Sophisticated economics shows up in mundane situations, including bickering in my home town of St. Paul, Minnesota, over a police gun range. That dispute resembles one brewing over a new gun range planned for the Boise Police Department in the desert south of town.
Indeed, this involves Nobel-winning insights. While these situations affect only small areas, they exemplify trade-offs in state, national and international issues.
Start with details. The range in St. Paul belongs to our police department but lies in a suburb. Other municipalities also train there. When it was opened in the 1950s no housing was adjacent. Then, and in 1974 when a new 99-year lease was signed, it met all zoning requirements.
The range now has housing right at its edge. Firing is audible at a mile and is highly disruptive to those closest. These neighbors want it closed or open-air firing sharply limited.
People agree that gun training is essential to policing and that public safety is vital to the community. Many note that the range was there first and people living nearby knew it was there when they bought homes.
That’s similar to the case in Boise, where the police gun range in the Military Reserve was built in 1960, when the Foothills weren’t used as much for recreation and homes as they are now. When police wanted to expand the range, neighbors fought back. The expansion was denied in 2013.
So what would economists say?
My immediate reaction is typical: If people don’t like gun noise, why did they buy housing close to a long-established, legal range? That guns are noisy is self-evident and the long lease well-publicized.
The legal doctrine that “first in time is first in right” applies strictly only to water in Western states like Idaho, but it underlies most land-use regulation across the country. If a facility is established conforming to regulations before any competing uses arise, the first activity should have precedent. No one forced any neighbors to buy their properties.
Here we get to economics:
Broad principles based on British economist David Ricardo’s work show that the amenities or dis-amenities of a property affect its value. A tract with significant drawbacks, such as noise, will be worth less than one without the problem.
In 1986, our house was cheaper than identical ones nearby because it was on an arterial street with buses and near a gas station where mechanics worked late. We accepted that tradeoff. A similar tradeoff was accepted by all the complaining neighbors who now are shocked that a gun range is noisy.
This takes us to Gordon Tullock. He examined how people use political power to take money from others for themselves. Economists call this “rent-seeking.” Rather than using resources to produce new goods or services, they try to sway politicians. Tullock was a conservative, but other economists across the political and spectrum would agree: Here is classic rent-seeking.
Winning would give adjacent property owners a quieter life. The value of their properties would go up. Citizens of municipalities whose police officers use the range would be losers, as would taxpayers in general.
Certainly, more isolated land is available at the urban fringe, just as 60 years ago. But building a new range is expensive — Boise’s new one will cost $2.8 million. The time and expense of sending officers farther every time they train is costly, too.
So how do the individual losses of taxpayers, spread out over a large area, compare with the gain of landowners adjacent to the existing range?
That brings us to Mancur Olson. He examined “the logic of collective action,” in which a small group of people, each of whom has much at stake, will win out politically over much larger groups, the members of which, individually, have very little at stake. Well-organized landowners who stand to gain a lot by closing a gun range have the edge.
And that, in turn, leads us to 1991 Nobelist Ronald Coase. Gun noise is an external cost, which reduces the efficiency of a free market. But, Coase argued, that reduction is minimized as long as property rights are clearly specified. In this case, the law could be clear that the range has the right to make noise. Conversely, it could clearly say that neighboring landowners have the right to quiet.
In the first case, neighbors could get together and pay the city to shut down the range, build noise reduction structures or limit hours. Or they could just live with the noise.
In the second case, the city could pay for noise attenuation, limit hours, close the range or pay damages to the neighbors, either a one-time lump sum for an easement or an annual nuisance compensation fee.
There is a difference in who comes out ahead financially between the two cases. But, Coase argued, either situation could be the most economically efficient possible as long as the rules are clear.
The law is pretty clear in St. Paul’s case: The city can legally operate the range as it sees fit. The neighbors should pay if they want quiet and higher property values.
But one can always resort to politicking. That clouds the rules. Laws can be overturned. A city can be cowed into concessions.
Identifying economic efficiency is a topic in itself. Following Italian economist Vilfredo Pareto, Nicolas Kaldor and John Hicks clarified key criteria. If the gain in well-being by neighbors closing a range exceeds the loss in well-being to the city or cities that had used it, then a shut-down is the economically efficient option. This is true regardless of who actually bears the cost.
On the other hand, if the added-taxes or reduced-police-effectiveness costs of shutting the range exceed benefits to neighbors, then keeping it open is most efficient. Again, this is independent of who actually bears the cost.
What is true for gun noise is true for agricultural or construction pollution of rivers, acid rain, nuclear waste disposal and myriad other externalities at the state and federal levels. It is true for coral bleaching and sea-level rises globally as a result of man-made activities. The scale is different, but the economics are the same.
St. Paul economist and writer Edward Lotterman can be reached at firstname.lastname@example.org.