The economic effects of long-term rent control: The case of New York City

Abstract

This article presents a simple model of rent control in which the costs and benefits can be analyzed in terms of Hicksian consumer and producer surpluses. Data from New York City are then used to examine the effect of the long-term rent control in that city. Estimates are presented which suggest that the program provided tenants with benefits amounting to about 5 percent of their income in the years 1965 and 1968. Additional evidence shows that tenant benefits declined rather sharply between the two years, and that in each of the years benefits were higher for older tenants, richer tenants, and white tenants than for their counterparts. Finally, evidence presented here suggests that, due to the in-kind nature of the program, the cost to landlords exceeded the benefits to tenants by about 75 percent.