urban final
Explain how minimum lot size zoning can reduce the number of "tax eaters" in a jurisdiction.
Decreases the likelihood of fiscal deficits by placing a family's tax liability equal to the cost of providing services.
Why does the fact that choices determine land uses not imply that land use planning changes voluntary choices much
Despite the availability of mass transit options, people will not get out of their cars to trade off.
Why would you expect rent control to be associated with homelessness?
Developers would have very little incentive to build affordable housing if they knew the rents they charge were to be restricted by rent control, or were at risk of being regulated in the future. Thus, almost no new stock of middle and lower class housing is built. Instead, developers may only build "luxury" buildings that are often not regulated. Thus, affordable housing stock will decrease as older buildings become uninhabitable (or are burned to the ground for insurance money) and no new stock is created. Over a long time, the effects the shortage is devastating, leading to homelessness.
4. (146). Why do building codes encourage destruction of housing over renovation?
"Building codes encourage demolition rather than restoration and reuse of older urban structures. Many buildings cannot be economically adapted to meet requirements for new construction. For example, there was a plan to convert an old five story garment factory...to apartments. The code specified a stair width far in excess of that required when...[it] was built." However, widening the staircases would have required [much more work than building a new building]." Thus, building codes encourage destruction of housing over renovation
3. (146). Why does the diversity of building codes increase housing costs?
"Building codes have artificially increased the costs of new housing construction and rehabilitation. The diversity of code rules from jurisdiction to jurisdiction prevents builders from achieving economies of scale in providing construction services. Builders must either accept excessive overhead costs in product design and variation of work-site techniques or concentrate within a limited number of jurisdiction." Due to this, construction companies will demand higher compensation for the construction of houses.
5. (147). Why might building inspectors be expected to be rigid in their appraisals of whether code requirements are met?
"Building codes place impossible administrative and legal burdens on building inspectors. The rules are so rigid that inspectors have no discretion to cope with unique situation. On the other hand, attempts to liberalize the rules have been undercut by the imposition of personal liability on inspectors for later construction defects. There is no reason for an inspector to jeopardize his job and his income by approving materials that vary from the letter of the code." Conclusively, it forces building inspectors to be incredibly rigid in their appraisals.
Why are only one-way negative externalities a problem that might require zoning, but not two-way negative externalities or two-way positive externalities?
- Case 1: If A and B have negative externalities on each other, they will not locate near each other. If A and B have positive externalities on each other, they will locate near each other. Two way externalities do not need zoning because the two parties will voluntarily do it - Case 2: One way positive externalities: A increases value of B's land but B has no effect on A. Zoning's justification is protection against harm. There is no ability for someone to harm somebody else in this case. One way positive externalities have no need for zoning - Case 3: One way negative externalities: A harms B, B has no effect on A. à this justifies zoning, but these cases are a small subset only - Case 4: Positive externalities one way, negative externalities the other way- justifies zoning, but this is very rare e.g. nudist colony right next to apartments - Zoning only makes sense for specific districts, not citywide
Why is a focus on commuting-to-work trips a misleading way to understand congestion? Why is a focus on commuting to central cities also misplaced?
- Commuting to work trips are only responsible for 1/5 of travel by private vehicles. Social and recreational travel is at the top of the list, with a 30 percent share. - The most frequent commuting trip is between suburban municipalities.
How do land prices automatically zone out most major external cost situations? How does the existing transportation grid automatically exclude them, as well?
- E.g. Glue factories use a lot of land, but they cannot outbid people who want to live in Malibu. Land price is too high for factory. Land price reflects people's preferences for use of it. - E.g. Families want to live in cul de sacs but gas stations don't. Existing transportation grid and difference in kind of traffic infrastructure keep the negative externality from showing up and automatically zone them: Gas stations need easy access roads with lot of traffic. Firms want big heavy duty roads to transport their products. Households do not.
Why would local government still exercise great control over land use patterns in the absence of zoning?
- Gov't still controls infrastructure decisions e.g. how big the roads are, where the sewers go, where to put parks and schools, where power grids are. So, if govt builds small roads only, no one will build industrials sites there - By changing amenities, need for zoning is eliminated.
Why does the absence of bankruptcy risk mean that zoning institutionalizes errors?
- How bankruptcy works: A builds a building,that turns out to be a bad idea. - A will go bankrupt à someone else will get ownership and use it for wiser things - Zoning: There is no negative feedback to eliminate the mistake. (Zoning mistakes cannot be fixed) - In a market mechanism, when there is uncertainty, the negative feedback mechanism (bankruptcy) exists so mistakes can be fixed. But zoning involves people in politics who do not lose their jobs for mistakes. Thus, zoning provides bad incentives.
Why does the potential for re-zoning undermine the argument that zoning is needed to provide stability and security? Why are restrictive covenants better at providing security?
- If zoning is supposed to provide stability and security, the need to re-zone proves that it cannot be done. Purpose of zoning is to know what use of land we can have. But if you need to rezone, then it means you did not know enough to zone in the first place (you did not adequately anticipate future use of the land). If zoning can be changed, then there is no stability and security anyway (zoning protection can go away) - Restrictive covenants are local solutions that work better because most externalities are local e.g. If A were developing an area, he will be restricted from selling his property for a different use. There is usually a supermajority condition: If one property sells, all neighborhood property sells. i.e. A won't lower B's property value by selling to a factory. But A, B, C, etc. can all sell property at the same time (so factory wont impose negative externality) - Restrictive covenants are more flexible, allows for more certainty. They may be intrusive sometimes, but you already knew the conditions when you decided to live there, so you deemed it worthy.
Why does growth lead to opportunities in the market sector, but complaints of strain on government facilities and services?
- Market sector and government sector have very different view towards growth. Market sector sees growth as more opportunities vs. government sees growth as something that imposes costs, so it must be restrained. - E.g. Storeowner will like it if he finds out something will be built near him because demand for his services will increase, so he can make higher profits. But govt planners complain when people move in because they do not raise prices becomes strain instead of opportunity. - Why gov't makes worse choices: a. Monopoly power of gov't - Gov't mentality: "I don't need to accommodate you" because it's a pain to make changes b. Non-profitability - Gov't does not go out of business when it makes bad choices, and does not benefit from good choices either c. Mispricing - Not pricing the cost of good appropriately (this is a government-caused problem, not market failure)
Why do information problems and the non-profit status of government decision makers lead to problems for urban planners?
- Non-profit status: Govt does not gain from good choices, and does not get fired for bad choices, so there is no incentive mechanism. - Information problem: Too much valuable info that is unknowable to central planners. Everything depends on everything else, so planner CANNOT know who to assign to live in an area. Vs. Market mechanism allows people to reveal their costs and preferences through their behavior
Why would private zoning work more effectively than government zoning? How is this illustrated by shopping centers?
- Private zoning provides incentives to do it correctly. - Shopping mall: By placing stores in different locations/order, you can change the value of the shopping center. Small stores benefit from being next to big store such as Macy's. So you will charge small stores more. You will put water fountains far away from the food court where they sell drinks. If you don't design according to people's preferences, no one will go. If you don't put things in the right place, you will earn less. But you also capture the benefits if you zone correctly. = Incentives
Why does zoning imply trade offs between rigidity and complexity? How has it resulted in the rule of men and not law? Why has it resulted in graft and corruption?
- Rigidity = predictability - Tradeoffs: The more rigid, the more difficult to handle the complexity. But the more flexible, the less predictable it is. - Zoning laws are too complex that no one can know in advance whether something is consistent with zoning or not - Rule of men: Zoning inspectors can decide either ways because zoning laws are too convoluted. Inspector can tell you something is wrong from the start, or he can choose to tell you the something is wrong after you finish building it so you would have to start overà leads to graft and corruption because you want to know ASAP - Not being delayed for approvalà you can build sooner, which is worth a lot
Why is zoning that attempts to preserve the values of properties at odds with the fact that owners own their physical house and not its value, so only physical damage constitutes valid actionable nuisances?
- When you try to preserve value, you infringe on actual property rights against the other. à Changes property rights. e.g. A wants to keep his ocean view so A restricts the way B builds his homes. A asserts his right to his view, even though it is not an actual property right, by taking away B's right (redistribution of rights) - Essentially, A expands his property rights (that was originally not attached to his purchase) at someone else's expense.
Why can different preferences and voting with your feet mitigate most of the asserted problems that supposedly require zoning?
- Zoning assumes that people are identical—that what one likes/dislikes, everyone likes/dislikes e.g. Living near a car garage. A has a good car and good hearing, so he won't like it. Vs. B who has a crappy car and bad hearing, so he won't mind living near the car garage. à They will self-select to live there, at a lower cost. - We cannot conclude something is a negative externality simply because one person doesn't like it - Magnitude of negative externality is reduced because of differences in preferences. E.g. Single people do not want to live in cul-de-sacs but families do. Problems are fixed by people voluntarily moving, so no need for zoning - e.g. Environmental racism: Low-income countries are more polluted. But in reality, this only looks at the cost of living in that country. The benefit is less rent. So, the tradeoff was one the low-income countries were willing to make. à If people can choose, externalities would be reduced/eliminated.
What types of policies do cities use to limit their population growth? Are those policies solutions to market failures or causes of government failures?
- tax new developments, limit amount of building permits, limit amount of land, limit urban services (roads, sewers & water). Govt failure
12 (236). Why do cities have an incentive to adopt unconstitutional zoning restrictions? How does that reflect the high cost of challenging zoning and the ease of adopting alternative restrictions that accomplish similar ends? How does this relate to the Chinese laundry zoning example from San Francisco?
- to keep the Chinese out, who operated most of the city's laundries, zoning that banned laundries from certain neighborhoods provided a legal means of ethnic segregation.
Of those 4, which 2 does a gasoline tax change in the appropriate direction? Which 2 does it not change? Explain.
--> Changes modal substitution and location choices in the right direction, b/c it decreases the relative cost of alternative travel modes, and increases the cost per mile traveled. --> It fails to affect the time of travel or the travel route, except to extent that congestion generates lower gas mileage.
What is the argument for how free employee parking adds to traffic congestion? Is free employee parking a market failure or a government failure?
--> Free parking generates a relatively low cost of driving to work. The firm absorbs the cost of parking facilities as a cost of doing business. --> Induced government failure because of the tax implication. Firms offer free parking because they aren't taxed for parking (no tax penalty).
What is "the simple rule to decide on road width"?
--> If the total revenue from the congestion tax exceeds the cost of building the road, the government should build a wider road. --> The optimum road width generates just enough congestion-tax revenue to pay for the road.
How would a gas tax reduce pollution? Why would it not encourage people to drive fewer miles?
--> It internalizes the externalities from tax pollution. It increases the private cost of auto travel. It increases the cost per mile driven, so it decreases the total miles driven and decrease air pollution. --> A tax on gasoline is better than a tax on cars, because a tax on cars doesn't encourage people to drive less. A tax on gas is more target efficient, because it is directly addressing the externality. (pollution).
What two problems does the text cite in using transit subsidies to deal with the congestion externality?
--> It will decrease the volume of automobile travel and reduce congestion, but it won't be as efficient as a congestion tax. --> It causes transportation in general to be underpriced, leading to excessive amounts of travel.
Why don't roads experience sharply reduced congestion after being widened? Why could the equilibrium speed of the Ventura Freeway approach the speed on Ventura Boulevard, during rush hour in the San Fernando Valley?
--> The demand for peak-period travel is highly elastic. When a road is widened and travel initially, travelers who were previously deterred by slow speed start using the road. Because consumers respond to lower travel costs by traveling in larger numbers, travel time and trip costs decrease by a smaller amount. --> "latent demand": the reserve army of the unfulfilled that will switch to a previously congested highway as soon as an increase in capacity increases travel speeds.->> it will fill most or all of the new capacity during peak periods --> Because Ventura Freeway will be so congested, that the speed will equal that of the boulevard.
5 (160) Why is BART, together with its funding a regressive system?
