Zero-sum game is holding back housing progress

Dr Eric Crampton
The Post
30 September, 2023

Elections are the classic zero-sum game. In a zero-sum game, one person’s gains are necessarily another’s losses.

But most of life is not zero-sum.

And zero-sum thinking is ruinous in a world that is filled with games where everyone can win.

In September, America’s National Bureau for Economic Research published two excellent working papers on zero-sum thinking and its consequences.

The first, Zero-Sum Thinking, the Evolution of Effort-Suppressing Beliefs, and Economic Development, by Jean-Paul Carvalho and coauthors, demonstrates that zero-sum worldviews and ‘demotivating’ beliefs go hand in hand.

While the paper relies on data from the Democratic Republic of Congo, the authors note that the problem is pervasive. They compare Australia and New Zealand’s ‘tall poppy’ beliefs to Japan’s aphorism that “the nail that sticks out will be hammered down.”

They show that people believing in a zero-sum world see hard work as less important for achievement and place less importance on their own work and success. They also report lower levels of personal happiness and life satisfaction.

The paper argues that while zero-sum thinking has some broader advantages in truly zero-sum worlds, it can have pernicious consequences otherwise.

If people really are just competing for a pie of fixed size, any effort put into that competition is wasteful – from a societal perspective. But where effort and competition instead improve overall outcomes, zero-sum thinking can trap people, and countries, in poverty.

They speculate that the opening of trade opportunities at the time of the industrial revolution helped make the world less zero-sum, which helped shape cultural beliefs and economic behaviour in ways that reinforced non-zero-sum thinking and behaviours – a self-reinforcing positive feedback loop.

A resurgence of zero-sum thinking can make zero-sum worlds more likely.

The second paper, Zero-Sum Thinking and the Roots of U.S. Political Divides, by Sahil Chinoy and co-authors, looks at the origins and consequences of zero-sum thinking in America.

Using data spanning four generations, they find that experiences help shape zero-sum and positive-sum thinking.

American slavery was worse than a zero-sum game. The survey data shows that the descendants of those enslaved are, understandably, more likely to see the world in a zero-sum context. But even those without that ancestry had more zero-sum thinking if they were raised in a place that historically had higher levels of slavery. The stain runs deep.

By contrast, having recent immigrant ancestors, or having grandparents who were raised in places that drew a lot of immigrant settlement, reduces zero-sum thinking. Migrants’ experiences are living proof that the world is not a zero-sum game, and those experiences also persist.

More zero-sum thinking tends to predict greater support for taxation and redistribution, as well as support for affirmative action and opposition to immigration – both across parties and within them.

The authors argue that measures of zero-sum thinking help explain patters in voter preferences that are otherwise more puzzling. Groups that would seem to benefit from greater redistribution oppose that redistribution, and vice-versa, depending on whether they see the world in zero-sum ways.

The first paper showed that zero-sum thinking makes people worse off; people who see the world as zero-sum are less happy, and less likely to do things that would improve their situation.

Both papers suggest that zero-sum thinking and positive-sum thinking can be self-reinforcing in particular ways: they lead to support for policies that make the world align with either zero-sum or positive-sum beliefs. And people who experienced more zero-sum situations exhibit more zero-sum thinking.

Avoiding putting people into zero-sum situations then seems important.

It makes the zero-sum election campaign a little more depressing.

New Zealand’s biggest zero-sum game has been housing. For decades, councils have had every incentive to block new housing. Developers were not allowed to build enough houses to keep up with demand. If someone wins at a house auction, someone else loses – and others will be stuck with overcrowding or homelessness.

That cross-party failure underlies real, tangible misery. But it also seems to be breaking how a lot of Kiwis see the world. If housing really can never be fixed, rent-control, punitive wealth taxes, and tight immigration restrictions will be popular: zero-sum thinking for a zero-sum country.

There has been some real recent progress in housing. But the job is far from finished and will need a much stronger growth mindset favouring more housing development.

It’s wishful thinking at this point. But Labour once supported abolishing urban growth boundaries, and National once supported Medium Density rules enabling a lot more building in places where people want to live.

Elections are zero-sum. But a return to that bipartisan housing consensus would make the election outcome a lot less zero-sum for the rest of us, would make one big and important part of life a lot more positive-sum, and would clear the way for a far better game.

To read the article published in The Post, click here

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