A good illustration would be the immediate effect of a a gas-tax “holiday”, where informed people can apply economic theory to predict the outcome; i.e., would retail prices go down, or will retailers/wholesalers have increased profits?

In a NY Time op-ed, Prof Bryan Caplan says (in a “that’s a trivial question” tone) that the prices would remain constant. Now, he is clearly an educated person with expertise in economics, but in a real-life case of a partial tax holiday (high-tax NY vs. low-tax NJ), the retail prices are vastly different on the two sides of the Hudson River (though they’re about the same on the two sides of the East River).

So, if an intelligent economics professor misses something that plain, how can anyone possibly predict how the implementation/removal of “X” would not only directly affect “Y”, but how would it indirectly affect “Z”?

I say: Try it on a limited basis and find out. Study whether people in trans-fat prohibited NYC are getting any thinner than in trans-fat heaven Syracuse. If so, then the idea might have some (dubious) merit. Otherwise, revoke the law.

Yeah…that would be the day…

…just like the “congestion pricing” experiment…

A good illustration would be the immediate effect of a a gas-tax “holiday”, where informed people can apply economic theory to predict the outcome; i.e., would retail prices go down, or will retailers/wholesalers have increased profits?

In a NY Time op-ed, Prof Bryan Caplan says (in a “that’s a trivial question” tone) that the prices would remain constant. Now, he is clearly an educated person with expertise in economics, but in a real-life case of a partial tax holiday (high-tax NY vs. low-tax NJ), the retail prices are vastly different on the two sides of the Hudson River (though they’re about the same on the two sides of the East River).

So, if an intelligent economics professor misses something that plain, how can anyone possibly predict how the implementation/removal of “X” would not only directly affect “Y”, but how would it indirectly affect “Z”?

I say: Try it on a limited basis and find out. Study whether people in trans-fat prohibited NYC are getting any thinner than in trans-fat heaven Syracuse. If so, then the idea might have some (dubious) merit. Otherwise, revoke the law.

Yeah…that would be the day…

…just like the “congestion pricing” experiment…

Prices alone would change to the extend that denser development is prohibited. However, if denser development is allow, especially near transportation hubs prices will adjust.

Move a $800K house from NYC to Charlotte, and it is now worth $320K.
Yep. You are already paying a location premium for the NY home. It’s really land that’s the difference. Labor costs may be higher making the replacement cost high, but most of that premium is land.

If you are allowed to build denser, that higher land cost is spread among more built square feet.

Prices alone would change to the extend that denser development is prohibited. However, if denser development is allow, especially near transportation hubs prices will adjust.

Move a $800K house from NYC to Charlotte, and it is now worth $320K.
Yep. You are already paying a location premium for the NY home. It’s really land that’s the difference. Labor costs may be higher making the replacement cost high, but most of that premium is land.

If you are allowed to build denser, that higher land cost is spread among more built square feet.

Now I have a question:

Isn’t it possible that very high gas prices would simply lower the value of existing homes and have no effect on living patterns? Perhaps a $800K home might instead go for $750K. Yes, present owners would lose some of their capital value, but the overall cost of suburban living would remain constant.

I bring this up because gas price increases have been nothing compared to real-estate tax increases. But despite the tax increases, long-term suburban vacancies (in middle-class areas) are about 0% — and home prices aren’t even declining.

At least in the NY area, a the value of a suburban house (the actual house, and not the property), at most, about 40% of the total worth. Move a $800K house from NYC to Charlotte, and it is now worth $320K. That $480K provides a lot of negotiating room to compensate for even a $1K annual increase in fuel prices.

Now I have a question:

Isn’t it possible that very high gas prices would simply lower the value of existing homes and have no effect on living patterns? Perhaps a $800K home might instead go for $750K. Yes, present owners would lose some of their capital value, but the overall cost of suburban living would remain constant.

I bring this up because gas price increases have been nothing compared to real-estate tax increases. But despite the tax increases, long-term suburban vacancies (in middle-class areas) are about 0% — and home prices aren’t even declining.

At least in the NY area, a the value of a suburban house (the actual house, and not the property), at most, about 40% of the total worth. Move a $800K house from NYC to Charlotte, and it is now worth $320K. That $480K provides a lot of negotiating room to compensate for even a $1K annual increase in fuel prices.

No one in Scarsdale is going to move to Gravesend because of gas price increases.

Someone in Scarsdale may choose to move to a place where there is a commuter train. (maybe there already is. I don’t know Scarsdale) Most people wouldn’t drastically change their lifestyle, but little shifts of individuals make large overall shifts. Locations near transportation that were previously considered undesirable, may become desirable. Vice versa.

No one in Scarsdale is going to move to Gravesend because of gas price increases.

Someone in Scarsdale may choose to move to a place where there is a commuter train. (maybe there already is. I don’t know Scarsdale) Most people wouldn’t drastically change their lifestyle, but little shifts of individuals make large overall shifts. Locations near transportation that were previously considered undesirable, may become desirable. Vice versa.