-BART is questionable not only on economic grounds, but also because of equity considerations -the distribution of the costs and benefits of the system are not spread evenly across income groups -much of BART'S funding is drawn from sales and property taxes, which are generally assumed to be borne disproportionately by lower-income persons -those receiving the subsidy are BART patrons that are young, educated, affluent suburbanites -"the poor are paying and the rich are riding'
2 (158) In assessing the effectiveness of mass transit, why are the assumed numbers of future riders and the share diverted from cars so crucial to the analysis?
-a new rail line saves time not only for those riders who use it, but also for those drivers using the highways and streets that become less congested as a result of the new line -cost-benefit analysis is undertaken to assess the present value of net future benefits -the major benefits, such as time saving, are highly sensitive to estimates of the future patronage on the new line -for new mass transit lines, transit planners hope that most patrons/riders will be former car commuters -however it is easy to overestimate the future expected patronage on proposed new rail systems and the proportion drawn from former car users
Why does Scarlett argue that the root of many urban problems, especially pollution and congestion, are evidence of government failures, rather than market failures?
-air and roads are considered "free goods" , and are therefore treated as if they are available in unlimited supply -people pay nothing to use these goods such as roadways/throw out trash for free -means that vital information about the relative scarcity of air and roads and landfill is left out of the decision-making process
1 (158) Some have argued for even greater (than current) subsidies to mass transit riders to divert cars off the road. Why is this unlikely to succeed?
-although mass transit is much cheaper to ride, the convenience, speed, and comfort of the private automobile make it the preferred choice for most commuters -studies have shown that even the elimination of fares on mass-transit systems would not divert a significant number of commuters from cars to public transit
Why is it that "The very complexity of so often cited by city authorities to justify master plans in fact warrants just the opposite?"
-ends up with: decentralized decision making coordinated by the actions of millions of individuals, each privy to information unavailable on a grand scale -cities are but microcosms of the larger economy -complex economic systems require the rapid conveyance of vast bits of information about the ever-changing supply of and demand for different resources
6 (161) Why do matching capital grants lead to the purchase of too many new buses and not enough maintenance? How does highway construction funding introduce a similar inefficiency?
-federal subsidies are given in the form of matching capital grants...smaller amounts are devoted to subsidizing the operating expenses of local transit systems -these policies have the effect of reducing the relative price of new equipment, which qualifies for capital grants, and of increasing the relative price of maintenance and repair -not surprisingly therefore to find that local bus systems tend to underinvest in the maintenance and repair of buses and to replace them more frequently than is economically justified -early programs of UMTA (Urban Mass Transportation Administration) proceeded without requiring local governments to conduct cost-benefit analyses (ex: highway construction)
7 (162) Is congestion caused by free employee downtown a market failure or a government failure? Why could the elimination of free parking serve to reduce congestion? What would it do to the numbers of commuters per car? How does it illustrate how one government intervention into markets leads to further government interventions?
-free parking is a market failure -the elimination of free parking for employees-perhaps through higher parking taxes-would serve to correct a current price distortion -free parking makes auto commuting artificially cheap so that private costs of driving to work are less than social costs -full cost parking would discourage driving to work alone during the most congested hours -if the number of persons per car could be doubled, highway capacity would double without necessitating any increase in investment -initial evidence indicates that the demand for parking may be very sensitive to price increases. If so, one would expect higher parking charges to lead to more carpooling and bus riding and less driving to work alone -many of the transit system are intertwined and connected so that if is affected by government intervention, then the government must step in again to affect the other systems (government intervention only increases)
Why is it that "The Godlike approach to social policy ignores both the diversity of values and the cost of agreement". Why are property rights and self-selection better solutions to those problems?
-if it weren't Godlike and instead implemented planning... -public planning distorts the communication of knowledge -planning involves prescriptions, and prescriptions inevitably raise costs, these are all costs of reaching agreements among parties affected by public plans and their accompanying regulations -overall outcome subscribes to no one individual's particular vision of an ideal community -at the root of many urban problems, especially air pollution and traffic congestion, is the simple fact that air and roads are "free goods"-treated as if they are available in unlimited supplyà would be good to implement property rights -the most effective approach is to introduce price signals rather than presume to plan away the ill-effects of their absence. This would be self-selection -using price signals lets individuals make their own trade-offs, their own choices, about how to respond to changing circumstances
8 (162) How did cities act to restrict competition from jitneys for city-owned streetcars? How would allowing jitneys and deregulating taxicabs improve the efficiency of urban transit?
-jitneys were very popular, partly because they provided a flexible and inexpensive alternative to trolleys -trolley companies began suffering big losses and they retaliated by obtaining legislation in most cities that were prohibiting jitney operations -legalization of private jitneys would fill a large gap in the urban transport market -jitneys provide an intermediate flexible mode between fixed route, low-quality buses and the individually hired cabs -they would offer convenient transportation to low-income city residents whose trip patters are not well served by existing public transit -advantages of jitneys: flexibility, low capital and operating costs, and convenience -taxi cabs are on the other hand, considered a luxury -fares are high because most cities restrict entry into the taxicab market -deregulating taxicab markets would seem to be a simple step to increase the availability, quality, and convenience of urban transportation. The greatest beneficiaries might be the poor, the aged, and the handicapped, who are not well served by public transit
Why does public planning promote discord, compare to private planning?
-public planning interrupts the flow of information from consumer to producer and back -it does nothing to improve the flow of information about scarcities where the marketplace, with its price-coordinated transmission of knowledge, is not working -when price signals are absent, the most effective approach is to introduce price-signals rather than presume to plan away the ill-effects of their absence
4 (160) How well did the estimates for BART predict actual results for daily trips, diversion from cars, traffic volumes, congestion, capital and operating costs? Does BART qualify as a "great planning disaster," as one book called it? Why did one observer suggest that "the best use of BART would be to pave over the rails and use them for express buses?
-ridership prediction: 258,496 daily trips by 1975 -actual: by 1981, after 10 years of operation, number of trips only reached 160,000 -diversion from cars prediction: 61% of BART's patrons would be diverted from cars -actual: only about 35%, also...most of BARTS'S riders formerly rode the bus -study done by U.S. Department of Transportation concluded that BART had reduced neither traffic volumes nor highway travel times nor congestion -capital and operating costs: both of these costs were underestimated-operating expense s by about 500% -the positive net social benefits of the study were derived by exaggerating the system's benefits and by underestimating its costs -converting existing freeways to express-bus systems could have achieved the same performance as BART at a cost of between $15-50 million, which represents about 1-3% of the capital cost of BART -per-mile construction costs of BART = $35 million
Why do planning agencies push for large scale regional plans and powers? Why does that reduce the ability of individuals to plan effectively?
-socialist mindset, must plan on big scale -there is "someone's idea of utopia" of how to construct a city's growth -big urban problems require big urban plans -with these problems (pollution, congestion, crime, noise) has come an understandable urge to mitigate them -much of the chaos that planners fail to mold into order is precisely the dynamism and diversity that drive economic prosperity...the vitality of cities depends on disorder -urban problems in large cities persist
3 (158) Why can you not just look at pollution generated directly by BART in calculating pollution effects? Would pollution savings be overstated if studies assumed that cars would not continue to get cleaner over time?
-the indirect or secondary benefits of transit improvements are also susceptible to exaggeration -expected secondary benefits depend on estimates of the new system's ability to attract automobile users -the actual rail line construction process contributes a lot to pollution as well...people driving to park in BART parking lots also contributes to pollution -yes pollution savings would be overstated if studies assumed that cars would not continue to get cleaner over time...over exaggerates benefits of the rail lines
Why does centralized, public planning have to be specific and leave little discretion to those implementing the plans? What information burden does that impose on planners to do their job well, as compared to the market sector?
-the specificity and little discretion creates inflexibility which acts as insurance against the discriminatory use of the vast powers of the government -to spell out specific rules, planners need vast amounts of information...to make plans work, they must accurately predict demographic trends, and have up to the minute info/knowledge of production processes -must be able to ascertain who is/is not complying with regulations
Why might urban "chaos" be a good thing? What would be required to stop such chaos?
-this "chaos" is actually the tangible reflection of diverse preferences among different people -efforts to eliminate this chaos cannot be accomplished without suppressing freedom and squelching economic prosperity -such chaos is the sign of an economy that is working
Why is the law of unintended consequences so prevalent in urban policy?
-urban characteristics like air pollution and traffic congestion result from decision-making processes in which important knowledge is not being conveyed -plans end up setting in motion a series of unintended consequences and unacknowledged costs -key to solving urban problems requires master planning: is to understand existing decision processes
11 (235). Why does the Standard State Zoning Enabling Act virtually assure that zoning powers will be abused?
...
What six groups does O'Toole mention that have hidden agendas for smart growth? How would each of those groups benefit from suburban congestion?
1. Central city official eager to restore or maintain the prominence of their cities over the suburbs a. Suburban congestion would make the central city more appealing 2. Downtown interests desiring to reverse the decline of their businesses relative to those in suburban malls and edge cities a. Suburban congestion would produce more developments downtown. 3. Transit agencies and employees seeking ever bigger budgets despite transits falling market share a. Higher suburban congestion leads to higher transit budgets even though O'Toole states that transits market share is so small, that it has little effect on congestion. So its wasted money 4. "new urban planners" interested in testing their theories out on various cities a. More congestion leads to more demand for planning to solve the problem 5. urban environmentalists opposed to more freeways and cars in general a. congestion would lead people to choose some other mode of transport, aiding the environment. 6. engineering and construction firms seeking federal dollars to spend on urban public works such as rail transit.
What are Gordon and Richardson's two responses to the "subsidy excuse" that sprawling development is due to various subsidies?
1. Effects of such factors are exaggerated. The subsidies effects are minor and have little effect at the margin. 2. Critics overlook the many policies that favor central cities, such as downtown renewal, subsidized stadia placed in central cities, and heavy subsidized down-town-focused rail transit systems.
Why is the argument for converting HOV lanes to HOT lands? How is the benefit tied to "underused" HOV lanes?
1. HOV: High occupancy vehicle; HOT: High occupancy and toll --> Argument: if not many solo drivers switch to carpooling or buses, the HOV lane will be underutilized and the other lanes will become more congested. 2. HOT allows people to pay their way into the HOV lane with a toll that varies with the level of congestion in order to maintain a target speed. So if the HOV lanes are underused, then HOT allows for people to pay for them so that they are used. An express lane sorts travelers with respect to their willingness to pay for speed. --> Travelers with a high opportunity cost of travel time will use the express lane, and those with a lower opportunity cost will use the slower regular lane. --> Efficiency enhancing idea: increases the carrying capacity for the HOV lanes. By allowing some drivers to move to the HOV lane, congestion is decreased on the regular lanes.
How does the conclusion of the "cost of sprawl" compare with data about infrastructure costs?
1. High-density urban areas have the higher infrastructure costs 2. The lowest per capita infrastructure costs are in areas with 250-1250 people per square mile The data shows that sprawling is more beneficial than to remain in the city. On top of this, the benefits of suburban lifestyles, have been widely ignored since it is difficult to quantify.
What does Tucker argue are the local government policies that inhibit the housing market's ability to provide reasonably priced housing?
1. Zoning, growth control, and other exclusionary strategies preventing new housing from being built 2. Rent control that constricts the rental housing market, which generally serves the less affluent 3. "Affordable-housing" and "inclusionary-zoning" schemes, which generally rationalize the preceding two tactics, while doing little more than subsidizing housing for middle-class people who don't need it in the first place
How can private communities internalized alleged external benefits and costs? If most externalities are highly local, what does this do to arguments to increase local and regional government powers to "solve" those problems?
1. the migration to the outer suburbs, exurbs, and rural areas 2. migration to private communities They adopt institutional arrangements that allow them to do so. These associations are also likely to include the amounts and the kinds of open spaces that their member-residents want. It will only exacerbate the migrations that they deplore. Suburbanization as a response to people's preferences is natural and efficient. Policies that worsen the conditions that "push" people out of the inner city are neither natural nor efficient.
What happened to mass transit ridership from 1980-1995? How does that relate to forecasts that mass transit will save energy, clean the air, decongest the city and change land use patterns?
