really detailed, fine grain data you have to read through hundreds of pages of zoning bylaws and actually know what you're looking for. And so, one sort of unsatisfactory answer is we don't know on a systematic scale across the country how these have evolved over time.

That said, I think we do have some decent research that gives us some sense of what's been going on. So, the first is that we have seen a huge increase in the number of environmental regulations since the 1970s. And so, again, I think it's really hard, and the environmental regulations to me are some of the trickiest to sort through because on the one hand environmental degradation is really bad and we should be protecting green spaces, they provide a lot of good positive externalities for the surrounding communities.

But, also we know that if we have a ton of those environmental regulations, we make it more expensive to build housing, which is also a thing that we very much need. And, we also know that in some communities, environmental regulations are actually abused by privileged white homeowners who use them as a pretext for opposing new housing and new affordable housing.

So, I think that's one area where we have absolutely seen changes.

Just, the second place I would apply where we've seen some change is in some communities we have seen increasing interest in making it easier to build multi-family housing.

So, we've seen a movement over the last two years to get rid of single-family zoning. We actually have some recent research on this that shows this is not just something that's happening in Minneapolis--that there are a lot of communities that are weighing this as a viable option. And, I do think we're also seeing more of an emphasis on walkable [?] high density communities in general, in our zoning codes in some places.

Russ Roberts: Yeah. Speaking of the environment, I think it was the episode with David Owen--I might be wrong about that, but we'll check the archives: Density is really good for the environment. And, having a lot of people spread out and driving to their single homes out in the middle of large lots, it's not particularly environmentally a good thing. And, so density in cities are actually quite green just by themselves. And, these regulations often make that hard to achieve.

But, what I'm curious about is: Whose incentive is it to pass more restrictive regulations? Now we know part of the answer: it's the existing homeowners. But, I'm curious if you've thought at all about why some areas have much more restrictive legal and regulatory environment versus others that are more lenient.

Katherine Levine Einstein: Yeah. So, I think there's a lot of really interesting empirical research on this, and there's some conflicting findings. I think, to me one of the strongest pieces of this is a political scientist named Jessica Trounstine, who has actually amassed a lot of really interesting historic land use regulation data and looked at things like fair housing lawsuits. So, she's used a lot of different types of data to show that land-use regulations produce racial segregation. And at their core, many of them explicitly sought racial segregation: that, that was part of their aim.

And, so I think in a lot of communities, especially if we're looking back at zoning ordinances and exclusionary zoning ordinances prior to the 1960s, 1950s, I think the aim of a lot of them was to keep communities white. In particular, when we look at the prevalence of things like single-family zoning in suburbs and other forms of exclusionary zoning, it's really hard to look at those and say that those didn't have race and class segregation at their cores. And, so I think that's a really important part of the story.

Russ Roberts: Yeah, I think the class part is also prevalent. I think--racism is hard to measure. People tend not to volunteer it, as you pointed out earlier. But, it's pretty clear to me that most rich people don't want to live with poor people. For whatever reason. It's not necessarily a racist attitude. It's just, people want to live around people who are "like them." Race is one of the ways that you are like or not like people; as is income. And, of course--we've talked about this on the program before--people have certain aesthetic desires that are more important to them when they're wealthy than when they're not. And, a lot of the examples in your book are kind of embarrassing, but kind of understandable: that people like to have the neighborhood look a certain aesthetic way. It's not just how crowded the traffic is, streets are, or whatever. They like a certain style and--an amazing thing in your book are architects who have come and complained about the architecture of the proposed building: it's not up to their standards. And, I just think, again, I think there's both a selfish and a more maybe community-oriented motivation working there. But--yeah.

Katherine Levine Einstein: I think--again, the class and race motivations when combined with a desire to have exclusive access to public goods. Right? So, one thing I'd add on to this is: where we live has a profound impact on the quality of our public services, and perhaps none is more important to folks than their schools. And, a lot of times you will hear people talk about, when they're opposing a housing development, like, 'There might be children that will move into this housing development and what will that do to our schools?' Which again, really perhaps most explicitly, harkens back to those school integration battles.

