My ECONS101 lecture today covered price controls, and as examples we discussed the minimum wage (as an example of a price floor) and rent control (as an example of a price ceiling). On the topic of rent control, I was really interested to read this new article by Shane Sanders (Syracuse University), Andrew Luccasen (Mississippi University for Women), and Abhinav Alakshendra (University of Florida), published in the American Journal of Economics and Sociology (open access). They outline a number of useful examples where the 1990s TV show Seinfeld can be used in teaching rent control from an economic perspective:
More than 30 years after its premiere, Seinfeld continues its run as a seminally popular television show. Set in New York City, where rent control laws have a long history, a recurring theme of the show concerns the trials of apartment living. In several episodes of the show, characters must deal with the difficulty of procuring an apartment in a city with rent control or rent stabilization policies (shortage, tastes for discrimination by seller, bribery, and search costs), as well as the difficulty of maintaining the quality of a rent-controlled apartment over time once one has been procured (quality degradation). Seinfeld also illustrates the informal process through which rent-controlled apartments are advertised, and that less advertising takes place under rent control induced shortages.
The specific episodes that Sanders et al. outline are The Robbery (Season 1, Episode 3), The Apartment (Season 2, Episode 5), The Shower Head (Season 7, Episode 16), and The Andrea Doria (Season 8, Episode 10). The cool thing about these episodes is that they illustrate many of the negative consequences of rent control. As Sanders et al. note:
In The Andrea Doria, we discuss seller discrimination and bribery as two potential consequences of a rent control policy. The Apartment revisits the theme of bribery and also discusses advertising in the case of underprovision. The episodes The Shower Head and The Robbery illustrate the negative effect of rent control upon housing quality.
As rent control leads to excess demand for apartments (a shortage), many would-be tenants miss out on apartments. That allows landlords to discriminate, because they have a lot of choice over who to rent their apartments to. In my class, I noted that low-income tenants would likely be among those to miss out on rent-controlled housing, because landlords would prefer to rent to high-income tenants instead. Rent controls also provide an incentive for tenants to use side payments (for example, bribes) to ensure that they can secure a rent-controlled apartment. Rent controls also change the incentives for landlords. Since there is no shortage of tenants looking for an apartment, landlords can afford to skimp on maintenance of their apartments, lowering the overall quality of housing. Landlords can also afford to avoid the cost advertising when they have an apartment available, because they can rely on word-of-mouth instead.
Sanders et al. have done a great job of collating these examples. The sad thing is that each example relies on multiple clips from the episode, and as far as I can see, those clips are not available on the official Seinfeld YouTube channel. I guess you could rely on this site (which streams Seinfeld episodes non-stop), but you'd need some way of recording them. Or, you have to buy the Seinfeld DVDs. Or watch Comedy Central, which has been spamming Seinfeld episodes in the evenings for the last couple of months.
On the plus side, they reminded me that there is a whole website devoted to the economics on Seinfeld (and a book!). If you love Seinfeld, there is a lot to learn about economics from this show.
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