10 U.S. cities that added light rail during then experienced a collective system wide ridership loss of 2 percent. Because it is promoted as a way to save energy, clean the air, decongest roads, and promote new land use patterns, expensive proposals for new rail projects are always put forth despite the failure of rail transit being widely documented.
If a public housing recipient family had to pay the taxes to provide their own housing, would they be better or worse off? Why is this approach a useful guide to efficiency questions? Why does the welfare cost of taxation make the benefit cost ratios even worse than indicated by the first question?
A family that receives a housing subsidy in an amount equal to its additional tax eventually will be induced to occupy better housing and spend less on other goods. Since the net subsidy to this family is zero, its total spending is unchanged. Therefore, the new combination of goods could have been (but was not) chosen prior to the program, which means that the family that gets back as much as it pays in taxes is made worse off. This thought experiment is a useful guide to efficiency questions because if the family is made worse off, the subsidy is necessarily inefficient, and the family would be better off with no subsidy at all. Furthermore, because taxation carries with it a welfare cost, the total cost to society from inefficiencies is even greater.
How do set-aside requirements for low-income housing affect housing scarcity?
A set aside housing requirement, like that of Portland's ordinance requiring that developments with more than ten housing units be required to set aside at least 20% of those units for low income housing, is meant to reduce housing scarcity by offering more affordable housing.
10 (394). Using Figure 15-5, explain the effects of housing vouchers on the price and quantity of housing for moderate price housing. How does the filtering process drive the results? Why are eligible non-recipients harmed by housing vouchers?
A voucher program increases the demand for moderate-quality housing and increases the equilibrium price. The quantity of moderate-quality dwellings supplied increases because more rapid filtering from medium-quality submarket and slower filtering to low-quality submarket. By speeding up the filtering process, vouchers decrease the supply of medium-quality housing, which increase the equilibrium price; as the result medium-income households are hurt by the housing vouchers given to low-income households. In general, the filtering process means that the increases in demand for house triggered by the vouchers increases the prices of housing of all quality level. Everybody is harmed by the voucher program, excepting the recipients.
How does the text's analysis ignore crucial income redistribution issues?
A. these arguments ignore income redistribution by assuming that tax payers will get this money back. This isn't true.
Why can abandonment create a negative externality? Why can abandonment become self-reinforcing?
Abandonment can create a negative externality because abandoned buildings provide targets for vandals and graffiti artists, and they quickly become eyesores. They often become the temporary homes and retail outlets for transients and drug dealers, so they contribute to crime. Abandonment decreases the relative attractiveness of a neighborhood, decreasing the rent that other landlords can charge for their properties. Yes, it can be self-reinforcing because the decrease in profit on other properties encourages more abandonment.
How does the cost of access time compare to the cost of in-vehicle time?
Access time imposes more cost than in-vehicle time.
Which type of time saving--haul time or access time-- would be more effective in increasing ridership? How did BART get things backward in this regard?
Access time. They focused on higher speed rail but there are less stations and more time between pickups.
Explain the effects of a growth boundary on landowners both inside and outside the growth boundary, using Figure 9-3.
According to the figure, the initial equilibrium is shown by point i, where the urban bid rent curve intersects the agricultural bid rent curve at 12 miles. If the urban growth boundary is set at 8 miles, it increases the urban rent within 8 miles (the curve connecting points t and u) and decreases the rent between 8 and 12 miles. (line connecting points v and i)
Why is the harm prevention rule local government bodies' favorite standard to apply to questions of the constitutionality of zoning?
According to the harm prevention rule, zoning is not a taking if it prevents the landowner from using land in ways that are detrimental to the general public. Most zoning ordinances are judged by a broad interpretation of the harm prevention rule: if an ordinance promotes public health, safety, or welfare, compensation is usually not required.
How do the housing "reforms" Tucker presents act to paralyze the filtering process? Why do housing authorities back such reforms?
Almost every proposal will have the effect of slowing the circulation of housing through the market. Construction will be diverted from its optimal point of entry at the high-quality end of the market. Conversions to home ownership will be blocked, decaying housing propped up instead of replaced, and the entire filtering process ground to a halt. Housing authorities back such reforms to try to push down rents and compensate the failure of the market to build housing that low and moderate income owners and renters can afford.
What three ways does an increase in the price of housing increase the quantity supplied? Why is it that "the supply response to a price hike is determined in large part by the response of used housing"? Why is the supply of used housing relatively inelastic for long periods of time? Why does a recession hit housing construction so hard?
An increase in the price of housing increases the quantity supplied in 3 ways: - Build more new dwellings--> increases the profitability of new housing, so more will be built. - Increase maintenance on used dwellings--> higher price=greater incentive to spend money on maintenance and repair (slowing the movement of dwelling down the quality ladder). - Upgrade used dwellings--> owners have an incentive to move their dwellings up the quality ladder by renovation and remodeling The supply response to a price hike is determined in large part by the response of used housing because in a given year, between 2 and 3 percent of the total housing stock is new. The supply of used housing is relatively inelastic for long periods of time because the rate of deterioration is relatively low and remodeling/renovation are relatively expensive. A recession hits housing construction so hard because people do not have the funds to buy new housing, rather they stay where they are, or move to less expensive housing.
What does Olsen assert would be taxpayers' preferences with regard to housing programs for the poor?
Anything that minimizes costs and maximizes benefits. Specifically, the 7 items in italics in the article, most of which are addressed in the rest of the questions.
What is the rule of thumb for walking time to a transit stop? Why does O'Sullivan argue that, as a result, few U.S. metropolitan areas meet the minimum density thresholds for bus service? Why is that even truer for rail mass transit systems? Why does this imply that mass transit will require subsidies in virtually all U.S. cities?
Approximate walking time to transit stop is 10 minutes, and the rule is that mass transit is feasible "only if density around bus stops or train stations is high enough to attract enough riders to exploit conventional scale economies and Mohring economies." The average densities of the 10 densest US cities meet the minimum threshold for just bus service. It's even truer for mass rail because that requires much higher densities of people to be feasible. This means that mass transit will require subsidies in virtually all US cities because most US cities are not nearly dense enough to feasibly provide mass transit.
Using Figure 14-3, explain how the age of a dwelling affects the optimal housing quality. Explain the effect of an increase in prices per unit of housing quality. What would happen to optimal housing quality if the housing stock ages and the price per unit of housing quality increases over the same period? What would happen to optimal housing quality if the housing stock ages and the price per unit of housing quality decreases over the same period? Could that lead to abandonment? If tastes dramatically shifted to new housing styles, why would you expect new housing to be built at the high end, combined with filtering down of the existing housing stock?
As a dwelling ages, the marginal cost of maintenance increases, decreasing the profit maximizing quality level. An increase in the price of quality increases the profit-maximizing quality. If the housing stock ages, and the price per unit of housing quality increases over the same period, the optimal housing quality... horizontal line = revenue up sloping curve= cost of maintenance What would be the sustainable level of quality? What would be the equilibrium. Point i is the equilibrium because it's the only point that is sustainable. Complaint: doesn't mention where you're starting from. Upgrading is much more costly than filtering down. If price goes up, it becomes a more popular spot for renters. Moving from i to k. As building ages, shifts marginal cost curve to the left. If something changed on the cost side, level of quality you're going to expect changes. Net effect = reducing quality. More and more costly to maintain, or receiving less and less revenue... If I know some of the underlying variables change, it's an easy way to keep track of some of these things.
Explain Mohring economies from increasing mass transit ridership. Why do they increase the scale economies in mass transit?
As demand for transportation goes up more vehicles must be used. This causes a decrease in wait times which in turn causes the demand for mass transit to increase. This feedback is used as a justification for subsidizing mass transit.
How does a growth boundary affect homeowners who were there when it was imposed? Those who buy land after it is imposed?
As landowners, homeowners benefit from higher land prices. So a policy that increases the price of land in a city benefits the people who own homes at the time the growth policy is implemented. in contrast, the newcomers must pay higher housing prices , so they are harmed
Explain Holcombe's statement that" The tools the new urbanists want to use to promote higher population density are tools of land use planning, but there is a tenuous relationship between physical structures built on land and population density."
As people gain wealth and income, their preference is to buy more living space. By forcing land use toward apartments instead of houses, and houses on smaller lots, new urbanists are trying to reverse people's preferences.
Why are federal housing public housing, subsidized housing and vouchers programs inherently inequitable?
Because for the voucher, everyone who needs the help can get equal amount of the benefit. But without the voucher system, the public housing actually takes money from all those, and only benefits about 30%. So the 70% of those who would have benefits gets hurt instead. Also since there is tax deductible on mortgage system, the people who can afford to buy a house get benefits. Those who need help cannot do this, so the benefit goes from those who need help to those who can buy house. Combined with the public housing system, the system hurts 70% to even greater extend.
Why does the transit share of urban transportation imply that even large relative changes in mass transit usage will have small effects on congestion and pollution?
Because mass transit is so little used even a doubling of it would result in a small percentage decrease in car users. For example if 10,000 out of 1,000,000 commuters(1%) rode mass transit was doubled to 20,000 the decrease in car use is only slightly more than 1%. 1. At the national level, only 5 percent of commuters use public transit. Because the majority of people don't use public transit, nationally it has a small effect on congestion and pollution. 2. Urban transportation has a larger effect on pollution and congestion in metropolitan cities (NY and Chicago) where the transit share is higher.
Explain Figure 11-2. What does O'Sullivan say is the efficient result? Why does he conclude that? Why does that result require a subsidy? How could the marginal welfare cost of taxation result in average cost pricing being more efficient?
Because of Mohring economies O'Sullivan supports that a subsidy produces a multiplier effect. The money for this subsidy must come from taxes so if the marginal cost of taxation is higher than paying then it would be more efficient to charge people the correct amount
Why do mass transit subsidies to monopoly systems lead to high operator costs? Why would user-side subsidies be better than operator-based subsidies in this regard?
Because of excessive labor compensation, misallocation of labor (high skilled workers performing low skilled tasks), and inefficient mixes of capital and labor. A user-based subsidy would be more effective because it would accurately allocate capital to the operators that service the most passengers. *Include example from book: "If the subsidy is $.10/passenger per mile, a transit operator that provides 200 million passenger miles per year would receive an annual subsidy of $20 million (page 302)
Are congestion externalities market failures or government failures? If local governments built the optimal scale of urban highways, as discussed in the previous chapter, what would happen to their magnitude?
Because people bear the cost of congestion any congestion generated by increased population only the people that value living somewhere despite the congestion. Government can cause congestion by making carpool lanes and taking away lanes for green space in which case they increase congestion while but not due to increased use.
What does the difference in time values of walking or waiting for mass transit versus that for line-haul imply for frequency of service as a strategy to attract mass transit riders?
Because people prefer to be on the transit than waiting for it if there are frequent pickups then people will wait less time and incur less costs. BART was designed with next make the experience of being inside the train as comfortable as possible. To do that, you put the stations far apart. If you've increased the frequency of service, not decrease price and to charge for parking.
Why do private firms provide transit services at lower cost than public transit services?
Because private firms (1) pay lower wages, (2) more flexible work schedules, meaning they don't have to pay workers during idle periods, (3) minibuses are used on less popular routes, which saves both capital and operating costs
Why do sunk costs favor rail systems? Why, given the inefficiency of heavy rail systems versus buses, do you think local politicians continue to push for rail systems?
Because rail systems have very high initial costs. Local politicians continue to push for rail systems because, for one, the firms in charge of building these rail systems could be the ones contributing to their campaigns. Politicians could also be going off of surveys that call for more public transportation, even though the survey fillers have no intention of actually using it themselves.
13 (396). Why do programs like community development block grants (CDBGs) allow more successful income redistribution toward central cities than would otherwise be the case?
Because the allocation formula for fund distribution favors cities with relatively old and over-crowded housing, high poverty rates, and slow economic growth. The better program would get more support.
Why can't we look at national averages of transit use in evaluating new mass transit systems?
Because the cities that are most suited for mass transit typically already have it, then the averages may not be reflective of success in a less suited city.
If low income people are more likely to ride mass transit, does mass transit need to be subsidized, particularly in view of how many different programs exist to subsidize various items for them?
