Empirical Political Economy of Housing

In many cities around the world, housing crises have emerged. Simultaneously, strong trends towards urbanisation have not been matched by increased urban housing. In this project, I am looking to empirically investigate drivers of the lack of supply from a perspective at the intersection of urban and political economy.

One potential driver that fascinates me is vertical externalities in policymaking and political misalignment as their cause. Such externalities arise when policymaking on one level of government affects the efficacy of actions of another level of government. Political economy literature exploring tensions and regulatory externalities between different administrative levels primarily focuses on taxation and finds that with vertical externalities, society arrives at an inefficient tax level (e.g., Keen, 1998; Keen & Kotsogiannis, 2002; Brulhart & Jametti, 2006).

Beyond taxation, theoretical analyses have explored the presence of vertical externalities in the control of politicians (Wrede, 2002) and environmental policy in the context of taxation (Boehringer, Rivers & Yonezawa, 2016). I hypothesise that vertical externalities resulting from conflicting interests between different government tiers are a central reason for policies to fail in their aims.

One potential setting to explore vertical externalities and quantify its welfare effects is in the United Kingdom. The authority to consent to refurbishments of protected buildings ("listed building consent") lies with local councils and refusing consent to refurbish or retrofit houses collides with national energy-efficiency policy incentivising refurbishments. While energy efficiency policies generally do not discriminate between listed and other buildings, economic intuition suggests that the policy outcome measured in energy-efficiency refurbishments differs for listed and other buildings. Hence, my thesis will estimate the effect of the listed building policy on forgone energy bill savings and avoidable welfare costs in terms of greenhouse gas emissions. During my PhD, I want to explore political misalignment between governmental tiers as a driver of such vertical policy externalities.