The Indifference Principle Comes To Columbus, Ohio

See Columbus’s Reputation as an Affordable City Is Making Its Homes More Expensive: The city’s Goldilocks status as an employer magnet with still-reasonable housing is now on shaky ground by Will Parker and Chip Cutter of The WSJ. Excerpts:

"Home values across the metro are up 51% since the start of 2020 through August of this year"

"More companies view the city as an attractive place to expand. State income taxes are lower than many coastal states, and for wage earners over $100,000 a year, those taxes are set to get lower in 2026, when the state introduces a flat tax. That could draw even more high-earning newcomers."

The economist Steven Landsburg gave this definition for the "Indifference Principle." "Except when people have unusual tastes or unusual talents, all activities must be equally desirable"  (from his book "The Armchair Economist").

We could also say that all places to live will be equally desirable. If a city has a high quality of life, then more people want to move there. But that raises prices (like housing, for instance). Then it costs more to get those extra benefits from the quality of life. As more people move there, prices keep rising and eventually all the extra benefits are completely offset by the higher cost of living).

It would work in reverse. If a city is really bad, then some people leave and then congestion and prices fall so that it is not so bad anymore.

In the case of Columbus, its low housing prices made it an attractive place to live. But once more people moved there, the price of housing rose. This was an increase in demand. Now people and businesses will be indifferent to moving to Columbus (or they will in the near future).

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