The most tempting idea in economics
Rents are crushing. A law could just… stop them. What could go wrong?
In every expensive city on Earth, the same conversation repeats. Rents rise faster than paychecks. A family gets a renewal notice with a number that makes their stomach drop. And someone proposes the obvious remedy: make it illegal. Cap the rent. Freeze it. If housing is a human right, why should a landlord be allowed to price a person out of their own neighborhood?
The appeal is real, and so is the problem it responds to. In big, productive cities, a third or more of renter households spend over 30 percent of their income on housing — the standard threshold for being “rent burdened.” Rent control promises relief, and it delivers something voters can feel immediately: my rent stops rising, starting now. 11 “Rent control” is a family of policies. First-generationcontrols (1940s-style) freeze nominal rents outright.Second-generation controls, common today, cap annual increases, often with exemptions for new buildings and rent resets between tenants. The economist Richard Arnott introduced this taxonomy in 1995. The distinction matters — and, as we’ll see, so does everything a ceiling doesn’t change.
Yet among economists, rent control has achieved something remarkable: near-consensus in a field famous for disagreement. In a 1992 survey of American economists, 93 percent agreed that rent ceilings reduce the quantity and quality of housing available. When the IGM panel of elite economists — left, right, and center — was asked in 2012 whether rent control had improved affordable housing in New York and San Francisco over the prior three decades, 2 percent agreed.22 Alston, Kearl & Vaughan, “Is There a Consensus Among Economists in the 1990’s?” American Economic Review(1992); IGM Economic Experts Panel, “Rent Control,” February 2012. The IGM panel includes Nobel laureates from across the political spectrum.