Because the very poor have most needs subsidized already then they should have the money to pay for mass transit if they value it at the market cost. The fact that it is subsidized shows that even the poor do not value public transport enough to make it efficient.
Why does Tucker say the most efficient long run housing strategy is to build high quality housing?
Because well-constructed housing has long-life expectancy (approximately 75 years) whilst housing built for the poor usually last only about 20 years and have no capital appreciation. 3 (21). Why does undercharging tenants rather than overcharging them (as often alleged) often make more sense to landlords? Since the market is dominated by small, amateur operators who gain entrance with very little capital and is excruciatingly competitive, undercharging tenants will help promote vacancy and minimize turnover. Moreover, 1) Landlords often develop personal relations with their tenants 2) They tend to worry about vacancies more than about getting top rents
How can building codes be used to serve powerful special interests? Why would performance standards rather than specified materials or techniques reduce the problem?
Building codes are documents that prescribe in detail the materials and standards that all construction must meet. In theory, the implementation of these building codes is intended for the interest of public health and safety needs. However, due to its power, the makers and enforcers of the code are given strong incentives to abuse their positions in order to serve special interests. For example, writers of the building codes could accept bribes from manufacturers of construction materials to include the requirement that their product be used in certain structures. In this scenario, the building codes are used to serve special interests that deviate from their original intent. Performance standards would help reduce the problem because performance standards don't specify specific requirements of structure. By implementing performance standards, it gives the construction companies the freedom to build their buildings in any way they deem worthy; as long as they can hold up to performance tests. In doing this, it reduces the possibility of people abusing the power of building codes.
Why do collection costs and distribution costs favor bus systems over rail mass transit systems? Why do linehaul costs favor rail systems over bus systems? How do cars compare to rail mass transit systems on these criteria?
Collection costs favor bus systems because bus systems are integrated, meaning passengers do not have to take other means of transportation to access them. Distribution costs favor bus systems because buses have a lower access time cost. Line haul costs favor rail stations because there are further distances between each stop, which increases the line haul portion of the trip, thus lowering the in vehicle time. Cars are more effective than all of these options because they have lower costs
Explain the restrictions on how zoning laws must treat outsiders. Does it matter what state you are in?
Courts will judge zoning on the basis of its effects on both insiders and outsiders. If a zoning ordinance does not represent a reasonable accommodation of the competing interests of insiders and outsiders, it may be declared unconstitutional. zoning for diversity of housing types and income levels. Yes it matters what state you're in.
What is the irony connecting Euclid v. Ambler and smart growth zoning
Euclid v. Amber stated that in a neighborhood of single-family homes, apartment houses are a nuisance, and that neighborhoods of single family homes could use the police power of the state to keep out apartments. The irony is that smart growth uses re zoning measures that change single-family homes to multi-family housing.
Why is it that "everyone benefits" from subsidies to new housing?
Everyone benefits from subsidies to new housing because they hasten the filtering of used housing to lower income housing.
How does Holcombe rebut the claim that urban sprawl destroying valuable farmland?
Farmland use has been diminishing faster than urban sprawl has been expanding. This is due to huge advances in productivity in agriculture, not expansion of development.
Explain, using Figure 14-7, how growth controls affect the price and quantity of high-income, medium-income and low-income dwellings.
Figure 14-7 demonstrates the supply and demand of housing with the effects of a building ban. A building ban will shift the supply curve for high quality dwellings to the left, increasing the equilibrium price. This increase decreases the supply of medium-quality dwelling as fewer filter down from the high-quality market and increases demand as consumers switch from the high-quality submarket to the medium-quality market. The equilibrium price rises. The same then occurs for low-income dwellings.
What are the two lessons the text draws from the analysis of non-zoning in Houston? How does Houston support the case for restrictive covenants over zoning? How does it demonstrate marketplace zoning?
Firstly, in the absence of zoning, landowners have the incentive to negotiate restrictions on land use. It seems neighborhood externalities are large enough to justify the cost of developing and enforcing restrictive covenants. Secondly, in the absence of zoning, most industrial firms cluster in locations accessible to the transportation network, and most retailers cluster in shopping centers and retail strips. Restrictive covenants governing residential subdivisions are stricter than zoning and have restrictions on the architectural design, external appearance, and lot maintenance. The covenants for industrial parks limit the activities that can locate in the park. retailer do not locate in quiet neighborhoods and locate along major thoroughfares on strip developments and shopping centers to take advantage of large volumes of foot and auto traffic.
What is fiscal zoning? Why, in California, with restrictions on property taxes (due to Prop. 13) and some local retention of sales taxes, does this lead local governments to favor retailers over houses, and to oppose apartment and churches?
Fiscal zoning ensures that households or firms generate a fiscal surplus, not a deficit. Local governments prefer retailers whom they can benefit economically from due to tax.
How does Holcombe's argument connect to Hayek's emphasis on "circumstances of time and place?"
Government cannot plan land uses better than you can due to having inadequate information regarding time, place, and circumstance. This is why the private sector will always 'plan' better than the government.
Why do growth controls lead to higher housing prices and lower quality?
Growth control leads to higher housing prices and lower quality. The control affects the filtering process. The potential occupants of new housing no longer have the option to buy a new house, so they either bear the relatively high cost of upgrading, or tolerate a growing mismatch. In either case, the lack of new housing means that no houses will be vacated for filtering to middle-income households, so they now have to upgrade at a higher cost, or tolerate a mismatch and no houses will be vacated for filtering to low-income households.
If growth control displaces people from a city, how can it add to commuting and pollution?
Growth controls (land use regulations that attempt to restrict population growth and urban sprawl) have increased housing prices and diverted population growth to uncontrolled cities. Resulting changes in local labor supply might stimulate intercity commuting from uncontrolled to controlled cities. This intercity commuting leads to an increase in the pollution.
How can growth controls on new construction cause "back filtering", resulting in higher rents?
Growth controls on new construction cause 'back filtering' and result in higher rents because resistance to growth push people back into the rental markets whereas they would ordinarily move up to home ownership.
Could collision externalities be caused by problems with insurance requirements and the legal system, rather than by driving?
Having insurance and the way that the legal system handles accidents cause people to be less careful than if they didn't have insurance.
Why does the text say "low income communities more frequently make this tradeoff between environmental quality and fiscal benefits"? What does that say about the income elasticity of demand for environmental quality? Is the result "environmental racism" or an improvement in efficiency?
High income people pay more to live in better environments. This is an improvement of efficiency, not racism. Discrimination is based on wealth not racism. This is voluntary and looks at cost and not benefit. Income elasticity of demand for environmental goods: as income goes up, people prefer more (better) normal goods.
Why does Holcombe argue that reduced population density decreases pollution levels?
Holcombe argues that reduced population density means less traffic congestion. This decreased congestion means faster commuting times and less time in a polluting car. Furthermore, in areas that are less populated, the trees and environment can absorb the pollutants much better than the concrete of inner cities. This means that pollution will be less with sprawl.
6 (128). Why does the underfunding of housing assistance programs violate horizontal equity? Can housing aid make eligible families who don't receive aid worse off?
Horizontal equity is the idea that families in the same situations should receive the same aid. Currently, programs do not subsidize everyone who qualifies for aid. Therefore, we should reduce the subsidy or reduce the number of people who qualify. Families who qualify and don't receive aid are worse off because the subsidies which others receive increase the price of housing, yet the unassisted families' incomes remain unchanged.
Why does housing originally occupied by the rich not typically filter down to low income households?
Housing originally occupied by the rich does not typically filter down to low income households because lower income households do not usually demand luxury features (10 foot ceilings, fancy fixtures, etc).
What are the three features O'Sullivan says make housing "different"?
Housing stock is heterogenous (dwellings differ in size, age, style, interior features, utilities & location), housing is durable (can deteriorate over time at a fast rate or slow rate depending on maintenance decisions) and moving is costly (when income or preferences change, consumers don't instantly adjust consumption)
Referring to Figure 15-3, why does public provision or support for 2.6 million dwellings not increase the housing stock by 2.6 million dwellings? Why does the elasticity of supply of low-income housing have such a large impact on the answer? Why could the long run effects be far different than the short run effects? What two mechanisms does the text give for the crowding out of unsubsidized housing?
Housing subsidies decrease the demand for unsubsidized low-quality dwellings. The resulting excess supply decreases the equilibrium price, and the number of unsubsidized dwellings decreases. With the elasticity of supply of low-income housing, when the demand curve shifts to the left, it reduces the unsubsidized housing that partly offsetting the effects of housing subsidies, so the net factor is crowding out. The supply curve in the short run is very steep for the existing housing. The supply curve in the long run is almost perfectly elastic because of the filtering process, but it takes so long for the existing housing to disappear, so the politicians are difficult to see the crowding out. Two mechanisms: More retirement- a decrease in the price of low-quality dwellings reduces the profit on unsubsidized dwellings, so more dwellings are retired from the housing market, either converted to another use or abandoned. Slower downward filtering- a decrease in the price of low-quality housing relative to the price of medium-quality housing causes property owners to slow the movement of dwellings downward along the quality ladder.
12 (131). Why might a situation where 40% of residents qualify for a housing program indicate a poorly designed program?
If 40% qualify, that makes it very expensive for the remaining 60% in taxes.
Explain how filtering up and down of housing works when one particular quality level (bundle) of housing becomes unusually profitable. How does it affect other existing housing? How does it affect new housing construction?
If bundles of some particular size becomes more profitable than bundles of other sizes, then some producers with larger bundles of housing service will allow housing units to deteriorate more than they would otherwise. They will allow their dwelling units to filter down to the bundle size which is most profitable by pursuing a lower maintenance policy. Similarly, some producers of smaller bundles will follow a higher maintenance policy than otherwise resulting in a filtering up of their dwelling units. Short run effects: shortages, higher prices, and profits for bundles of these sizes that will finally settle to reach bundles of sizes which can be provided by the construction of new dwelling units. New construction continues until there are no profits to be made on bundles of any size.
15 (133). Why is whether new unsubsidized construction of low income housing is occurring a good guide to whether a supply side (construction of new public housing) strategy makes sense?
If comparable unsubsidized units are not being built at this time, it is because they cannot compete with existing units—their costs cannot be recouped at existing and future expected rent levels. This indicates that the vacancy rate among units of this overall quality—low-income quality—is high, and therefore public construction makes no more sense than private construction. It is better to allow filtering to work.
How might smart growth policies lead to even greater sprawl?
If smart growth leads to congested, polluted cities, many residents may flee to rural areas, creating an even greater sprawl.
How does limiting building permits affect the supply of housing in a jurisdiction? Why does it decrease the cost of producing housing? Illustrate what developers would be willing to pay for permits, using Figure 9-5.
If the number of permits issued is less than the number demanded by the developers, the policy decreases the number of people who can live and work in the city. The supply of housing will reduce. The permit policy decreases the marginal cost of production because it decreases the demand for land and its price. The decrease in the demand for land decreases the market price of land, decreasing the cost of producing housing. In the diagram, Price is 250,000 and marginal cost is 160,000. the difference between the price and MC is the developers willingness to pay for the building permit(90,000).
8 (129). Why do subsidies for those at the upper income limit for eligibility violate taxpayers' preferences?
If the subsidy is positive for families at the upper-income limit, then subsidized families with incomes below the limit will be able to consume more than some ineligible families.
Why would even doubling mass transit ridership have little effect on automotive travel? How large would we expect the benefits from reduced congestion and pollution to be, as a result?
If you have 2 people riding mass transit, doubling this number would have basically no impact on car use. Large percentage changes are deceptive. People switch from the bus to the metro, not from cars to the metro. Buses are more green than rail systems. We would see almost no discernable impact.
How do trends in Western Europe dispel arguments that U.S. government subsidies are the primary cause of sprawl?
