Cross-posted from City Observatory.
Over the past three weeks, we’ve introduced the “sprawl tax”—showing how much more Americans pay in time and money because of sprawling urban development patterns. We’ve also shown how much higher the sprawl tax is in the US than in other economically prosperous countries, and how sprawl and long commutes impose a psychological, as well as an economic burden. Today, we’ll take a close look at how ignoring the sprawl tax distorts our view of the cost of living in different regions and neighborhoods.
As one old saying goes, an economist is someone who knows the price of everything and the value of nothing. It’s often claimed that some places, often sprawling Sunbelt cities, have a lower cost of living, based usually on observations about lower housing prices. And judged solely from the sticker price of new homes, the argument has some merit.
But as our aphorism about economists implies, there is a lot more to this question than just one set of prices. If you’ve followed our series on the sprawl tax, you know that living in some cities—those with cheap average housing costs, like Houston or Dallas or Birmingham—also carries with it a heavy, and largely ignored cost in the form of the “sprawl tax”: much higher transportation costs. In short, we tend to fixate on the price of something we can easily measure (housing) and simply leave out the value of something that is much less obvious (sprawl and longer commutes).