But, I am sympathetic to some extent to why someone might want their neighborhood to have trees a certain way. Right? One of the examples in our book was about how a housing development--it was delayed for many, many reasons--but one of the things that delayed it was a massive old copper beech tree in the middle of the development. And, the people who are involved with this housing development eventually called this tree the Million Dollar Tree, because they ultimately, as a compromise to the neighborhood, ended up having to keep this tree and lose several of the affordable housing units that they were going to build in order to keep the tree.

And, so, I think it's challenging. There some old trees in my neighborhood that I love walking by and I think are gorgeous. And, I think we all probably have parts of our neighborhoods that we would really hate to see get changed as part of new development pressures. But, yeah--community interests are also important.

44:23

Russ Roberts: But this raises an important question about preservation, generally. And: Do you want to live in a dynamic world or a more static world? In a dynamic world, you lose some things--a dynamic world builds nostalgia because you're more into things that you used to have; but of course you get new things which are sometimes better than the old things. Or you get better, cheaper prices for poor people to have access to jobs in the cities where the jobs are.

So, I come down--obviously this is not a scientific question. It's a question of morality and ethics and taste. But, I like a dynamic world, even though--or I'd like a more dynamic world; let's put it that way. I'm not sure I'd like cities to say, 'Anything goes all the time if it's your land or if you buy it.' Because, we might not like everything that comes out of that. Obviously, we won't.

But, we've gone so far in the other direction to turn our cities into what I think of as museums. These preserved, often-beautiful, but static and detrimental to people who we should be caring about.

Katherine Levine Einstein: Yeah. So, I'm a native of Milwaukee, Wisconsin, and my hometown neighborhood has not changed at all since I've moved away, almost 20 years ago. It is exactly the same. And, the reason it's exactly the same is because there's not a lot of economic growth happening in Milwaukee. There's not the same kinds of development pressures and job opportunities that we see in other communities. It's a place that's really struggling, that has profound income inequality and racial inequality.

And so, when I juxtapose that with communities where we do have job growth--like, when we have development pressures, it's because there are economic opportunities in those places--

Russ Roberts: Yeah. Well said--

Katherine Levine Einstein: So, I talk to neighbors, I kind of push them to say, like, 'I get losing some of the things we loved about our community is hard, but I would rather have that and have the possibility of my children being able to get a job in this community relative to the alternative.'

Russ Roberts: Yeah. I agree.

46:21

Russ Roberts: Let's turn to what--allow me to say one more philosophical point. One of the things this book highlights is what I think of as rules versus discretion.

So, with rules, you put a set of rules down and those are the rules. Discretion is--it seems better because it says, 'Well, sometimes the rule is not really appropriate for this situation or this person. So, let's make room for discretion.' Which is, on the surface, a great thing.

And, I'm a very rules-oriented parent. And, I think we make these same choices as parents. A lot of people have rules about their kids: Bedtime, whether they can watch TV (television), how much TV, or how much on screens, and so on. What you're allowed to buy for a kid, etc. And, other parents just sort of let, say, 'Well, I have the rules, but they're flexible.' And, flexible seems good, of course. But what flexible does is it creates a big demand for whining. And, my dad, God bless him, his attitude was, 'You don't want to have a lot of whining because you're not going to like your kids. Which is bad.' So, his [?] strategy was to make sure that he didn't encourage whining.

I felt that same way when I was in the classroom about having people ask for regrades. There was a policy; but it was pretty strict--meaning, I kept the rules.

So, here's an example--sorry for the long digression--but, here's an example, I think, in housing where this idea of flexibility is such an attractive idea. And it's created a monster, is what it seems like to me--the ultimate whining child.