In America, as well as Western Europe, the personal incomes of people have risen and thus more automobile purchases have been made. Secondly, this has created more demand for personal living space in both house size and lot size. As autos have made transportation less expensive, people have opted to live further and further away from the central cities and bought large lots for their homes in low-density suburbs. In America, smart growth advocates have blamed government subsidies such as highway funding and mortgage-loan guarantees for this trend, but in western European countries where the same trends are observable, governments have used different subsidies for transit and high-density residentials. These subsidies are meant to penalize people desiring personal autos and low-density housing, but it hasn't had the desired effect of stopping sprawl. So, it is not government subsidies that are the primary cause of sprawl.
What is Muth's rule of thumb for adjustment of housing services to long run equilibrium each year? Why is Olsen's housing market analysis a long run explanation as a result?
In the absence of maintenance, dwelling units deteriorate with use and over time which means that they yield smaller and smaller quantities of housing service per time period. Normally, producers of housing service find it profitable to invest in maintenance. Olsen's housing market analysis is a long run explanation because it involves the process of filtering, subsequent decision on maintenance policy, and the continuation of new construction until there are no profits to be made on bundles of any size.
What is Tucker's "cover-up" explanation for local government policies such as inclusionary zoning for new construction?
Inclusionary zoning units are designed to provide low-income housing directly to the poor. It requires developers to set aside 10% of their new units for people with "low to moderate incomes." Tucker's cover up explanation for this for new construction is that these units always end up in the hands of the wrong people such as young, educated whites who had qualified by being at the beginning of their earning careers. These "yuppies" will undoubtedly stay in their subsidized apartments for a long time, creating less filtration and circulation than if the apartments had been offered at market rents in the first place.
Could "breakdown insurance" be designed to internalize the externalities caused by breakdowns during rush hour? How would those with older cars fare versus those with newer cars? Could accident insurance include a $10,000 payment to government for congestion caused by the driver ruled "at fault"?
It could internalize the problems. If your car breaks down you create a cost because a road needs to shut down, cops, and ambulances need to come. You can find an insurance mechanism to fix this, so that people find ways to prevent themselves from breaking down. (like insurance). If you used a market mechanism to fix the problem by fining people if they break down on the street, then it will happen less.
Does cream-skimming eliminate the possibility of subsidization of unprofitable routes?
It does not eliminate the possibility but it would call for larger subsidies because the profits from more lucrative routes would no longer be as high
O'Sullivan says "urban transportation determines urban form." How does that explain the monocentric city of the early 20th century and then its subsequent decentralization? Why, then , in current circumstances, is there a "weak connection between transit design and urban form?
It explains the mono-centric city of the early 20th century because of a combination of streetcars, slow transportation modes for goods, need for face-to-face interactions for transactions. Trucks, highways, phones, etc decentralized the city in later years. Today there is a weak connection because automobiles have made it possible for people to locate further and further from city centers, regardless of what urban transit systems are like.
How do concerns of central cities "losing jobs, people and capital" reflect the logic of trade protectionism?
It implies that we should be more concerned about the economic prosperity of certain places than the economic prosperity of actual people. Trade protectionists are more concerned about the loss of jobs than the highest and best use of human capital
6. (147). Why is it recommended that cities be prohibited from adopting more stringent building codes than statewide statutes?
It is recommended to reduce the costs and problems of traditional code enforcement for all the reasons listed in the above questions.
Why would mass transit service improvements be attractive to mass transit planners? How would that affect the well- being of auto commuters? Why would mass transit planners like to increase the costs of driving? How would that affect the well- being of auto commuters?
It keeps them in demand. Auto commuters would suffer because of the increased gas taxes they pay to subsidize mass transit. Mass transit planners would like to increase costs of driving to divert people to mass commute. This would also hurt auto commuters because it would result in increased travel time and less convenience, both of which are highly understated when collecting data to justify building mass transit.
Why does viewing landlords as rich (compared to tenants) misrepresent the reality of the housing market? Why, under rent control, might you expect the tenants to be richer than the landlords?
It misrepresents the reality of the housing market because landlords generally come from the lower strata of the society. They may be a little more affluent than their tenants- although sometimes they are notably less affluent- but as a rule, landlords generally come from the same economic strata as their tenants. Under rent control, we expect the tenants to be richer than the landlords because the tenants 'benefit' from the given degree of affordability whilst the landlords' net profits significantly decrease.
What else does O'Sullivan argue is necessary for investments in rail mass transit systems to be sensible? Why would that be described as using land use coercion to make mass transit "work"?
It only makes sense if the government uses zoning and taxation to generate high density development. This would be land use coercion because you are making people pay and restricting their land use freedom in order to make mass transit profitable. Without the taxation and zoning, people would not choose to use mass transit, which would result in a loss for mass transit.
What would happen to the cost estimates for heavy rail if the cost of rebuilding the entire rail system every 30 years was included, rather than just counting the initial construction?
It would increase dramatically.
If governments do not build the optimal size urban highways, how would it change the average cost of driving with increasing volume in figure 11-4?
It would increase the average cost of driving, making it more negatively sloped, because an increase in volume with no expansion of roads would lead to more traffic, more gas consumption, and more in-vehicle time for passengers, which is bad.
How does light rail compare to bus systems? Why is data about light rail operating costs understated? Why is the diversion of passengers from buses to rail systems important in defining any pollution and congestion savings?
Light rail has higher capital costs and higher operating costs than buses. Data is understated in that the proposed money and energy savings are negated by the fact that federal buses are required to get people to the rail stations.
Why do stringent housing regulations / restrictions make the supply of housing more inelastic in the upward directions. What are the consequences when demand increases?
Local governments use a wide variety of policies to regulate residential development. On average, it takes about 6 months to get a building permit for a project. The housing regulations decrease the price elasticity of supply of housing and generate higher housing prices. Thus when the demand increases the price of housing keeps increasing while the supply cannot really be increased to cope up with the increasing demand.`
How can development taxes or impact fees solve a fiscal problem? How can they be the result of government failure under Prop. 13? Can a development tax be a growth control strategy, contrary to the text?
Local governments use various taxes to finance local public goods. When the annual taxes fall short of the costs of providing public services, 1 response is to impose a one time development tax to cover the gap. In this case it is simply solving a fiscal problem and is not a growth control policy. Some cities impose impact fees on commercial and industrial developers, using the revenue from the fees to expand local transportation networks. Impact fees can reduce the fiscal burden of new development , decreasing the opposition to development.
14 (132). Why would a subsidy for development costs but not operating costs introduce inefficiency into housing programs? Why did the law change in 1970 create incentives for too much maintenance and rehabilitation?
Local housing authorities will build housing as maintenance-free as possible, even though this makes long-term costs higher than the reduction in all future maintenance costs. The law change to cover maintenance costs "in excess of revenue" made the cost of maintenance zero—made it free—to local authorities, so costs soared.
Explain how local tax policy can lead to housing abandonment. How does the elasticity of abandonment with respect to the property tax rate in New York City mean "a tax cut would generate a fiscal surplus for the city'?
Local tax policy can lead to housing abandonment if the property tax is inflexible. As a dwelling moves down the quality ladder over time, profit decreases. In New York City, the elasticity of abandonment with respect to the property tax was 1.65, a 10 percent increase in the property tax increased the frequency of abandonment by 16.5 percent. Given this large elasticity, a tax cut would generate a fiscal surplus for the city. Although the tax liability per property would decrease, the direct revenue loss would be offset by (1) an increase in the number of properties on the tax rolls and (2) a decrease in the number of properties that the city must either take over or demolish.
Why does O'Sullivan argue that maintaining housing quality is substantially different than increasing the quality of an existing unit? Why does this mean that most housing filtering is downward rather than upward?
Maintaining housing quality is substantially different than increasing the quality of an existing unit because raising the quality of the dwelling means that the owner must spend a substantial amount of money to renovate or remodel, rather than keeping up with the house with a little maintenance each year (which is much less expensive). Most housing filtering is downward because houses easily deteriorate, but take a lot of work/money to improve, so it is more likely that houses will filter downward.
How does regulation of cabs and jitneys impede the efficient operation of urban transit? How might it be explained by government ownership of mass transit systems? Were the insurance and speed restrictions placed on cabs and jitneys justified by the cream-skimming argument or by the desire to protect the revenues of the existing mass transit system?
Many other transit alternatives that are not tried. Jitneys are a major part of transportation in most of the world. Not here bc regulated out of existence. Cabs are regulated jitneys. Insurance and speed limits were imposed to slow down jitneys and make them less competitive. While the cream skimming argument is more attractive, it is much more likely that these insurance and speed restrictions were enforced to protect revenues of existing mass transit systems.
If time and convenience are valuable and becoming increasingly so, why does this indicate the failure of mass transit systems?
Mass transit is an inferior good in the United States. If the alternative is walking, then it is a normal good. Time and convenience are important, and cars maximize peoples preferences for these 'goods'. If mass transit systems are losing money today, they'll lose more tomorrow as people increasingly value both their time and convenience.
Use Figure 15-6 to explain the mortgage interest subsidy and its inefficiency. How can the mortgage interest deduction justification use low income "mascots" to give far larger subsidies to others? Why could you eliminate the inefficiency either by eliminating the mortgage interest deduction or by taxing imputed rental income? How does the text evaluate the externality argument for the mortgage interest deduction? Why does the federal income tax deduction for property taxes on houses act as a subsidy for local government. How does it treat higher income residents better than lower income residents?
Mortgage interest deduction only benefits the people who can own the house. Also the 1dollar return on 0.71dollar investment makes people just consume larger quantity house, which makes the benefit of owning the house disappear by forcing people to buy houses at the higher price. Local government can use the law to tax self-renting people so the benefit can be canceled out.
Why do "most high income households move rather than upgrade? What does that imply about whether building new low-income housing makes sense? How does this relate to whether mandates (e.g., fire sprinklers) should apply to all houses or only new housing?
Most high income households move rather than upgrade because repairing things in an older house tends to be relatively more expensive than moving to a new house that is built from scratch with new materials and modern technology. This implies that building new, low-income housing does not make sense because of the filtering process. This relates to the question of whether mandates should apply to all houses or only new houses because more and more new houses are being constructed and if you have a mandate (say for LA earthquakes), cost is cheaper for building a new structure (relatively....the thing to prevent is cheaper, but the actual new housing is more expensive). When it's mandated, cheap structures get torn down and low-income people are worse off. This only applies to newly built structures for today and the future.
If there is increasing sprawl everywhere, should U.S. sprawl be blamed on U.S. policy?
No. Sprawl is not a phenomenon specific to the U.S. It is seen throughout the world. U.S. policy is not to blame. The problem is on the supply side of roads to support transit.
How close do fares come to covering operating and capital costs for mass transit systems? Why might the volume carried by existing mass transit systems in New York and Chicago produce a higher fare-box revenue than would be expected by new heavy rail systems?
Not very close. They create more revenue because the marginal cost of a rider is negligible so each additional rider contributes greatly to covering cost and capital cost. In a new heavy rail system it would need similar ridership to produce similar revenues.
Is Los Angeles congested because of too much reliance on freeways for urban transportation?
O' Toole says that LA is congested because of its high-density urban areas and low freeway per capita numbers. Crowding and inadequate highways is why LA is so congested
Evaluate Olsen's analysis of the effects of rent certificates on housing occupied by recipients.
Olsen argues that slum clearance and urban renewal are not the answers to decrease the number of occupied slum dwelling units, nor to improve the housing occupied by low-income families specifically in a competitive housing market. Rather, they could arrange certificates which can be bought to pay the rent or make mortgage payments in order to subsidize the housing of low-income families. In the long run, this method will eliminate demand for dwelling units which provide less housing service than can be purchased with rent certificates of the smallest face values.
What would a HOV lane do to congestion on a freeway if less than 20% of cars carpool and it does not induce an increase in carpooling, on a 4-lane (each way) freeway? Why, since the first diamond lane on the I-10 in Santa Monica, have HOV lanes been added rather than converted from regular lanes?
On a four lane freeway the optimal distribution of riders is 25% per lane. If one lane is converted to carpool and only holds 20% of the riders then each other lane will hold 26.66 of the ridership. Since the first diamond lane, HOV lanes have been added since then because it hides it inefficiencies by leaving the existing lanes intact and shifting some people into the new HOV lane.
