In a recent episode of the InFi podcast, I discussed NYC mayor Mamdani’s move to freeze rent for two years. In the episode, I alluded to claims that the old school economist consensus on rent control had been overturned in the more recent literature, and I showed that this was an exaggeration at best. In the present post, I want to be more specific and show how an academic paper on the Massachusetts experience has been cited as if it overturns the original view, when in fact it vindicates the textbook Econ 101 critique of rent control.
How the Pro-Rent Control Advocates Use the Massachusetts Study
To set the stage, consider a July 2025 article in Current Affairs entitled, “Rent Control Is Fine, Actually.” The piece opens by citing the plight of residents in urban areas with out of control rents, and how some politicians—including then-candidate Zohran Mamdani—were proposing government measures to contain costs.
After setting the stage, the article then sets up the old-school economic orthodoxy like this:
But suggest rent control to a stadium full of economists, and you can practically hear the sound of a thousand whiteboards flipping in protest. The profession is virtually unanimous in its belief that rent control is a bad idea—and that those who call for it are “economically illiterate.” In one telling poll from 2012, economists were asked whether rent control policies in cities like New York and San Francisco have had a positive impact “on the amount and quality of broadly affordable rental housing.” 81% of respondents disagreed or strongly disagreed.
Their comments included: “Next question: does the sun revolve around the earth?” and “Unless all the textbooks are wrong, this is wrong.” The award for the strongest statement on the idea goes to the economist Assar Lindbeck, who quipped: “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”…
This animosity towards rent control is in line with the predictions of “econ101”: an Americanized way of referring to basic economics classes, which rely on tidy, stylized models of the free market. Although actual introductory economics courses vary in their content and framing, the idea of “econ101” has taken on a life of its own.
Naturally, with the above framing, the Current Affairs writer goes on to present a more nuanced assessment of rent control, ostensibly in line with the formal economics literature:
One 2007 study helps illustrate how [a] more-flexible form of rent control plays out in practice. When Cambridge, Massachusetts abolished second-generation rent control in 1995, it was shown to have little effect on the total volume of housing built roughly a decade later. There was no construction boom as landlords took advantage of fewer restrictions on what they could do. What did happen was a substantial rise in rents for previously controlled houses, displacing many of the tenants who had benefited from the policy. However, with rent control policies gone, landlords did put more homes up for rent (as opposed to selling or leaving them vacant) and they also invested slightly more in the maintenance of their existing properties, providing a boost to the market. Are the multifaceted consequences of this policy really a catastrophe for the housing market as a whole?
The 2007 study was by David Sims, entitled, “Out of control: What can we learn from the end of Massachusetts rent control?” As the framing above suggests, one might expect that this paper is at odds with the simplistic “econ 101” supply and demand textbook approach to rent control. But as we’ll see, the Sims paper confirms the textbook treatment.
How the Massachusetts Study Validates “Econ 101” on Rent Control
Yet even though the Sims paper is presented as a foil to the textbook logic, Sims himself says his study validates the orthodox treatment:
This paper examines the effects of rent control in Massachusetts on the willingness of owners to rent housing units, on the rent and cost levels of renter occupied apartments, the maintenance of those apartments, and length of tenancy. The results suggest that eliminating rent control has little effect on increasing construction in the years immediately following the law change, but that rent control induces owners to remove their units from the rental market. Additionally, rent control leads to large rent decreases and small but significant decreases in the maintenance of rental units. I also find evidence that rent control may lower the rent of non-controlled units in controlled areas, possibly through spillover effects of decreased unit quality. Using my estimates I calculate a rough measure of Massachusetts’ approximate welfare losses in due to rent control.
These results confirm the simple intuition that economists derive from very basic microeconomic models; rent control artificially lowers price, decreases the quantity of rental housing supplied and decreases unit quality. Although inefficiencies are inherent in any price control, rent control is an opportunity to study a price control that is large in magnitude and has important effects on the behavior of many tenants and landlords. (Sims 2007, bold added.)
At best, one might argue that Sims showed the quantitative harms of rent control were not so terrifying in the grand scheme. On the other hand, we could do the same for the ostensible benefits of rent control.
Specifically, we can use the regression estimates from the study to see what the “pros and cons” were (in terms of the values espoused by the typical proponent of rent control). In Section 4.3, Sims reports:
The preceding estimates allow a rough approximation of what the excess burden of Massachusetts rent control regulations would have been if they were in force in 1998. If rent control reduces the probability an apartment is available for rent by around 6 percentage points, as suggested by the estimates of Tables 2–3, its continuation would have meant the loss of around 15,000 units from the Boston area rental market in 1998 relative to the number of rentals actually observed. Additionally, the estimates of Table 4 suggest that if rent control had continued, the counterfactual rent received by landlords would have been approximately 84 dollars below the observed 1998 equilibrium rent of 741 dollars.
However, some of this rent differential accounts for the reduction in housing quality of rent controlled units rather than reduction of the quantity of units supplied. Since the chronic damage problems found in rent controlled housing would lead to a 20% rent reduction if that unit was in a non-controlled zone, and an additional 6% of units in rent controlled zones will develop these problems, I assume that rents would decrease about 1.2% or 9 dollars from the actual 1998 rent due to a decline in unit quality. This leaves a counterfactual rent decrease of 75 dollars below equilibrium level due to the price ceiling on rental housing. (Sims 2007, bold added.)
What Sims is saying is that (according to his model estimates), after the abolition of rent control in Massachusetts, as of the year 1998, the average rent for an apartment was $741, which was $84 higher than what would have been the case if rent control had remained in force. However, Sims also estimated that if rent control had remained in force, then 6 percent more of the rental units would have had “chronic damage” (such as peeling paint, holes in walls, etc.). He further estimated that such units (in a free market) would rent for 20% less than a unit in better condition. So if you control for the quality of the units, Sims found that the actual 1998 rental rate of $741 was only $75 higher than what would have been the case under rent control. In other words, holding unit quality constant, removing Massachusetts rent control increase rent in 1998 from a hypothetical $666 (yikes!) to the actual rent of $666 + $75 = $741. (Notice that this is an estimated 11% increase in the rent from the hypothetical baseline.)
In exchange for preventing a $75 (or 11 percent) increase in (quality-adjusted) rent, the Massachusetts policy (if it had remained in force) would also have kept 15,000 rental units off the market, as of 1998. The hypothetical rent-controlled stock of housing in Sims’ model was some 226,000 in the relevant Massachusetts regions, meaning the continuation of rent control would have forfeited an actual 7% expansion in rental units available to tenants.
In summary: According to Sims’ estimates, as of 1998 the elimination of rent control meant that Massachusetts renters had to pay $741 per month instead of $657. But in exchange for that $75 rent hike, the amount of available units for rent increased from 226,000 to 241,000 (an increase of 15,000 units). Furthermore, the number of rental units suffering from “chronic damage” dropped from 29,000 to some 18,000, which is even more remarkable when considered in conjunction with the increase in the total number of units.
Conclusion
As with the minimum wage, there has been a push to overturn the old-school orthodoxy on rent control. Yet a 2007 study of the Massachusetts episode—contrary to the claims of progressive “debunkers”—actually validates the standard textbook treatment, as even the author Sims acknowledges in the paper.
Dr. Robert P. Murphy is the Chief Economist at infineo, bridging together the dependability of Whole Life insurance policies with the benefits of blockchain-based finance.
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