Katherine Levine Einstein: Yeah. I 100% agree. I had not thought of the analogy to parenthood before, but I think it's an apt one: that, when we create unpredictability we make our parenting less pleasant, right? That we end up with kids either stressed or whining or whatever else.

But, also we think about it in the context of housing policy: We create a process where if I'm proposing a new housing development, I have literally no idea how many hearings it's going to take and how expensive it will be, how I should think about my budget. Because, it could be one hearing, cut-and-dry, or I could end up with, like, five hearings and a year and a half of delay. And, that unpredictability is deeply problematic.

One example that we highlight in the book is this issue of traffic studies, or engineering studies. So, one of the really common things that happens at these hearings, if someone comes and they complain that a new development is going to cause traffic in their neighborhood, the developer has to produce a traffic study. And, this is often just part of the development process if you're producing a project of a certain size.

And, that totally makes sense that you should show how your proposed housing development is going to affect community traffic.

The problem is when members of the community show up and they say, 'Well, we think this traffic study is wrong. We think you need to redo it.' And, sometimes the planning board sort of goes along with this.

And, so we talked with developers. One developer had a story about having to do a traffic study four times to placate different groups of neighbors who had different objections to the traffic study.

And, to me, that feels like an area where, as you put it, rules could really solve this problem. That if local governments laid out up front: Here's when you as a developer have to provide a traffic study or a parking study. And: Here's what comprises a traffic study or a parking study that meets our standards. Then we don't get into this back and forth. The developer knows exactly what's demanded of them. The community knows what they're going to get. And, we don't get cherry-picked evidence on either side. We don't get a developer doing traffic studies until they get the answer they like, and we don't get the community demanding traffic studies until they get the answer they like.

49:59

Russ Roberts: Well, as an economist my first thought is that somebody is benefiting from this, that maybe is not so obvious. Right? There's a temptation to say, 'Well, it's hard to do this study right.' And, they raise some objections.

And I wonder--part of it's when the regulation gets written to start with. Part of it's the nature of this discretionary process.

But, one obvious group that benefits from this is the people who do the studies. Because this is good for them: creates a demand for their good, their service.

The other thing I always think about are the people who are the decision-makers--either the legislators or the mayor. Not the board member in this case, because that's often a volunteer. But, people who have an ongoing, long-term relationship with their city as a decision-maker, who then attract cronies--people who curry favor with them over time.

So, that's the other advantage of the discretionary process. It allows for favoritism and cronyism. Do you feel that's an important part of this? Because you're not getting--I hope, because you're not taking bribes. Are you? Right? So, who is getting paid off, either directly or indirectly in political support, for this discretionary process? [More to come, 51:18]

Katherine Levine Einstein: So, to me, what the really interesting question is, is this difference between big cities and small cities. Because, in big cities it is unambiguously the case that politicians get lots of money from developers--

Russ Roberts: yeah--

Katherine Levine Einstein: and, that's a big--when we think about cronyism, that's the whole thing this neighborhood planning process is responding to: is the fact that developers, they do have access to these big city politicians. And, you know, our Mayor in Boston is running for reelection. They just had some disclosures that show that he is getting a lot of campaign money from developers. So, this is absolutely a phenomenon.

What to me is an interesting question--and no one has really done the deep dive into campaign donations in, like, small suburbs--is: what does the story look like in smaller suburban communities? Do these smaller-scale developers who are building in less big places, are they also engaging in this political process? That I think, it's a really interesting question and unknowable. Yeah.

Russ Roberts: Yeah. Well, my claim is it's a feature, not a bug. Right? It gets a lot of attention to the people who hold the levers of power.

But, you're one of them. You should be getting a lot of attention as a practitioner. You're not getting it, though. They're not leaning on you?

Katherine Levine Einstein: No. I just I get a lot of negative attention on social media. I'm told from people in the neighborhood who--they think I'm a developer/crony. But unfortunately, no. I don't get it.

