Why Rent Control Doesn’t Work (Ep. 373 Rebroadcast)

**Stephen Dubner** (0:01)
Hey, there, podcast listeners, and a special welcome to all the new listeners who heard me on the Joe Rogan Experience and on the Bill Simmons podcast. And thanks to Joe and Bill for having me on. This week's Freakonomics Radio episode is one from the archive, and it gets more and more current every day. It's called Why Rent Control Doesn't Work. Where appropriate, facts and figures have been updated. Also, in honor of all you new listeners, we've added a bunch of older episodes to our feed to make it easy to catch up. If you want to hear every episode we've ever made in our 10-year history, go to freakonomics.com, where we also publish transcripts and show notes. You can also sign up there for our newsletter. Thanks for listening.
I'm sure you know this already, but let me say it anyway. Cities have become really popular all over the world. An ever larger share of the US and global population lives in cities, and that large share is expected to get even larger. As demand for city living grows, the supply of housing often can't keep up, which results in, and you know this too, a rise in prices.
In the US, median rent has doubled since the 1990s, outpacing inflation by quite a bit. In many cities, this makes it hard for people who already live there to stay, and hard for people who'd like to move there. I'm sure you've heard the horror stories about rents in cities like London and Hong Kong, Seattle and San Francisco, where the median one-bedroom apartment costs about $3,700 a month.
The problem is so bad in New York City that it inspired a new political party.

**SPEAKER_2** (1:45)
I represent the rent is too damn high party.

**Stephen Dubner** (1:48)
People work on eight hours a day and 40 hours a week to sum a third job.
New York, like many cities, has over time put in place various affordable housing policies. One time-honored tradition is some form of rent control. That might mean setting a price cap on what a landlord can charge or limiting the amount the rent can be raised. Here's the Stanford economist, Rebecca Diamond.

**Rebecca Diamond** (2:10)
From an economics point of view, it provides insurance against getting priced out of your neighborhood.

**Stephen Dubner** (2:17)
And rent control seems to be having a moment. It already exists in a number of places.

**Rebecca Diamond** (2:22)
The most expensive cities in the US, they almost all have rent control.

**Stephen Dubner** (2:28)
And the appetite is spreading.

**Rebecca Diamond** (2:31)
You see rent control popping up politically when housing prices and rents are going up.

**Stephen Dubner** (2:38)
Among the cities currently considering some form of rent control are Chicago, Philadelphia, Providence and Orlando. In 2019, Oregon became the first state to pass a rent control bill. California followed up with their own statewide bill, which recently went into effect. A report last year by a consortium of affordable housing advocates says that if all the proposed rent control legislation were to pass, nearly one in three American tenants would have some kind of rent protection.
Today on Freakonomics Radio, how well does rent control work? As with many complicated issues that have multiple actors and crossed incentives, the answer depends on whom you ask.

**David Eisenbach** (3:22)
Well, I'm in favor of residential rent control and rent regulations.

**Vicki Bean** (3:26)
If you were starting from scratch and you were designing the most efficient rent regulation system, what would that look like?

**Ed Glaeser** (3:34)
The short of bombing I know of no way to destroy a city that was more effective than rent control.

**SPEAKER_7** (3:55)
From Stitcher and Dubner Productions, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Dubner.

**Stephen Dubner** (4:17)
Most economists say that rent control is a bad idea, as is just about any form of price control.
They believe that markets work best when supply and demand are allowed to find a natural equilibrium with price acting as the referee. Here's one such economist.

**Ed Glaeser** (4:35)
My name is Ed Glazer, and I am the Fred and Eleanor Glimph Professor of Economics at Harvard, where I teach both microeconomic theory and the economics of cities.

**Stephen Dubner** (4:43)
Ed, you have one minute to convince someone that rent control is a terrible idea. Go.

**Ed Glaeser** (4:49)
All right, so they've already squandered five of my seconds. It's not particularly fair. It's not a good way of allocating scarce space. It's not a good way of helping the downtrodden.
It's a way that freezes a city and stops it from adjusting to change. It's a way that freezes people in apartments and stops the motion that is inherent in cities.