Law professors and zoning advocates may need a new example

The paper title is “Strip Clubs, ‘Secondary Effects’, and Residential Property Prices,” and the authors are Taggart J. Brooks, brad R. Humphries, and Adam Nowak, here is the abstract maybe strip clubs are more popular than I thought:

The ‘secondary effects’ legal doctrine allows municipalities to zone, or otherwise regulate, sexually oriented businesses. Negative ‘secondary effects’ (economic externalities) justify limiting First Amendment protection of speech conducted inside strip clubs. One example of a secondary effect, cited in no fewer than four United States Supreme Court rulings, is the negative effect of strip clubs on the quality of the surrounding neighborhood. Little empirical evidence that strip clubs do, in fact, have a negative effect on the surrounding neighborhood exists. To the extent that changes in neighborhood quality are reflected by changes in property prices, property prices should decrease when a strip club opens up nearby. We estimate an augmented repeat sales regression model of housing prices to estimate the effect of strip clubs on nearby residential property prices. Using real estate transactions from King County, Washington, we test the hypothesis that strip clubs have a negative effect on surrounding residential property prices. We exploit the unique and unexpected termination of a 17 year moratorium on new strip club openings in order to generate exogenous variation in the operation of strip clubs. We find no statistical evidence that strip clubs have ‘secondary effects’ on nearby residential property prices.

Is this evidence for or against “the death of distance”?

For the pointer I thank the excellent Kevin Lewis.

Comments

"We find no statistical evidence that strip clubs have ‘secondary effects’ on nearby residential property prices."

What does using the same methodology say with respect to say Libraries?

In a study like this, I like to see the same methodology applied to a variety of items and then show the numerical differences. It's an indication to me if the methodology produces useful data. Otherwise, I'm inclined to believe that the results are more noise than signal.

"We have information on the location of 24 strip clubs that were either open during the entire sample period, opened sometime after January 1, 2000 or closed sometime before December 31, 2013. "

The error bars will be large in this one. It might be correct, but it's not a very powerful test.

This is a lot like the social benefits for parents study from a couple of weeks ago. They make it sound like they have 300k observations and a bunch of statistical power, but they don't.

Don't you need a similar natural experiment for those? Maybe they exist. Also, would small effects across a variety of development alternatives call into question this study, or our assumptions that the various alternatives have differing impacts on surrounding neighborhoods?

Natural Experiment: "Using real estate transactions from King County, Washington, we test the hypothesis that strip clubs have a negative effect on surrounding residential property prices. We exploit the unique and unexpected termination of a 17 year moratorium on new strip club openings in order to generate exogenous variation in the operation of strip clubs."

Usually, strip clubs go to commercial districts where traffic is high, so I suspect they would not impact neighboring areas much since the neighboring areas are already commercial. Every strip club I ever attended was in a office part area, not a quiet residential cul-de-sac.

As for law school, Rayward is the expert here (I flunked out) but there's a doctrine known as "coming to the nuisance" meaning if your neighborhood was once nice, but it's since gone seedy, you cannot complain as a new buyer that the strip club next door is making too much noise. You're "on notice" that the neighborhood has gone bad, as in "there goes the neighborhood". That's one reason (Steve Sailor is the expert here) that there was "white flight" a couple of decades ago: the theory was once minorities moved into a neighborhood, it would be destroyed and there's not much you could do to stop it as an existing neighbor short of perpetual nuisance lawsuit (sic: for trespass and nuisance), nor as a new neighbor ("coming to the nuisance").

In the case of public expenditure it would be necessary to balance any property value increase with the cost to build the library, the cost of any takings, and the opportunity cost of revenue not used for other purposes. Reason being, strip clubs are privately owbed and operated whereas libraries aren't. If researchers didn't appropriately weigh the costs of the library against the benefits, a study showing a benefit would be used wholesale for years by dishonest or stupid leftists. It would become another meme among the left that would never die.

Sure, but it was just an example. Feel free to substitute "Dentist's Office" if you wish or any other kind of establishment.

What is n-1 and what is n.