52:41

Russ Roberts: Okay. In the time we have left, let's turn to the question of what might be done about this. I always like to say, 'Well, we need more people to listen to EconTalk.' So, they'll show up at these hearings. And, now they realize, 'Oh yeah, this is an insidious thing that my neighbors are preventing---blah, blah, blah.' So, that's one way the world would get better.

But that's a very small step. So, I'm curious what you think. And you close your book with this: What might be done?

One obvious thing is it's something at the national level. I've mentioned a study or an idea that Judge Glock put forward from the Cicero Institute in San Francisco of letting developers pay off neighborhood residents for their higher traffic costs, say, or there less-attractive building facade or view. And, I think that's a genius idea. I'd like to see it it get some traction. But you've looked at some different ideas. So, what do you think are some things we might do?

Katherine Levine Einstein: Yeah. So, I think the first place that I want to flag that is potentially helpful, but will likely have sort of more limited efficacy is trying to convince, you know, pro-housing people to show up to every single one of these hearings. Because, I--I love new housing enough to write a whole book about it. And, I still don't go to every hearing in the surrounding metro area, about every townhouse that's getting built. Like, there's no way to--it's not rational. It's not in anyone's real--the benefits I get are not worth the cost to my time.

And, so, you know, people will talk about, 'Well, what if we had free childcare?' at these hearings? 'What if we had pizza?' 'What if we did things to incentivize people to come?'

And, you know, I like free childcare and pizza, but that's still not going to motivate me to come to something that I'm not interested in. That's not sort of--still a three-hour hearing.

And, so I think as much as possible, we need to be thinking about how do we get public policy so that we're making land-use decisions not in this ad hoc neighborhood level way, but at a city level, or at the state level. Like, how do we move up the unit of analysis?

And, insofar as I would encourage you, EconTalk listeners, to show up to something it would be to like city-level, so, like, rezoning conversations.

You know, in D.C. [Washington, D.C.] right now, there's a big conversation about city planning happening that may dictate sort of, you know, re-zoning efforts and master planning. You know: if there's a big zoning change on the table, that's a time where I think organizing pro-housing people to show up can make a big difference.

In the city of Cambridge, they just passed something called an Affordable Housing Overlay which essentially allows anyone who is proposing a 100% affordable housing development to bypass local zoning codes, in a pretty dramatic way. And, so they did this by getting a lot of people to show up to these public hearings.

So, I do think you can organize to get these changes to happen.

So, that said, I don't think that that organization is most effective. And, you flag the Federal and state government. I really like looking to those units' interacting with the local level.

And, I think one place that I would love to see a Biden Administration take this is to think about how to use Department of Transportation dollars to shape local zoning codes. Because, a lot of these peri[?]-privileged suburban communities, they get a lot of transportation money, either for roads or in many metropolitan areas they have, like, yeah--

Russ Roberts: whatever, like, yeah--

Katherine Levine Einstein: Yeah, exactly. And, so if you have a light rail or commuter rail, you should, to continue to have that privilege, be building lots of housing near that commuter rail stop and creating more walkable communities.

Russ Roberts: Yeah.

56:16

Russ Roberts: Of course, the other part about EconTalk, I hope, it's not just to get people to turn out in favor of more housing developments. It's to get people who are speaking out against them to feel shame. Because they're really hurting poor people and others so they should be less vociferous in defense of their own self-interest and more altruistic. But that's a long shot as well.

But, I like to mention it.

56:38

Russ Roberts: Let's close and talk about an attempt at the state level. I think it was at the state level, a California bill that--it was a bill in the legislature, right? SBA 27. You write about it in the book. Talk about what happened there, why it failed. I was excited about it. It entered into the Twitter-sphere and blogosphere for a while, and people were kind of excited about it. And I lost track of it, of course, because I'm not so self-interested in it, I didn't even notice that it failed. So, talk about that.

