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Tuesday, May 01, 2012

Yes, People Do Wash Rented Cars!

I’d like to thank the good folks here for having me back.  I’m going to use this stint to air out a few grievances, discuss a few ideas that are not quite paper worthy, and promote some new work of mine about cities, first about land use and then about local elections.  

But let’s start with the grievances.  

A pet peeve of mine is the use of the phase, "No one ever washed a rented car,” which has been credited to people ranging from Larry Summers to Tom Friedman, but was first used by an unnamed army sergeant in an article by Thomas Peters.   It is used to justify many things, particularly massive subsidies for homeownership.  And it is an abomination. 

There are two flaws.  First, it's just plain not true.  People wash rented cars all the time.  Not daily rentals, but leased cars, which constitute 18.5% of the cars on the road.  If you lease a car for two years, are you really going to let it be filthy the whole time?  Also, rental car companies wash their cars.  (Here is Avis boasting of its environmentally-friendly car washing techniques.)  And when you rent a car using my favorite method -- sticking your hand in the air and waiting for a cab to appear – these cars are usually clean too, having been washed by their owners in order to attract fares.  

Second, and this one is actually important, the moral of the metaphor is problematic.  It presupposes that the external benefits of ownership (increased investment in community and the care one gives to one’s own possessions) are inherently and always higher than the external benefits of non-ownership forms of use of resources, like renting, borrowing etc.  These forms of resource usage promote flexibility, mobility and the like, the benefits of which can outweigh the increased degree of care owners pay to their property and nearby associated property.  In the case of housing, here are lots of reasons to believe that the costs of the induced ownership outweigh its benefits.  For instance, Andrew Oswald has shown that there is a correlation between home ownership and unemployment, as owners of homes don't move to meet opportunities, leaving society with the costs of dealing with unemployment and firms with fewer good workers.  Figuring out whether home ownership or mobility should be encouraged is a complex question, as Bob Ellickson's excellent article on the differences in residential mobility in France and the United States, shows.  A preference for ownership rather than renting cannot merely be asserted, it must be proven. 

In making this determination, the metaphor does little to help us.  In the narrow case, no one -- at least as far as I know -- thinks we should subsidize car ownership in order to ensure that people invest in car washing (to avoid the social plague that third parties have to look at dirty cars.)   We instead think that the benefits of flexibility dominate.    And in the area where the metaphor is most frequently invoked, the public benefits of home ownership are rarely compared to the public harms of excessive home ownership.  If we did, we might end up saying, "Car owners spend way too much time washing their cars." 

Posted by David Schleicher on May 1, 2012 at 08:41 AM | Permalink

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Comments

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Posted by: Hannah | Aug 28, 2020 12:12:19 PM

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Posted by: Bellasmith | Oct 27, 2015 6:27:21 AM

A weekly car wash will keep the finish in its best shape. In addition, if you live in an area that suffers from acid rain, rinse your vehicle off after a period of rainy weather.

Posted by: Car Valeting Worcester | Oct 26, 2012 1:54:40 AM

I totally agree with the bigger point, that even if it is true that short-term renters don't wash the cars while they rent them, it hardly follows that there's anything wrong the economics of renting cars!

At worst, it probably means that on the margin there is an adverse selection problem in the rental car market, and that people who are particularly fastidious might economically benefit from longer-term car investments at the expense of flexibility (again, on the margin). But somehow I doubt that's what Tom Friedman was going for. :)

Posted by: William Baude | May 1, 2012 10:41:52 AM

Will -- The phrase is used both ways. And point taken. But it strikes me that if the moral of the story is that there is insufficient maintenance, one ought to look at all the parties who might do maintenance. And, of course, the more substantive second point of the post.

Posted by: D.Schleicher | May 1, 2012 10:31:15 AM

The point about leased cars is a good one, but I think the reason the phrase refers to "rented" cars rather than "rental" cars is to exclude the time period while a rental car is not currently being rented. When a rental car company washes its own car while it's not on the clock, it's a "rental" car but not currently a "rented" one. Same thing for a taxi driver not currently on a fare.

Hence the moral is that those who are renting a good for a short period of time (thus your lease exclusion) generally don't have the incentives to do long-term maintenance on the good, and instead pay higher prices for the good so that the long-term owner can do the maintenance himself.

Posted by: William Baude | May 1, 2012 10:17:24 AM

I know this is based on anecdotal evidence, but I would suspect that routine maintenance is probably higher in rental properties than in owner-occupied housing, since with rental properties maintenance costs are typically sustained by a corporation with deeper financial resources than a typical family. Plus, while a family might be willing to have, say, the toilet in a second bathroom be non-functional rather than spend the $1000 to have a plumber fix it, the rental property management is typically legally required to make the same repair (assuming the tenants get around to reporting it). And even if the "owner" family might repair the toilet eventually, they might not do it on the same schedule as a rental company.

Of course, this is assuming a typical situation; I recognize that slumlords who refuse to maintain apartments exist, and that sometimes these are the only affordable units on the market. But I suspect the average apartment is better maintained than the average home, looking at comparable family income.

Posted by: Charles Paul Hoffman | May 1, 2012 9:59:17 AM

I always wait until Festivus to air my grievances.

Posted by: David Bernstein | May 1, 2012 9:49:04 AM

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