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How crime stops upzoning and densification
And therefore helps cause 'the housing theory of everything'
Cooperation is why we are successful as a species. Notwithstanding the emergence of new technologies like Zoom, cooperation still happens best when we are physically near one another. To work physically near someone you have to be within commuting distance. So cities are important.1
Many of the most successful cities around the world have shortages of housing, with houses that are much more expensive to buy than build. In ‘The Housing Theory of Everything’ John Myers, Sam Bowman and I looked at all the terrible knock-on effects these shortages have on fertility, growth, inequality, and the climate – and possibly more.
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In general, these cities have housing shortages because development control systems deliberately prevent either extra density or extra outward expansion or both. They do this where there is popular demand: development tends to impose costs on locals that they are not compensated for, like noise and congestion. When clever policy means that they are compensated for noise, congestion, and so on, locals do often opt for development, as in clever development policies seen in Tel Aviv, Seoul, Houston, and Vancouver.
One further potential cost of development is crime. Crime is hyperlocal. People pay substantial amounts to buy housing in neighbourhoods with less crime. Since crime is extremely bad, people are risk averse about getting more of it near them, and when crime is high they tend to be more opposed to development nearby.
Crime in America is extremely high, relative to developed countries. For example there were 24,576 homicides in the USA in 2020, compared to 318 in Japan, a country with about 40% of its population, or about 30x higher per capita. There were just over 4,000 across the EU as a whole, which has more than 100 million extra citizens compared to America – or a rate about 8x lower.
The USA actually has somewhat less of a housing shortage than somewhere like Britain. Whereas British cities have been contained almost completely by green belts, with practically no outward expansion at all since the Second World War, American cities have sprawled legendarily.
In cities with four directions to sprawl into – like Atlanta, Phoenix, Houston, and Dallas – this has led to house prices that are not far off the cost of construction.
In cities facing physical limits, usually lakes, oceans, and mountains, housing shortages appear, with high rents and prices. San Francisco and Silicon Valley are hemmed in by the bay, the Pacific, and the mountains; New York City has the Hudson River and the Atlantic. Both cities have significant housing shortages.
There are upzoning efforts going on across the USA – attempts to increase the amount of building that is permitted on existing suburban plots. YIMBYs have had some impressive success. To the extent that these will succeed, I think it is because American cities had been getting much safer between the early 1990s and about 2014, driving property values in the centre up dramatically, but zoning had not always caught up to reflect this.
A New York City with 2,200 murders in a year is one where you will be minded to block every bit of housing people want to build nearby. Residents of a 300-murder NYC will balance up the probabilities differently. This is true across all categories of crime – for example California has more than 3x fewer murders per capita today than in 1993, 2.5x fewer car thefts, 8x fewer burglaries, and 3x fewer robberies. But I tend to use murder as the best indicator, since it is measured most consistently and accurately.
Sadly, these attempts to allow more development in suburban areas of cities will for the most part have trouble succeeding, in part due to worries about crime. Overall, the gigantic overwhelming majority of new housing in American cities is not being built in the places where housing is most expensive, near the best jobs in San Francisco and New York City, but instead forced to the places where it is easiest to sprawl, with all the concomitant costs.
How much is this costing America?
Hsieh & Moretti look at 220 American metropolitan areas between 1964 and 2009. They find that these strict zoning laws that locals have imposed are keeping people from moving to superstar cities. They find that this lack of migration is driving the widening productivity gaps that opened up between cities during this period. And summed together they find that growth would have been 36% higher over the period, which implies that overall output would have been about 14% higher in 2009 with rules that allowed more upzoning.
Duranton & Puga model the productivity upsides and congestion downsides of city size and density, and look at a counterfactual USA where planning restrictions were stripped away. In this scenario many large productive US cities like Boston, San Jose, New York City, and San Francisco grow by millions in population and see rapidly rising productivity through extra agglomeration and division of labour. Overall, average incomes rise by over a quarter.
So the prize overall is somewhere between 14% and 25% of US national income. But crime isn’t responsible for all of this. We need to work out some sort of way of judging how much extra restrictionism extra crime causes.
I have puzzled over several methods. Firstly, I can’t seem to find any literature at all that directly addresses this question by creating some sort of measure of the demand for zoning, and then seeing how it varies over time, over space, or before and after some sort of treatment condition, event, or natural experiment.
I wondered, therefore, if there might be some sort of measure of zoning stringency around the world which I could draw on and compare to crime rates. Japanese zoning is legendarily liberal; American zoning is strict. Some of the gap between these is down to the varying crime rates. But measuring the stringency of zoning systems is a detailed, careful job, and working out how much of that gap is due to crime is a further delicate statistical job. And sadly I can’t find such a measure or metric – and having asked field experts like Nolan Gray, they don’t know of such a thing either.
So I’m coming up empty. How can I work out empirically how much fears about crime drive some of the demands for restrictive development control?
I appeared on the Aesthetic City podcast with Ruben Hanssen, which I enjoyed very much.
The UK has a new housing secretary, Simon Clarke. Read more about him here.
My work on crime (so far) has helped influence an excellent post on the Effective Altruism forums.
Ed West wrote about how certain crimes are de facto legal in the UK.