Economic Theory – Consumer Sovereignty Supports Affordable Housing and Transportation

“Consumer sovereignty” is a basic economic principle which means that, as much as possible, public policies should allow markets respond to consumer demands. For example, if more people want live in a particular area, zoning codes and development policies should allow developers to build more housing there, and if more people want to walk, bike and use public transit, transportation planning should accommodate those demands.

Many current policies fail to do this. Local development policies favor single-family housing and automobile-transportation, to the detriment of non-residents who want more affordable housing and transport options. This favors existing residents over potential new residents, and wealthy households over lower-income households.

Without policy changes to allow more density, more households will bid for the limited number of housing units, driving up prices and excluding those with lower-income. Policy changes that allow more development of affordable housing types, such as townhouses and low-rise apartments, respond to the demands of lower-income households, creating more inclusive and equitable communities.

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