Areas that would be attractive to strip clubs already probably have bars and pawnshops, etc. They are n-1 in effect already. Adding a strip club to an already deteriorated neighborhood may not make that much difference. It just goes to n.

But, let's say you are in an n-5 neighborhood and someone proposes you go to n with a strip club, followed by bars and pawnshops.

When you look at transitional effects, you have to begin with where is the starting point.

+1, adding a strip club to an area that already has similar low reputation businesses probably won't have an impact. Adding a strip club on Main street between the grocery store and the town library probably will have an impact.

JW,

+1

Completely matches my knowledge of such things

In Amsterdam the red light district contains the most valuable real estate in the entire city. Prostitutes in windows exist next to Michelin-star restaurants, high-end design stores and historic landmarks. It doesn't seem to have any impact on property values. Maybe reasonable consenting adults can tolerate seeing alternative lifestyles without having a panic attack.

The Dutch are scum.

Amsterdam's red light district is also the #1 tourist spot in all of the Netherlands. Lots of international tourists with money to spend. Your average strip bar in the US is not that. The Netherlands also does a good job keeping the area orderly; in the US, as is mentioned in other comments, the strip bars locate in already seedy areas.

The natural US analogy to Amsterdam's red light district is probably parts of Las Vegas or possibly areas like San Francisco's Columbus street neighborhood. If you make that comparison, your point might be still valid, but I would suggest that the number of places like this that a country can support are limited, and it is some small fraction of the population that is ok with living near them.

"in the US, as is mentioned in other comments, the strip bars locate in already seedy areas."

Seems that this is part of the entire question of the article -- is that observation a cause or effect. Are they in seey areas because the strip club brougt the area down or do the zoning laws push the business into those areas. If the latter, the follow up might be to look at the secondary efffects for things like crime statisti -- do these clubs attact otherwise peaceful people into more dangerous areas and so expose them to the robbery/mugging?

Strip clubs exist in low income areas which are disproportionately minority occupied and you presume that customers traveling there are exposed to increase risk of criminal victimization? Wow, Stormfront is here folks.

"Strip clubs exist in low income areas which are disproportionately minority occupied and you presume that customers traveling there are exposed to increase risk of criminal victimization? Wow, Stormfront is here folks."

What a useless post that is deliberately misinterpreting the original posters intent in order. Oh well, I think it's time to add this poster to the killfile.

... intent in order to throw out a spurious charge of racism.

I think the 1.1 indicates a sarcastic (yet accurate) sock puppet.

@ JohnL. 1.1

I made no statement about lower income people as a class whatsoever so you're interpretation is questionable. I did suggest that, if the findings of the paper were correct then perhaps the applicaiton of the same reasoning of secondary effect might be applied to the existing policy and one could test for any potential increase in risk of experiencing crime arraises from the policy of pushing strip clubs to the more seedy, or less populated/residential areas.

While I've not frequented many, well I think I went into one in my life, my experience has been that t hey are not in residential areas so neither the rich nor the poor are really living in the immediate area. But this was in Washington DC so other areas my well be different.

I recall a few months ago the Dutch, getting elderly like most of Europe, wanted to reign in the 'red light district' of Amsterdam. At least that was the headline in the Yahoo News article.

At the same time, when something with what seems to be a positive externality is established nearby, home owners don't share any of the sale price of their homes with the positive entity and complain if their taxes go up. The externality road is a one-way street.

"Negative ‘secondary effects’ (economic externalities) justify limiting First Amendment protection of speech conducted inside strip clubs." I'll admit that I've been to a few strip cubs, but I don't recall much speech being conducted. We don't have strip clubs in my part of the low country, but there's a liquor store within walking distance of my house, and I'm confident that it adds value to my property since I don't have to risk a DUI if I need to restock the liquor cabinet. We have lots of strip clubs in the sunbelt city where I work; indeed, we are known far and wide for our strip clubs. That explains why I've been to a few. I wouldn't call it speech, but some strippers earn extra money by performing a feat that few Olympic gymnasts can perform. "Externality" is a good name for it.