Explain Holcombe's statement that "When one looks at the dynamics of the problem, it becomes apparent that urban sprawl is not the problem that causes traffic congestion, it is the solution that keeps congestion from getting worse."
People's preferences for cars will not change based on government programs, can the gov't make you live in denser areas if you don't want to? People adapt, urban sprawl is an example of people adapting in order to meet their preferences.
Evaluate the "poor pay more" for housing hypothesis. How is it related to the poor pay more for food argument? How might that hypothesis relate to damage, rent-skipping and eviction costs for low income housing? How might it relate to building and occupancy codes?
Poor pay more housing hypothesis states that the price per unit of housing service is greater for dwelling units yielding small quantities of housing service. This is because market works efficiently in large bundles of housing service. Whereas in the case of dwelling units yielding smaller quantities of housing service, the price exceeds the minimum Long run average cost of production. As a result, the supply of dwelling units yielding less than x units of housing service per time period will increase and the price per unit for these small bundles will fall. Eventually, new construction will be induced.
Is the value of the property taken or the value of what is left the key to whether courts rule that there has been an unconstitutional taking?
Property may be regulated to a certain extent, if regulation goes too far, it will be recognized as a taking. In other words, compensation is required if zoning decreases the property value by a sufficiently large amount. Thus it is the value of the property what is left that is the key to whether the courts rule it as an unconstitutional taking as if the zoning leaves the landowner with options that provide a reasonable rate of return, no compensation is required.
What do Gordon and Richardson respond to the assertion that "people should be given a choice" as a defense of smart growth?
Proponents of smart growth do not see waste and inefficiency in ways cities are developing, but are actually unhappy with suburb people's tastes, which are revealed in the residential communities. The "Perfect" market exist only on paper. Surveys shows people's preference for low-density living. Developers cater to consumer preferences.
Why is public housing more expensive than private housing? Explain how the text calculates the "bang per buck" of public housing.
Public housing is more expensive for two reasons. First, the private sector can build new low-income housing more efficiently than public sector. Second, there is a plentiful supply of used low-quality housing, so even the least costly new housing costs more than used housing. As shown in figure 15-2, recipients would be indifferent between $200 in cash and public housing, so the bang from each public-housing dwelling is $200. If the government subsidy per dwelling is $840, the bang per buck is $0.24 (equal $200/$840).
How do federal housing policies redistribute income between higher and lower income households? Explain.
Public housing, subsidized housing, and voucher programs focus on low-income and part of income distribution, but only about 30% receive assistance. There are long waiting lists for households to get the aid are not funded at a level necessary to serve all the eligible households. Not everyone in the low-income category is helped; it actually harms some. For middle-income and high-income households, the government sacrifices some tax revenue to subsidize homeownership through the tax deduction for mortgage interest.
Why would rent control make conversion of existing housing to condominiums or commercial purposes attractive? Why would such attempts generally be resisted by local political authorities?
Rent control would make conversion of existing housing to condominiums or commercial purposes more attractive because it might be more profitable (but only if the alternate activity generates enough profit to offset the cost of conversion). Such attempts would generally be resisted by local political authorities because rent control only applies to residential use. People get around rent control by renaming it. Empty lots that can go residential or commercial start going commercial and political authorities do not like this.
9 (129). If a housing program induced some recipients to get less housing as a result, would the program be consistent with its stated rationale? Could some housing recipients value the last unit of housing spent at more than the cost, while other housing recipients value the last unit of housing spent at less than the cost?
See #5: this is the under-consumption situation. Since the rationale for the housing program is to increase housing consumption, the program in this case actually has the opposite effect. Underconsumption families consume less than they would without the subsidy; they value the last unit of housing spent at more than the cost. Families that are induced to over-consume value the last unit of housing spent at less than the cost.
5 (128). Why could a public housing recipient actually get less housing as a result?
See the lumpy fixed quantity subsidy graph. In the case of under-consumption, the family values the last unit of housing spent at more than the cost. Thus, with the subsidy, they are consuming less housing than they would in the absence of the subsidy.
What is Holcombe's core argument about government infrastructure development?
Similar to Hayek's argument about how the market is superior to central planning. The gov't should have no role in land use planning as it runs into the same problems that the Central Planning Board under Soviet Russia ran into. The market can more effectively allocate appropriate land uses than the government. However gov't owns the roads. This means that to a certain extent they will have to plan. But they should focus on planning its own infrastructure development (mainly roads) and not plan how private landowners use their land.
Evaluate Olsen's argument for whether slum clearance will result in a net reduction of slums. As a result, why would slum clearance not be likely to reduce the negative externalities borne by slum dwellers?
Slum clearance, defined as the destruction of slum dwelling units by government, is believed to merely result in the transfer of slums from one location to another instead of lead to the net reduction of slums. Slum clearance as a result are not likely to reduce the negative externalities borne by slum dwellers since it does not result in change in the incomes of the former residents. Consequently, the former residents will in the long run consume exactly the same quantity of housing service as before slum clearance.
Why do smart growth advocates back regional government agencies with authority over the suburbs as well as the central city? How does regional government avoid substantial public involvement?
Smart growth advocates back regional government agencies to have authority over both the central city and the suburbs. Suburbs have a long history of resisting annexation and mergers with the central city, but regional government agencies can strip away this democratic process of resistance to change. The regional government is comprised of local government representatives who take controversial stands on issues but then can shift the blame onto other entities like the organization thus deflecting the regional governments involvement in the public.
What is O'Toole's argument that smart growth will increase pollution?
Smart growth argues that there will be less pollution due to the reduced number of cars on the road, but O'Toole says that pollution emitted by cars is more complicated than that. He says that it is not so much how many miles a car had driven that determines how much they pollute. He argues that engines pollute more when they accelerate, and also when they are driven at lower speeds. Therefore, the smart growth system of shorter trips at slow speeds will only result in more pollution. He also shows a table of how the worst polluters are high population density areas.
What is the standard claim about sprawl and urban service costs? What does the evidence actually point to? Why does a comparison of high versus low-density development on vacant land misrepresent the cost of redeveloping existing low-density neighborhoods to higher densities?
Smart growth claims that low-density suburbanization costs society more than high-density developments because of the high cost of extending urban services - sewerage, water supply, roads, and schools - to low density areas. However studies have shown this to be the opposite of what data shows. The studies showed that higher density populations brought on higher service costs. Redeveloping existing low density neighborhoods into higher densities is often an extremely expensive measure because it requires tearing down existing infrastructures to install higher capacity services. Often the infrastructure will be put under too much pressure to accommodate the new, higher densities
Why might "snout houses" reflect the desire for private space and air conditioning?
Snout houses are houses that have garages in the front. Smart growth has certain design codes that tries to discourage this style of housing. It specifies that snout houses need to have recessed garages, front porches, and tiny front and side yards, severely limiting the space that people can park their cars. This design code encroaches upon the homeowner's privacy satisfaction by limiting how much he/she can develop on his land in ways they see fit.
If people in suburbs "generally love their lives," how can you explain that in a democracy, government policies like "smart growth" are designed to impose different results on people than they prefer?
Sprawl's critics presume that people are consistently making the "wrong" choices and that they have only poor choices from which to select. Both are disrespectful for the wishes of people whose tastes are not shared by the anti-sprawl activists.
How much value do recipient families place on a dollar of public housing? Why can't we know the marginal value of the last dollar spent on housing for a particular recipient family?
Studies estimate a typical family in public housing would be willing to move out in return for an unrestricted cash grant worth 60% of the public housing subsidy. The subsidies are lumpy fixed subsidies, so we don't get any information about how much the family values the last dollar spent on housing.
What is Fishel's argument for why zoning didn't develop before the 20th century? How does Justice Sutherland's view of apartments in Euclid v. Ambler get reflected by exclusionary zoning and other restrictions today? Do current homeowners have a property right in maintaining the "feel" or character of existing neighborhoods?
Technology in 19th/20th century made zoning unnecessary. Sutherland implies that homeowners have the right to have the "feel" of existing neighborhoods. Sutherland thinks apartments are a mere parasite (they take advantage of open spaces/attractive surroundings)
Why does Olsen say taxpayers' interests have been ignored by U.S. housing policy?
The "traditional explanation" is that members of special interest groups have a much larger stake in housing policy than other taxpayers. This is true, but if taxpayers understood federal housing programs, politicians would find it in their interest to change them radically.
How does the takings clause apply to physical invasions? How does it apply to regulations? How would it interpret a government policy of taking for its own use 50 units in a 100 unit apartment building? How would it treat a rent control ordinance that required landlords to take half of what others would have been willing to pay on all 100 units?
The 3rd criterion for the constitutionality of zoning is compensation. The takings clause states that if the government converts land from private to public use, the landlord must be compensated. Most zoning ordinances do not actually convert land to public use, but merely restrict private use. Thus the government basically regulates the use of land with the takings clause but while property may be regulated to a certain extent, if regulation goes too far, it will be considered a taking. If the government policy takes for its own use 50 out of the 100 units in an apartment building, the government must compensate the landlord for the units according to the takings clause. if there was a rent control ordinance, where the landlord could only take half of what others might be willing to pay for all 100 units, then according to the zoning laws that the court has routinely upheld, as long as the landowner is left with some profitable use of his land, compensation is not required by the government.
17 (134). Some, including Arthur O'Sullivan, argue against demand side housing subsidies because they would increase the price of low income housing. What evidence from the Experimental Housing Assistance Program does Olsen cite in response?
The EHAP did not result in perceptively higher rents for units that were not improved. Additionally, the program cost $900 annually per household while the supply-side HUD program cost $3800/household/year.
What is the EPA's (Environmental Protection Agency) role in support of smart growth?
The EPA threatens to deny the transportation of dollars and other federal funds to cities that do not adopt smart growth programs.
Why does Holcombe argue that local planning for land use is largely "a fiction?"
The State determines what local planning does. If you're trying to save money, obey the state. It is actually state planning disguised as local. If one disobeys the state plan, their proposal gets rejected and they have to make others. This is costly. So in reality, there is little local planning, it is state planning.
How does the cost of asserting problems caused by sprawl compare with the cost of rebutting such charges?
The argument that sprawl gives rise to excessively costly infrastructure, excessive transportation costs, and environmental damage is wrong and actually points directly to the opposite conclusion. Many of the widely available data undermine most of these claims made by critics of urban sprawl. The charge that urban sprawl fosters inequality, unemployment, and economic blight is disproven by the fact that lack of human capital, not workplace inaccessibility, is the main cause of poverty.
How does Holcombe respond to the argument that increasing the density of development will increase air quality?
The assumption is that with increased density, people will commute more by mass transit and less by car. Holcombe responds that this is not at all clear, and cars are so desirable that people will continue to drive them.
What would have to be true for doubling an area's density to reduce traffic congestion? As a result, will smart growth increase or decrease congestion?
The average person living in the area would have to reduce driving by more than 50% for traffic congestion to be reduced in an area that doubles in density. Smart Growth, however, has only indicated that the driving per capita will only be reduced by 10-30% if the density is doubled. Therefore, by these figures, congestion will increase.
Why is the result the socially efficient road width?
The congestion tax covers the avg road cost (vertical distance between private trip cost and social trip cost).
Why does the text conclude that a city that imposes congestion taxes on highways will grow at the expense of other locations? What changes it the tax revenue is wasted on projects of low value to citizens or excessive costs of providing municipal services? What would that do to the change in utility levels in both the congestion tax and non-congestion tax city?
The congestion tax shifts the city's utility curve upward because the internalization of congestion externalities reduces the diseconomies (noise, pollution,congestion) of urban size. These diseconomies pull utility down as a city grows. --> So as these diseconomies are reduced the utility curve of the city with a congestion tax shifts up. This causes the congestion-tax city to grow at the expense of the other city. --> But note that the text assumes that those who are taxed will get the money back with a reduced income tax. 2. If the tax is used on projects of low value then the utility would not increase, and the utility of the non-congestion tax city would be higher. There is mass opposition to tax funds that are used on projects of low value.
2. (145). How could the absence of model building codes for rehabilitated older housing restrict the renovation and filtering process?
