Class 4: Institutions I

Question 1

Larsen & Kettel: What is a general paradox regarding housing supply?

Answer 1

With rising demand, why do cities not permit more housing?

Question 2

Larsen & Kettel: What is the usual explanation for the lack of housing supply?

Answer 2

When the electorate is small, more citizens will live near any proposed housing development and face negative externalities, which they will then oppose because of NIMBYism. NIMBYist have a larger say in smaller electorates, thus politicians have a higher incentive to listen to them and block prospective housing initiatives

Question 3

Larsen & Kettel: What theoretical argument do they suggest that goes against the prevailing wisdom regarding small electorates and housing supply?

Answer 3

Smaller local governments have a stronger incentive to permit more housing because their tax bases are more vulnerable to negative economic shocks. By permitting housing, they can attract new taxpayers and revenue, thereby reducing the negative shock’s impact

While politicians in smaller jurisdictions face relatively more NIMBY opposition, this is likely to be balanced out against their stronger incentive to promote housing development

Question 4

Larsen & Kettel: Research methods, incl. IV and DV

Answer 4

Difference-in-difference design with Danish municipality reform in 2007 changing the jurisdiction sizes of some but not all municipalities

IV: Whether a municipality was consolidated in the 2007 reform

DV: Permitted and completed housing floor area per capita

Question 5

Larsen & Kettel: What is their main finding?

Answer 5

Less housing is permitted and completed in areas where the local governments were consolidated

Question 6

Larsen & Kettel: What is their findings predicated on?

Answer 6

The effect of the reform was concentrated in the areas where municipalities experienced large reductions in their tax base volatility (meaning less impact of negative shocks)

and in jurisdictions that become much geographically larger, limiting regional competition for taxpayers

Both risk to economic shocks and regional competition vary with jurisdiction size, explaining why smaller local governments have a stronger interest in building more housing

Question 7

Larsen & Kettel: What do they conclude on their findings vs. the general consensus on jurisdiction size and housing supply?

Answer 7

Their different results might stem from a non-US perspective - in Denmark, local tax revenue is a much bigger portion of total revenue than in the US, thereby giving Danish politicians a larger incentive to attract new tax payers to increase revenue

Question 8

Marantz & Lewis: What is their main finding regarding jurisdictional size and housing development?

Answer 8

The relationship between jurisdictional size and housing development is non-linear

Jurisdictions with 100,000-1 million residents are significantly more receptive to multifamily housing development than smaller or very large jurisdictions, esp. jurisdictions with populations of 500,000 to 1 mil

Question 9

Marantz & Lewis: Research methods, incl. IV and DV

Answer 9

Regression analysis with census tracts as units in US

DV: Change in multifamily housing units 2008-2012 and 2014-2018

IV: Population size of the jurisdiction regulating the tract

Question 10

Marantz & Lewis: Why are small jurisdictions less likely to allow multifamily housing?

Answer 10

They are more politically responsive to local homeowners who tend to oppose new developments due to fears about property values and racial/ethnic integration (NIMBYism). In smaller jurisdictions, a larger proportion of the population will feel the externalities

Question 11

Marantz & Lewis: Why are larger jurisdictions (+100,000) more likely to allow multifamily housing?

Answer 11

1. Homeowners are less likely to be the primary politically active constituency - for example, a large proportion of renters
2. Businesses that benefit from larger labor and consumer pools may lobby for further housing development
3. Larger jurisdictions may have better bureaucratic capability to plan and provide services

Question 12

Marantz & Lewis: Why are very large jurisdictions (+1 mil) less likely to allow multifamily housing?

Answer 12

Quasi-monopoly theory: They face less competition from nearby areas (offering unique opportunities and proximity to employment), allowing powerful residents to extract economic rents or demand concessions from developers

Question 13

Marantz & Lewis: Why do they use census tracts instead of jurisdiction-level analysis? (3)

Answer 13

1. When the unit of analysis is the jurisdiction, there can be a nearly automatic relationship between population size and housing production, since more people require more housing
2. Jurisdictions can be extremely heterogenous
3. Using jurisdictions fails to account for the possibility of intra-jurisdictional variation

Question 14

Marantz & Lewis: What are census tracts and why are they used?

Answer 14

Small, relatively permanent geographic areas in US which are similar in population size, making it easier to compare different places and capture variation within jurisdictions

Question 15

Findor et al.: What is the central question they set out to investigate regarding deservingness?

Answer 15

What are effective ways to promote majority support for out-group redistribution?

Question 16

Findor et al.: What is their main theoretical argument?

Answer 16

Designing policies to incorporate principles of distributive justice - justifications for who should get what and why - can garner majority support for policies intended to benefit minoritized groups

Question 17

Findor et al.: What are the 3 principles of distributive justice?

Answer 17

1. Equality: Every citizen, regardless of need or contribution, should be entitled to the same benefits
2. Reciprocity: Those who contribute more should be entitled to more
3. Need: Social assistance programs should target those who need it the most, i.e., the worst off

Question 18

Findor et al.: What are the 5 criteria of deservingness?

Answer 18

1. Control: degree of responsibility the group bears for its position
2. Need: the severity of the situation
3. Identity: perceived closeness between giver and receiver
4. Attitude: is group judged as likeable or grateful?
5. Reciprocity: the extent to which the group has contributed or will contribute to the social system

Question 19

Findor et al.: What is ethnocetrism and what role does it play in deservingness?

Answer 19

Ethnocentrism is in-group bias that causes people to view out-groups as less deserving of welfare, leading to stricter deservingness standards for minorities

Question 20

Findor et al.: Research methods

Answer 20

3 experiments (one field, two vignette survey) measuring the extent of opposition to policies that benefit the Roma + support for policies when the 3 distributive principles are used to frame it

Question 21

Findor et al.: What are their 3 main findings?

Answer 21

1. Mentioning minorities as beneficiaries reduces majority support for redistribution
2. Policies formulated according to reciprocity increase majority support for out-group redistribution
3. Minority groups - the Roma - prefer policies based without conditionality and based on need, and reciprocity depress levels of support

Question 22

Findor et al.: Why does the reciprocity-based framing work so well?

Answer 22

It counteracts negative stereotypes by framing the Roma as people who work to deserve their benefits, thereby enhancing perceptions of deservingness

Question 23

Findor et al.: Why are they cautious to promote reciprocity-based policies when they show that they can garner out-group redistribution support? (3)

Answer 23

1. It can lead to workfare policies, which does not improve the economic conditions of the Roma
2. It does not remedy the intertwined structural causes of their poverty and anti-Roma racism and discrimination
3. It can reinforce negative stereotypes about “lazy” Roma