New Results on the Effects of Regulation: Gun Control and Land Use Planning
Open AccessThis dissertation consists of three essays, each providing a new approach to modeling of and testing for the effects of regulations. The first essay studies the relation between gun laws and crime. These regulations have been studied separately in the past under the implicit assumption that their effects are additive independent. The second essay provides a new measure of household preference for lower residential density. Finally the third essay tests the welfare implications of planning regulations that lower density of laissez faire development in cities.The first essay demonstrates the limitations of the assumption of additive independence in the context of crime and gun laws. The current literature on crime and gun laws has generally considered one regulation at a time. The possibility that gun laws have significant interactions has been ignored. In particular, restrictions on potential victims such as concealed carry weapon laws (CCW) and castle doctrine laws (CD) have been examined separately. Similarly, effects of regulations that target potential offenders, including add-on gun laws (AOG) and universal background check requirements (UBC) have also been tested separately. This essay first develops a theoretical model that allows for possible interaction among gun laws. Four prominent gun laws that have been analyzed separately in the past are considered. The theory suggests that, of the six possible interactions, two are likely to be significant, and the other four are not significant. Empirical tests using the data sets that have been employed to test regulations individually confirm the hypothesis that two sets of laws have the theoretically predicted interactive effects on crime and that the other four potential interactions are not statistically significant.A substantial literature demonstrates that zoning restrictions on building height or density lower supply and increase housing prices. However, negative externalities due to household preferences for lower neighborhood density could justify restrictions on private developers. The second essay introduces a negative density externality to the Standard Urban Model (SUM) and tests the existence of such externality using rental cost data in Washington, DC. Theory demonstrates that building density in a laissez-faire city may be above the welfare-maximizing level. The potential external costs of height and density are tested here and found to be substantial. Increased building separation appears to mitigate the external cost of height. This implies that some level of density or floor regulation (FAR) regulation is welfare-enhancing, and that the gap between price and marginal construction cost overstates the social cost of zoning because households value lower density. Specific computations based on the costs and benefits of additional height construction in Washington, D.C. indicate that substantial reductions in building height below laissez faire can justified. Indeed, the height limits enacted by Congress in 1910 are found to be close to the welfare-maximizing level.Previous empirical research has demonstrated that indexes of urban planning restrictions, specifically the Wharton Residential Land Use Regulation Indexes of 2006 and 2018 (WRLURI), are associated with higher housing prices. Many economists argue that this relation is caused by a decrease in the supply of housing compared to a laissez-faire city. Alternatively, hedonic tests finding the positive effects of sunlight and clean air suggest that price increases could be caused by an increase in the attractiveness of a city. The third essay (joint with Nate Harris) demonstrates theoretically that, in the presence of building density externalities, both are correct, and that the welfare effects of planning regulations cannot be determined by the relation between housing prices and regulation. Theory developed in this paper shows that the welfare effects can be tested using an aggregate land rent value test, which provides a dispositive test of the aggregate welfare effects of urban planning. In addition, a Rosen-Roback test can determine if planning regulations generate net positive amenity effects for households. Empirical results for the Rosen-Roback test indicate that the combination of wage and house price effects of planning are associated with a positive contribution to quality of life and measured amenity. More dispositive (based on the theory section) empirical tests of the relation between aggregate land value test and the WRLURI, performed for the first time in this research, indicate that the relation between historical patterns of planning regulation and current aggregate land value is positive, implying that planning could potentially be a remedy for problems of overbuilding under laissez-faire land development. This contrasts with the prevailing view in the literature that the regulations, as measured by WRLURI, lower welfare.)
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