The construction of older buildings was made with the absence of model building codes. Because of the lack of specific codes, older buildings were made at the discretion of whoever funded the building. Thus, when building codes were implemented, many of the older buildings did not meet up to standards. Therefore, when trying to renovate or filter older buildings, there exists many flaws in the original building design that conflicts with the present-day building codes. And so, the renovation and filtering processes of rehabilitating older buildings are restricted due to these foundational flaws. To summarize, the absence of model building codes for older housing caused them to be constructed in ways that conflict with modern-day building codes.
Use Figure 14-4 to explain moving costs and housing consumption decisions. Why does the model imply that most people are not in equilibrium with respect to housing? What would happen if there was an increase in household incomes and housing deteriorated over the same time period? Why might a household move to a less than ideal match for its current circumstances?
The cost of moving is substantial, there are monetary and personal costs associated with leaving a house/neighborhood. For a household whose income is increasing over time, the utility maximizing housing consumption increases with income. As income increases, the gap between the household's ideal dwelling and its actual dwelling will grow, and eventually may become large enough to justify moving. The model (pg. 375) illustrates this. This model implies that most people are not in equilibrium with respect to housing because moving is very challenging and cannot happen instantly. Moving is only sensible if the difference in utility is large enough to offset the cost of moving. If there was an increase in household income and housing deteriorated over the same period of time, there will be more money to spend on other goods (see figure 14-2, point i jumps to j). Since the house is deteriorating, that extra money will most likely be spent on maintenance on the house, or if there is enough, on moving to a new house. A household might move to a less than ideal match for its current circumstances if the household anticipates future changes in the utility-maximizing consumption level.
What is the elasticity of demand for mass transit ridership? What does that imply for whether fare increases or decreases would increase fare revenue? What does that imply for the effectiveness of expanding mass transit ridership with fare reductions or subsidies that allow for fare reductions?
The elasticity of demand is very high in an upwards direction but very low in a downwards direction. A fare increase will decrease ridership severely but a decrease will not increase ridership very much.
11 (130). What is Olsen's "fundamental distinction" among government housing programs?
The fundamental distinction is between programs involving the construction of new units or the major rehabilitation of units selected by bureaucrats on the one hand, and those involving assistance to families who are free to choose any unit meeting housing standards on the other hand. I.e. supply-side versus demand-side programs.
Where is the average road cost in the diagram?
The gap between the average total cost and the private trip cost
How does Holcombe's argument that "under current institutions, the government just play a crucial role in land use planning," not conflict with his argument that "a strong case can be made for leaving the government out of the land use process altogether, and allowing private landowners complete freedom to use their land as they want, so long as their land use does not create a nuisance for others"?
The government owns the roads to the infrastructure. If they do a poor job planning, then the private sector does a worse job predicting. The more the gov't plans, the less individuals can. So given that the gov't owns the roads, they must do a certain level of planning. The better job they do at planning roads, the better everything else works. They can plan roads, but shouldn't plan what land use should be after the roads are built.
Explain the text's conclusion about the effects of growth control on the utility of workers in both the controlled and uncontrolled cities.
The growth control policy leads to the reduction of the population in the control city and in increase in the population of the uncontrolled city. The utility of the people in the controlled city increases and that of the uncontrolled city decreases. Since the workers are mobile, the utility gap will not persist as prices adjust to generate locational equilibrium.
Explain the hedonic approach to housing prices. How can incomplete data lead to misleading results, such as a dishwasher with a far higher shadow price than the price of a dishwasher? Why might house values not be a linear function of distance from schools?
The hedonic approach determines the price of each part of a housing bundle. It is based on the notion that a dwelling is composed of a bundle of housing services, each with an implicit price. Incomplete data can lead to misleading results. House values may not be a linear function of distance from schools because there are a lot of externalities that come with living in close proximity to a school. The main point about the nonlinearity is that while being closer to a school is generally preferred, there are very local negative externalities within one block of the school as well (litter, graffiti, etc.) that would reduce home values very close to schools. --> The dishwasher example illustrated that when some variables are missing (the age of appliances), the estimated shadow price of a dishwasher actually included something else as well, giving poor guidance.
Why does the heterogeneity of housing make it hard to apply economist's theory of competition to housing? How does filtering tie together the various heterogeneous housing sub-markets?
The heterogeneity of housing makes it hard to apply economist's theory of competition to housing because there are great variations among residential structures as to size, type of construction, and other characteristics to which consumers attach value. Filtering tie together the various heterogeneous housing sub-markets
How does your answer to question 10 above modify the conclusions of the optimal operating subsidies for bus and rail service presented in the text? Why does how heavily citizens are taxed in other areas affect the answer?
The inefficiencies created by taxation must be offset by the reduction in externalities. The more heavily taxed the citizens already are the more the marginal burden of taxation therefore the more the externalities have to be reduced to justified.
Why do subsidies for new private housing provide dwellings with market values less than their production costs?
The new private housing is less efficient than public housing because it is more expensive.
14 (397). Why would you expect homelessness to be correlated with rent control?
The presence of rent control in a city was by far the single most important predictor of homelessness. Both economic theory and evidence demonstrate that rent control reduces new apartment construction and leads to deterioration of the existing rental housing stock and conversion to other users... Rent control reduces the availability of affordable housing they face and tilts the competition for the new available units distinctly competition against them.
What tradeoffs does the text see between demand side and supply side housing programs? How does the supply of low-income housing and its elasticity of supply influence the comparison? How would long run results differ from short run results?
The public and subsidized housing, which increasing housing supply for low-income households, is more costly than unsubsidized housing, and it gives recipients fewer options. Vouchers give recipients more options and generate housing at a relatively low cost, but they increase housing demand and housing prices. In areas with a plentiful supply of low-income housing and a relatively large elasticity of supply, the price effects of vouchers will be relatively small. In contrast, in areas with a relatively inelastic supply of low-income housing, vouchers will generate large price hikes, and carefully crafted supply-side policies would play an important role. In the long run, the supply-side will all disappear.
How do federal housing programs act like an income tax?
The rent charged to a particular tenant pay exactly 30 percent of the household's income, like flat rate income taxes.
Explain Holcombe's "natural segregation" of land uses. How does it depend on knowledge of future transportation corridors?
The roads lead to natural segregation of land due to the different prices of land. Land that is quiet will be used for neighborhoods, not industry. If the quiet neighborhood roads get huge, the gov't buys everything and expands the roads. The gov't should buy up land first, then when people want to expand, they can.
Why does focusing on percentage changes in developed land versus percentage changes in undeveloped land dramatically change the apparent severity of the adverse consequences of sprawl?
The smart growth advocates always use apocalyptic language. They twist statistics by showing percentage change on a small base, which greatly exaggerates the severity of the issue. In reality, only about 5% of the US is developed.
Why do more cars not necessarily cause more pollution?
The standard approach is that the more cars, the more pollution. But if people don't have to take multiple trips, by going to Wal-Mart, for example, there can be more cars on the road, but with less pollution. Wal-Marts are placed at city limits, where the speed limit is 45, the optimal speed for lowest pollution.
13 (132). Why is the desire not to concentrate low income families in an area an argument against subsidized building of housing projects?
The subsidized building of housing projects will do just that: concentrate low-income families in an area.
Why can't you accurately evaluate housing programs without considering the income tax code?
The tax code subsidy is greater than the inefficiency for the investor. The Tax Reform Act of 1986 instituted a program of tax credits for investment in affordable housing for low-income households.
Explain the two basic features O'Sullivan say characterize the filtering process.
The two basic features O'Sullivan says characterize the filtering process are (1) Decrease in quality-- the quantity of housing services generated by a dwelling (summarized in 'quality') decreases over time bc of physical deterioration, technological obsolescence and changes in housing fashion. (2) Decrease in occupant income-- As a dwelling moves down the quality ladder, it is occupied by households with progressively lower incomes
Why would urban renewal predictably harm low income residents? What would it do to low income residents in neighboring communities? How would you evaluate the new commercial developments under the program?
The urban renewal program displaced low-income households in favor of higher-income residents, public facilities, and commercial operations.
If a city uses a growth boundary, but does not restrict lot size, why will higher density partly offset the loss of urban land with respect to population? Why would people's utility be higher without the lot size restrictions?
The utility gap between the control and uncontrolled city increases the price of the land in the control city. When the price of land increases, density will increase as firms and people economize on land. Single family homes will be built on smaller lots and more people will live in high density apartments and condominiums. firms will occupy smaller lots and taller buildings. This increase in density weakens the growth boundary as a population control policy and the higher density will offset the loss of urban land. Utility is higher with flexible density because the distortionary effects of growth control can be partially undone by increases in density.
When discussing commuting time, why is a minute spent in a suburb to suburb commute not as costly as a minute in suburb to downtown commuting?
The worse the traffic the higher the cost of traveling in that traffic. Suburb to downtown is typically the most congested and therefore the most costly to drive in.
Why can sprawl be a means of defending private property rights against central city abuses?
There are always people who wish to realize economic gains by taking the property of others or by rigging the regulatory game unfairly in their favor. Part of this can be achieved through zoning. By moving out of the central city towards the suburbs, people will be outside of the zoning laws that lead to abuses threatening their private property rights.
7. (148). Why are proposals for building code reforms like those offered in this article predictably difficult to get enacted?
These types of proposals are incredibly difficult to get enacted because there is no incentive for the leaders and managers of the existing set of building codes to accept the reforms. Without the currently in place building codes, many of the important regulators of them would be left out of a job that pays them well. Therefore, there will be strong rebuttal from the heads of the existing codes when trying to implement the proposals. And, because the existing people have lots of influence and power in the construction industry, it is difficult to get the new proposals enacted.
16 (133). Why does Olsen argue that a housing allowance plan would better match taxpayers' preferences than a supply side (construction) approach to housing subsidies?
This type of program involves the minimum government interference in the lives of recipients and housing suppliers while still providing subsidies. It avoids the inefficiencies of new-construction programs by subsidizing households and not requiring they live in new homes. It reduces inequality by offering equally situated households the same grant under the same conditions and providing subsidies to all eligible families.
How does renters' political power explain where rent control gets imposed? How does rent control treat existing tenants and prospective future tenants far differently? How does it affect housing in neighboring communities?
This would only benefit the existing tenants at the cost of the owners and the future tenants. The owners would have to sustain losses, so they will take less care of the buildings, which will deteriorate faster. Also the tenants will never move out, so the future tenants will not be able to get a house. Though all the renters are the ones who is actually living there and voting, so the tenants hold all the powers. It would make the owners to turn all the housing to other things also, so the housing quality will get worse, and the supply will shrink also.
Would investment in "traffic calming" increase or decrease transportation capacity? Why can't we use transportation funding levels to gauge the effect on transportation carrying capacity?
Traffic calming is a goal to discourage driving by reducing road capacities. It consists of putting barriers in roads to reduce speeds or flow capacities. Investment in traffic calming is supposed to decrease transportation capacity
Why is the term "unplanned growth" misleading, when contrasted with "smart growth"?
Unplanned growth sounds disorganized and gives it a negative connotation as opposed to smart growth where it sounds planned, giving it a positive connotation. It makes it seem like it is a "Not large scale plan" vs. "large scale plan". Many tend to think that unless it is a large scale plan, there will not be any success.
Why does the text say a growth boundary is a blunt tool to respond to sprawl?
Urban growth boundary increases density. There are 2 reasons, 1> Although a growth boundary may change density in the correct direction, it may go too far or not far enough. 2> A growth boundary creates distortions of its own.
With complex, interdependent urban relationships, why is it so easy to find a relationship between sprawl and other adverse trends over time? Do people leaving the central city cause those left to be poorer or could both be a consequence of poor central city policy choices?
Urban sprawl is linked to increasing income inequality, job security, central-city decline, increasing housing costs, long commutes, environmental problems, species extinction, loss of farmland, a sense of isolation, elevated blood pressure, muscle tension, intolerance, psychological disorientation, and even murder and mayhem. "unplanned growth" is shorthand for most current suburban and exurban development. Developers decide what sort of communities to provide and what houses to build by investigating consumer preferences. Markets do a better job of discovering consumer preferences and providing desired goods and services than does "smart growth planning" The General Plan for Stockhold is a good example of how "smart growth planning" is not as effective as people say it is. With the rise of information technology, foot-loose firms now follow the labor force outside of the city. Most households seem to prefer suburban environments where single-family homes dominate the housing stock.