Katherine Levine Einstein: Yeah. So, actually SBA-27 was the one that was coming out as we were writing the book. And now there's since even been a whole new effort, SB-50, which also has failed. So, I can talk about them both jointly.

So, some state legislators in the State of California, were trying to figure out, 'Okay, what can we do to get restrictive communities in California to allow for more housing.' Because they're clearly not going to do this voluntarily.

And, the theory was just to have the state preempt local zoning codes. To say that, 'We're going to allow more high density housing in high opportunity areas.' So, allowing basically up-zoning places that are either in job rich areas--

Russ Roberts: Explain what up-zoning is.

Katherine Levine Einstein: Yes, absolutely. So, up-zoning is essentially making it easier to build new housing. So, allowing for higher density housing in the local zoning code.

So, rather than it being single family, you're allowing two families or three families or fourplexes.

And so, what the state legislators wanted to do was to up-sell, to allow for higher density housing to be built in job rich areas, and in places that were proximal to mass transit stops.

And, so essentially allowing for people to have access to high economic opportunity and access to walkable communities.

And, what ended up happening is a really interesting coalition of some very left-leaning interests and some very conservative interests came together to kill both of these bills.

So, one set of interests, which doesn't surprise anyone, would be opposed to something like this is communities like Beverly Hills. Like, very privileged places with lots of white homeowners who are strongly opposed to the construction of new housing. So, those folks were like, 'No, we do not want to have fourplexes all over the place here.' So, they were a natural oppositional constituency.

But, other groups also came out in opposition. So, Sierra Club and a few other environmental groups were strongly opposed because they thought this would lead to the degredation of sort of existing green spaces.

And, that I think, and this is the oppositional group that was to me most interesting, is sort of left-leaning tenants' rights organizations and some of the socialists organizations in California that are quite powerful, especially in Los Angeles and San Francisco.

Those groups worried that this up-zoning would actually lead to gentrification. If we think about areas in Los Angeles that are near transit stops, that many of those are less -privileged areas with larger Latin X or black populations. And, that those were places that might face development pressures, and, you know, the construction of new luxury housing, should zoning codes be relaxed.

And, so those really diverse constituencies all came together. Both times they killed SB-27 and they essentially killed SB-50 as well.

Russ Roberts: So, it's discouraging.

I sometimes think this is the single most important area of change that could make our country better. I might be wrong about that, obviously. But I think giving people of, who are struggling economically the chance to move into a city where opportunity is, the fact that we make that incredibly hard and a lot harder than it used to be--for whatever--there are a lot of reasons that that could be the case--but it's gotten much more expensive to live where the best economic places are.

And, in a way that's economics. Of course. The places that are thriving are going to have high demand and it's going to push up the prices. But we throttled the supply. And, I think we've made a terrible decision as a country. And, ironically, it's the idea that local jurisdiction should have more power. Because that's where--there's a lot of good things about localism that people like to say in political science. But here's a case where it seems to have not worked so well.

1:01:02

Russ Roberts: So, do you have anything cheerful for me before we close, Katherine?

Katherine Levine Einstein: Yeah. I think that the cheeriness that I have is that we're in a moment right now where I think there's been a real sea change. And, again, this is particularly in the Democratic Party, in how we think about land-use regulations. We have a President Elect who has included as part of his platform, as part of his policy plan, really tackling exclusionary zoning and thinking about what levers the Federal government has to address this issue. And, I do think we have an increasing number of communities that recognize the problem of exclusionary land use and are trying to think about how to address these issues. So, it's still a small number. In our recent research, we found that somewhere around 10% of large cities in the United States have either proposed to, or have actually abolished single family zoning. But, that's a lot more than what we had 10 years ago. So, I do think there's been real evolution. And, I would expect with a cooperative federal government partner for that pace to accelerate.

Russ Roberts: My guest today has been Katherine Levine, Einstein. Her book is Neighborhood Defenders. Katherine, thanks for being part of EconTalk.

Katherine Levine Einstein: Thanks for having me.


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