Rent Control and Deadweight Loss

How instituting a price ceiling lower than the equilibrium price reduces the total surplus (dead weight loss)

[@meanmanturbo]

Yesh people, this video isn't a political statement about the housing market. This is the standard example for introductory economics meant to show some of the basic models. Models are by definition simplifications of reality.

[@89TNash]

8 years later, cant even bother educating ppl now

[@ThePeterDislikeShow]

Another issue with rent stabilization is that nobody moves. In New York, it incredibly hard to find a smoke-free apartment, because of how little mobility people have to move and thus it's cater to different markets.

[@warrenstarc820]

You the real MVP.

[@dannyledwith21]

love the econ videos. i'd also love an explanation for why governments institute price controls despite knowing that they make the market inefficient.

[@afsmapping6092]

That’s the thing: They don’t know; they think it will make the market better by making things cheaper for consumers.

[@Shihai0Tensei]

price floors prevent the distribution of income from being unequal since lower income groups will have to use income to pay for the rent, hence lower disposable income.

[@daiitokumyouou899]

@dannyledwith21 It doesn't. This model is simplistic and does not even come close to addressing all the key variables that exist in a market. In order to know whether a price ceiling is more efficient one has to look at the market in detail and do actual measurements, i.e. collect empirical data.

[@philiprydh8275]

Keep on doing these. Best ever.

[@QuasiBelgium]

I have two square feet.

[@pranavkhera2387]

is deadweight loss a term associated with rent industry only? or i can use it for loss of any other good/service?

[@doigor]

in another good/service production

[@GuilhermePottker]

it has to be high if people are actually going to invest in real estate for rent. perhaps lowering taxes would help with this. I'm sure it would.

[@TheIntJuggler]

The rent is too damn high.

[@daiitokumyouou899]

@dannyledwith21 Cont. A good example of what I mean would be, using Mr. Khan's graph, if available square feet was stuck at 2. This may result in owners price gauging the renters where they charge say $5/sq ft but it is only worth $3.5/sq ft. In this note that people have to have a place to live, this is not a want but a need so consumers are forced to pay $5/sq ft. This results in huge surplus for owners but a deficit for renters which can result in a recession.

[@daiitokumyouou899]

@dannyledwith21 It is objective in the sense the renters may only be able to afford 3.5 but have to pay 5. However, that was only an example I could come up with from the top of my head and my main point was that this is a complex issue that can not be modeled easily.

[@jerohmvillanueva2635]

Hi there, I think your deadweight loss calculation is wrong because it is not a right angle triangle so I’m not sure if you can use that formula or B x H x (1/2). Great video though! Great explanations as always!

[@sharartie]

beautiful!

[@Atalbhasin]

you are awsm........

[@StephandaSilva]

What happens if the mayor makes up from that $750k deadweight loss through subsidies to the producers?

[@chrisweber759]

Stephan da Silva well we still have to pay for the subsides through taxes so in the end the consumer ends up paying for the subsidy

[@punk2003]

videos like this make renters think they are justifying their high renting prices.

[@jackuy12345]

well it depends on the area as well... if its Hollywood of course it has to be high, but if its like a ghetto place then its cheap

[@FajorMuckup]

That's a bad example as sqft cost will differ a lot, there is never a fixed sqft price not even in a small neighborhood.

[@Arlemagne]

Jimmy McMillan is NOT going to like this! You know "The Rent is Too Damn High" guy. Yeah. He's going to HATE this.

[@dannyledwith21]

@daiitokumyouou899 hmmm... i like some of your points, but based on everything i've learned in my economics classes, value is not objective. when there is less available square feet in the market, it has a higher value. and i like some of your points about market variability and all, but that last point about objective value I fundamentally disagree with. thanks for the resoponse though, don't get me wrong.

[@watcbd]

@TheIntJuggler BEST COMMENT EVER!!!!!! : )

[@حصهالجنيبي]

Thaaank yooooooouuuu

[@baydood510]

@dannyledwith21 liberal economics

[@baydood510]

@FrankiePoker Are you saying that modern liberals support the free market? If classic liberals then i agree.

[@shepd3]

I think both are equally abhorrent, myself.

[@abmujvek1]

d

[@icebear1946]

This topic is deep, muddy water and cannot be modeled like that, this video is BS.

[@MyLegsAreKindaLong]

this is a simplificated model mean we have to assume all else equal and only considered price, quanity, demand and supply in their interaction. Hope this clear thing up