Use Figure 15-2 to explain public housing as a lumpy fixed quantity subsidy with a purchase requirement. How do you find the dollar value of the resulting welfare cost? Why do we lose information about the marginal value recipients place on added housing from a lumpy fixed quantity subsidy?
We cannot find the exact value of the welfare cost, because due to the fact that it is public housing or not, we cannot know the value that the recipient put in the value of housing. For the given graph, considering the right side is the housing, we can see how the loss is generated by the public housing. The dotted grey line represents the voucher system, the green line represents the under consumption, and the blue line represents the over consumption. We can see from the both blue and green line the lower utility curve have been chosen in order to get the public housing benefit. Where in voucher system, the utility curve will shift out to the point where the people would consume to the point where they can maximize their utility. Also since the voucher can be used to create higher demand for the housing, it could have made the owners of the houses to compete, rotating the curve to the solid grey line.
Why is the boarding up decision like the standard microeconomics shut down rule? Why would boarding up be a function of the interest rate?
When a dwelling is retired from the housing market, it can be boarded up temporarily. This occurs when the price is expected to increase sometime in the future and the opportunity cost of holding wealth in housing instead of another asset, such as a bank account, is relatively low. This decision is like the standard microeconomics shut down rule (where a firm will implement a shutdown of production when the revenue received from the sale of goods or services cannot cover the variable costs of production. The firm will experience a higher loss of production when it produces compared to not producing at all). Boarding up is a function of the interest rate because of the opportunity cost of maintaining ownership. The cheaper it is to finance cost, the more time you will board up, rather than abandon. Boarding up means that you think things will get better.
Evaluate Dee Hall's statement that light rail "is not worth the cost if you're just looking at transit. It's a way to develop your community at higher densities," if people like living at lower densities.
When looking at what happened in Portland, this statement is flawed. Portland built light-rail lines in the hope that it would stimulate high-density development. It did not however. 10 years after the rail was built, smart growth advocates realized that the plan wasn't working; there was very little development occurring along the railway. So, the city council gave tax breaks and subsidies to developers of high-density apartments, but even this failed after developers struggled to find tenants. There was not enough demand for high-density apartments to fill them. For high-density apartments to work, there needs to be a demand for it.
Why might surveys of the "need" for mass transit be inconsistent with actual data on mass transit ridership?
When people do not face a cost for their choice they may overestimate their ridership of mass transit. They may also favor mass transit in principle because they are hoping that others will ride.
Why would differences in regulatory regimes explain why the rental crisis was only on the East and West coasts?
When the figures are broken down nationally, rent burden has increased 20% in the Northeast and 33% on the West coast (mainly in California), while staying virtually level in the South and Midwest since 1967.
7 (128). Why does Olsen say that income "is the best way of directing the most aid to the neediest people"? Why do problems with official income and poverty measures mean that income can itself be a misleading measure of need?
While other factors are likely more informative, income is the best quantitatively measurable variable we can work with. Many people receive "in-kind" aid like food stamps that are not counted as income, leading to distortions in measurement. If they were counted, some families would be pushed above the poverty line. This leads ironically to poor who work less in order to earn less in order to continue receiving aid. Thus aid makes the poor look poorer.
With rising income, why is filtering even more beneficial?
With rising income, filtering is more beneficial. This is best seen through this example: if a high income household increases its ideal quality level for houses, then to meet its greater demand by modifying its old house, the household would be forced to not only restore the original quality level, but also to increase it with substantial remodeling. As a result, the advantage of new housing over used housing would be even greater. Similarly, if the incomes of middle income household are rising over time, they would find the houses vacated by high income households more attractive relative to upgrading their old houses. In general, when income increases over time, filtering is more advantageous, reflecting the high cost of moving dwellings up the quality ladder.
9 (393). Using Figure 15-4, why do vouchers act as a smooth fixed quantity subsidy? Why would vouchers eliminate the underconsumption of housing that is possible with public housing? Why do housing vouchers increase spending on other goods than housing? Could they have the same effects as giving those households equal value dollar cash grants?
With the vouchers, there is a dollar-for-dollar trade-off between housing and other goods. The voucher generates higher utility than public housing because the voucher gives the recipient more options. Same as number 4. No purchase requirement itself is already a benefit. The voucher would eliminate underconsumption or make people able to spend more on other goods, because it gives the people the choice. As we can see from the graph above, it gives people the opportunity to choose up to the grey line with voucher. Cash would be the best, because even the voucher system is inefficient in sense that it creates losses collecting and converting cash to the voucher system.
How does Peltzman's theory of risk compensation explain what happened to death rates to car occupants, pedestrians and bicyclists when mandated safety features made cars safer?
Wouldn't encourage people to drive cleaner cars, because every driver pays the same tax per gallon, regardless of how much pollution is generated, so ppl aren't given the incentive to buy cleaner cars.
Does filtering allow us to analyze the supply and demand for housing even though housing is heterogeneous? How do you reconcile that answer with the previous answer?
Yes it allows us to analyze the supply and demand for housing adopting the theoretical entity called 'housing service.' With this simplifying assumption, each dwelling unit is presumed to yield some quantity of this good during each time period, and therefore there is no distinction between the quantity and quality of a dwelling unit. Filtering is defined as a change in the number of housing services in a particular dwelling unit.
Can paratransit earn profits? Given your answer, how would you explain opposition to paratransit?
Yes, but opposition exists because it would detract passengers from using mass transit, thus making it even less profitable than it already is for the government
How does zoning affect the value of already developed land? Undeveloped land? Why does local voting give more weight to the owners of already developed land?
Zoning causes the value of the developed land to increase as the demand for it increases. As the zoning laws restrict the use of land, the price of the land will increase with increase in demand and stay stable if the demand is stable. This is because the supply of developed land is stable. For undeveloped land the value will not increase as compared to the developed land. Local voting gives more weight to owners of already developed land because of the increasing land values and the increasing demand.
What does the text say is the problem with zoning as an environmental policy? What does the text suggest as a better solutions? Are there any problems with its suggested approach? Why does the text suggest combining pollution taxes with zoning?
Zoning does not reduce pollution, it moves it around. Economic approach: impose tax on pollution equal to the external cost it imposes on society. By placing polluters in industrial zones & imposing a tax, pollution could be reduced and decrease the external cost of pollution
Contrast the substantive due process standard in Euclid v. Ambler with the "necessary and proper" clause of the U. S. Constitution. Why does it amount to benefit analysis rather than benefit-cost analysis, according to Fishel? How can this standard be used to justify rent control?
Zoning ordinance is constitutional as long as it generates some benefit for the local community. The court did not say that the benefit of zoning must exceed its cost, only that the benefit must be positive. in euclid v ambler: ambler realty compay sues bc the city zoned its land for residential use. ruling was that the zoning ordinance satisfied the standards for substantive due process bc it had reasonable relation to promote health, safety, morals and general welfare.
Explain each of the curves in Figure 10-6. On the test there will be no markings and you will have to label the curves *****IMPORTANT****
a. ATC curves (2 land and 4 lane): show the average total cost of travel. Includes the cost of building the road and the private cost of travel. --> As traffic volume increases, there is a decrease in average road cost, and increase increase in private trip cost (once the congestion threshold is passed). b. Marginal benefit/demand curve: decreases as traffic volume increases c. Social trip cost d. Private trip cost
Of those 4, which 1 does subsidizing mass transit change in the appropriate direction? Which 3 does it not change? Explain
a. It changes modal choice by matching the underpricing of car travel with under-pricing of mass transit. b. It doesn't affect the time of travel, travel routes, or location choice.
What are the 4 ways that a congestion tax reduces peak-hour traffic congestion?
a. Modal substitution: The tax increases the cost of single-driver travel relative to carpooling and mass transit, causing traveler to switch to other modes b. Time of travel: Tax is highest during the peak travel periods, causing some travelers to travel at different times. Students and commuters will be less likely to change b/c of inflexible schedules. c. Travel route: highest on the most congested routes, causing some travelers to switch to alternative routes. d. Location choices: Increases the unit cost of travel (travel cost per mile), causing some commuters to decrease their commuting distances.
Explain the analysis of congestion externalities and the optimal congestion tax, using Figure 10-3. Why can't the congestion tax just be set equal to the external costs at the initial (pre-tax) situation? Extend the analysis to peak versus non-peak hours, using Figure 10-5.
a. The demand curve shows the number of drivers who will make a trip depending on the cost. As the cost of the trip decreases, the benefit exceeds the cost for more people, so we move DOWNWARD along the demand curve. A demand curve is also a marginal-benefit curve. The demand curve shows how much the marginal traveler is willing to pay for a trip. If there are less cars, then the traveler is willing to pay more. As we move downward along the demand curve, people with progressively lower marginal benefits use the highway (low cost). b. The tax is set at the difference between the private trip cost and the social trip cost. The goal is to tax the private cost to the point where a traveler will operate at the equilibrium social trip cost. IN the figure taxing 2.10 at point i will get the traveler to operate at the demand equal to the equilibrium social trip cost at e. c. The congestion tax equals the gap between the private and social cost of travel, and it varies across time and space. During peak travel times, the demand curve is relatively high, generating a large gap between the private and social cost of travel and thus a large congestion tax. a. In off-peak periods when demand is relatively low, the congestion tax is low as well (smaller gap between the private and social cost of travel).
Why does the need to grant large numbers of exemptions argue against the alleged basis for zoning?
exemptions are proof that you do not know enough to know the right set of rulesà more reason to justify NOT zoning
Why are performance standards for retailers more flexible and efficient than confining retailers to special zones? Why might a similar approach to high density housing be better than restrictive zoning?
flexible approach gives retailers more location options and enforces performance standards for parking, traffic & noise. High density housing increases traffic, noise, congestion & parking problems...performance standards may prevent externalities through street improvements, off-street parking and buildings designed to deal w/ issues/lost views of sunlight.
a) Explain the text's analysis of the effects of a pollution tax on those who pay the tax and continue to use the highway? What would change if the tax revenue raised by the congestion tax did not benefit residents by reducing other taxes? b) Explain the text's analysis of the effects of a pollution tax on those who stop using the highway after the congestion tax is imposed. What would change if the tax revenue raised by the congestion tax did not benefit residents by reducing other taxes?
his results are based on the assumption that tax revenue is used to reduce income tax. This would leave travelers better off, but in the event that taxes aren't used for income redistribution, travelers are left worse off.
How can minimum lot-size zoning internalize the "space externality"? Could restrictive covenants or planned communities solve the problem, without zoning? How does the size of the area over which externalities extend affect the answer? Could the space externality argument be used as a "cover story" for fiscal zoning?
people want space between houses—high utility for all, homeowners & neighbors increase utility. Positive space externality=lots will be smaller than the socially efficient size. Minimum lot zoning = minimum space between houses with equal contributions of space by each household. People want to freeride and not provide greenbelts for others.
What comparison must be true to justify expanding the road?
the average
Do "incompatible" land uses need to be separated by zoning ordinances, or does the urban land market naturally tend to "zone" them apart?
the market naturally zones incompatible land uses
Explain the contrast between public land greenbelts and zoning in providing open space to a community. Show the result graphically and illustrate the welfare cost of zoning. How does the court's distinction between takings and mere regulation affect the answer? How can providing amenities as a condition of permission to expand or alter structures be supported by a majority of the residents?
would have to charge taxes to buy green space, price compensates. buy until real marginal benefits equal real marginal costs. Instead of paying real cost pay zero.If they interpreted taking as partial taking of property value then would only be able to buy it, solve problem that way. Physical invasion test. IF only regulate it then don't have to pay for it, just take away value. If a majority of voters is what mattered, they aren't paying for it. Ex: forcing in bike lanes. Seems like free beautification until you have to pay for it.
