This seminar could start with a discussion of housing finance, about the growth of subprime mortgages in the 1990s, the deregulation of Savings and Loans in the 1980s, or the privatization of Fannie Mae in the 1970s. Or it could begin with a discussion on zoning laws, both the historical motivation, as well the current political issues concerning who should get to decide about what gets built. Another angle would be to focus on a specific place like LA and discuss why it’s so expensive to build affordable housing. All of these would be interesting introductions to the course. They’d lead to great discussions.
I’d like to begin, though, with two stories from The New Yorker that focus on people experiencing homelessness.
The Economics surrounding the topics of Housing and Homelessness is both a complex and simple topic. It’s simple in that the objective is relatively clear — we’d like more housing and less homelessness. The challenging part is thinking through how we might “best” go about this. That “best” part has multiple dimensions.
The simple proposal is to spend more money. More money to build units. More money for housing insurance to assist those rebuilding. More money to support those facing eviction to keep them in their units. More money to house those currently experiencing homelessness without a unit.
But more money by itself is not a complete answer. Funds are limited. Decisions have to be made about where to allocate resources.
As Malcolm Gladwell highlights in Million Dollar Murray, the costs of the doing nothing can be expensive.
Effective decisions about where to allocate resources starts with understanding the context behind the problem. That costs of homelessness, as Gladwell points out, follow a power law. How ineffective leadership, a lack of due diligence, exacerbate problems. That people experiencing adverse conditions may respond to incentives differently.
In Off the Street, Jennifer Egan, carries Gladwell’s point further by attaching names and stories to the context. Her focus on personal accounts forces one to grapple with the complexity of the situation. The reasons for why Jessica and Iishea become homelessness are not simple. Is it the use of drugs? The abusive step father? The expensive Housing in New York? What does success look like? Is it reducing the amount of drugs one consumes. Is it entering a supportive housing apartment? How do we enable people to maintain housing and everything else they need — independence, relationships, income?