Stephen Smith writes about a Manhattan residential project in which 40% of the units will be set aside for affordable housing, likely due to political pressure. He asks "How much affordable housing is enough?" and then explains the unintended consequences of large affordable housing mandates:
Obviously, I oppose setting aside this much of new developments for affordable housing. People tend to think of different segments of the real estate market as distinct – how on earth could limiting the number of rich people on Far West Side make prices rise in Bed-Stuy? – but they are inextricably linked. You might not shed a tear for the 20-something banker who won’t get his Hudson River view, but when he then decides to buy in, say, Brooklyn Heights, the higher housing prices are going to have a ripple effect throughout the borough, pushing the envelope of gentrification further and further, until finally the knock-on effects reach places that the Far West Side 2o-something banker who got priced out of the Far West Side would never dream of living.
He is describing filtering. If you don't understand filtering, you don't understand the dynamics of housing markets. But my impression is that few urban planners understand this principle. This is a symptom of a broader problem. You will never catch me making over-generalizations on this blog, so I can safely say that most urban planners know nothing about urban economics.
O.K. Donald Shoup is an urban planner and has done first-rate work on the economics of parking. (But then his Ph.D. is in economics. Does he count as a counter-example?) Shoup's ideas have percolated down to rank-and-file planners. Planners who work at the transportation end of the planning spectrum seem to know a lot of economics. You probably can't get out of a top-notch school like M.I.T. without learning a bunch of economics.
But the average city planner can get by without learning much, if any, urban economics. For example, here is the curriculum for the University of Texas's masters degree in community and regional planning. The core curriculum does not appear to include any urban economics. (UT grads, correct me if I'm wrong.) UT planners can satisfy their elective requirements with courses like "growth management" and "deep democracy" and "historic preservation practice." The program does not even offer a course in urban economics, although a couple of the electives might touch on the basics.
UT graduates are not required to learn about the bid-rent gradient, filtering, Tiebout sorting or read Krugman's Development, Geography and Economic Theory. I'm sure they commit The Life and Death of Great American Cities to memory (and it is a great book), but are they required to read Jacobs' The Economy of Cities?
Some practicing city planners do learn these things, I know. But all planners should be made to. That planners aren't required to learn it signals students that urban economics really isn't very important. People shouldn't be allowed to meddle with housing markets without knowing this stuff.