The housing crisis in America has long been a complex and contentious issue, with the NIMBY (Not In My Backyard) phenomenon playing a significant role in hindering progress. The traditional approach of offering financial incentives to local governments to approve new housing has proven to be ineffective, as residents often oppose new developments due to concerns about neighborhood character, traffic, and property values. However, a novel strategy is emerging that aims to address this challenge head-on: paying the NIMBYs.
The concept is simple yet intriguing: if a local community approves enough new homes, each resident receives a substantial cash payment from the federal government. This approach, supported by various Democratic Party-aligned think tanks, aims to soften the stance of NIMBYs and inspire residents who are indifferent to become advocates for new development. By doing so, it provides political cover for local officials to propose pro-housing reforms while forcing anti-development politicians to defend their positions to residents.
A forthcoming paper by political scientist Michael Hankinson and economists Edward Glaeser, Joseph Gyourko, and Morris Davis offers valuable insights into the potential effectiveness of this strategy. The researchers conducted a survey in expensive areas, including New York City, Los Angeles, and Philadelphia suburbs, to gauge residents' willingness to support new housing projects in exchange for cash payments. The results are eye-opening.
The survey revealed that the majority of respondents (over 80%) would accept at least one of the proposed housing projects if offered a cash payment. However, the amount of money required varied significantly depending on the density of the neighborhood. Residents in densely populated areas were generally more accepting of new development, with many willing to approve housing even without a payment. In contrast, those in low-density suburbs demanded higher payments, with the median resident requiring over $5,000 to support a new project.
This finding has significant implications for policy-making. It suggests that the same policy can yield very different results depending on the location. For instance, a proposal offering a flat $1,000 payment to residents in places meeting housing production targets would likely be sufficient in dense urban areas but may not be enough in wealthier suburbs. On the other hand, a proposal offering a payment equivalent to the average annual rent increase in a city could inspire housing production in a range of places beyond just urban cores.
Moreover, the type of project being proposed plays a crucial role. The payment required for residents to accept a market-rate development at the edge of their neighborhood was relatively low, but it doubled when the project was adjacent to their current home and quadrupled when it was significantly denser than the surrounding buildings. This highlights the importance of working with residents' existing aesthetic and spatial preferences rather than trying to overcome them.
In contrast to the current approach of offering financial incentives to local governments, the evidence suggests that paying the NIMBYs is a more effective strategy. When compensation was offered as a parks-and-streets fund, residents required 10 times the amount of money they would have if offered cash. This underscores the potential of directly engaging with residents to overcome NIMBYism.
The housing crisis has persisted for over a decade, and traditional approaches have failed to make a significant impact. It's time to think differently and consider innovative solutions like paying the NIMBYs. By doing so, we can potentially shake up the local political economy and create a new political constituency that supports housing development. While the strategy is not without its caveats, it offers a promising path forward in the ongoing battle against the housing shortage.
