America's Frozen Neighborhoods by Robert C. Ellickson

Author:Robert C. Ellickson
Language: eng
Format: epub
Publisher: Yale University Press
Published: 2022-01-15T00:00:00+00:00

PART III

Reforming Zoning Practices

9

Benefit-Cost Analysis of Land Use Policies

The remainder of the book grapples with what is to be done. This chapter introduces benefit-cost analysis and indicates both its merits and limitations in the assessment of land use policies. Most local governments have numerous reasons to embrace exclusionary policies, and few are likely to reform themselves. The two chapters that follow therefore explore what higher-level governments might do. I recommend that both the federal government and, more importantly, state governments pursue zoning reform. In chapter 10 I recommend that the federal government significantly expand its funding of housing vouchers. Chapter 11 addresses state reforms, the crucial frontier, and offers concrete reforms that a state might consider.

The normative yardstick behind most of these recommendations is benefit-cost analysis. There is a vast literature on this method of evaluation.1 The federal government currently employs it as its default technique.2 Most commentators on land use policy implicitly employ some version of this analytic method, including, tellingly, those who defend the use of zoning to slow neighborhood change.3

Benefit-cost analysis of course has limitations. It is inherently difficult to execute. In addition, it commonly fails to include normative considerations that many regard as pertinent in policy analysis. A benefit-cost analyst traditionally would not consider the effects of a policy option on the achievement of, for example, horizontal equity (the like treatment of like individuals), distributive justice, and negative liberty.4 In many instances, although not all, inclusion of these considerations actually would bolster the case for the positions I advance in the chapters to come. It is easier, for instance, to root out horizontal inequity from housing vouchers than from project-based housing subsidies. And state limits on exclusionary zoning plainly would improve the opportunities of lower-income households, enhancing distributive justice.

Despite its limitations, benefit-cost analysis is invaluable. As a method for assessing the advantages and disadvantages of, for example, the densification of the Palo Alto neighborhood of Professorville, it has no credible rival. From a benefit-cost perspective, the construction of more housing in portions of Professorville would be meritorious if the gainers from that policy, including housing consumers, housing suppliers, and the net beneficiaries of greater agglomeration, would gain enough to compensate the losers from the policy, including some Professorville homeowners and Silicon Valley commuters.5 Virtually all studies by economists suggest that zoning practices, on balance, significantly harm the national economy.6 These studies imply that the aggregate effect of public land use regulation is negative. The finding that zoning politics tends to freeze land uses in a developed neighborhood of detached houses supports that suspicion. A benefit-cost analyst who focused more narrowly, however, rightly might award many specific zoning measures a passing grade.

The Benefits of Public Land Use Controls

Land use policy is intriguing because there are sound reasons for doubting the coordinating capacities of both market forces and government planners. Not surprisingly, commentators on the zoning system disagree about its overall merits. Zoning has had both skeptics and boosters.7 Even most critics of conventional planning and regulatory practices,

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