In the Seattle area, strip clubs are regulated as to location - I think in Seattle proper, I think there are certain zones that can have the existing ones, maybe or maybe not you can open a new one. A bunch are in one area of downtown, some are located just outside the city limits.... I'm hazy on the details, but my point is that an alternative hypothesis would be that strip clubs have been regulated such that you can't put one in a place where you would depress local property values.

Anyway, here's an (old) article which touches on some of the regulatory stuff, e.g. "a city rule that bans strip clubs within 800 feet of places where children congregate."

http://www.thestranger.com/seattle/behind-the-boobs/Content?oid=6988639

I personally could not move into a home knowing that just 200 meters away some women are flashing their nipples behind completely closed walls. What's next?! My next door neighbor smoking pot in the privacy of his living room?

You dont think that there might be some difference between a bar and ones living room?

Because businesses, just like my living room, have no incentive to advertise or make other efforts to draw others into the vice, of course.

Limit how they advertise (sign laws work) rather than what they do inside.

"We find no statistical evidence that strip clubs have ‘secondary effects’ on nearby residential property prices."

This seems completely wrong, both ways. First, a strip club replacing a restaurant next to a residential area, that doesn't already have any adult establishments (adult book stores, pawn shops, etc) would seem likely to lower property prices. Whereas, a strip club moving into a long closed business in an area with such establishments already present would seem likely to raise property prices.

You think their examples might have been cherry-picked?

Of course the notion that nude dancing at the Kitty Kat Lounge is protected 'speech' is a bit of idiocy that would be dreamed up by a lawyer and taken seriously by almost no one else not a potential customer of such establishments. We could improve the quality of public life in this country by tarring and feathering a mess of lawyers.

In Seattle, the ban ended in 2007. You might recall there was some instability in the housing market around that time. The other day, Andrew Gelman had a cartoon about trying to measure the weight of a feather while a kangaroo is jumping on the scale.

Further, the new 2007 zoning limited the proximity of strip clubs to schools. In fact, this means that they can only be located along a few, ugly commercial main streets. All the new cannabis dispensaries are next door, because they are similarly zoned.

A clever entrepreneur would combine the two businesses...you know, to save on real estate costs.

Minneapolis's North Loop, home to four strip clubs and a massive sex shop, is probably the hottest real estate market in the state. So much so that the massive sex shop, which is a bit of a local institution, is scaling back and the building that houses it is being renovated to add offices and a restaurant.

So, yet more anecdotal evidence the study is completely wrong.

Huh? There's also a ton of new, expensive, housing being added to the area.

In that case, your example is completely irrelevant to the study.

The paper addresses the effect of new strip clubs opening near existing residential areas. People buying housing near already established strip clubs, obviously don't consider it a negative. Ergo, there wouldn't be an expected negative effect on prices.

The characteristics of the population are the important factor here. And it's one the study (of really limited sample size) seems to ignore. I would strongly expect the area to which you are referring is largely full of urban professionals without families.

If you open a new strip club (or noisy bar, pawnshop, etc) near a quiet residential area full of young families, I would strongly suspect that you are going to see a negative effect on nearby housing.

And you'll note this line from the study:

"In addition, we eliminated any property located within 2000 feet of a school or daycare center from this analysis sample."

This study suffers from the following obvious flaws:
1) a small sample size (n=21)
2) all examples from one city (Seattle)
3) no control group (similar areas of the city without any clubs over the same period)

The paper is in response to the long-held view that strip clubs have negative externalities, using new strip clubs as a natural experiment to test that view.

New development in the neighborhood of existing strip clubs is additional, but different, evidence that challenges the long-held view.

I think you have a point that strip clubs may hurt property values in some contexts but not others, but that's is very much not the long-held view.

Property values go up- so what? What if they went up much less than they would have otherwise?

Anecdote: There is a strip club surrounded by the new Amazon towers in the Belltown part of Seattle. There are two private elementary schools about 500 feet away.

All the reasons for zoning for strip clubs was to create new businesses and jobs by creating a "combat zone" of entertainment for bikers, rednecks, and other rough men to create the critical mass for explosive business growth creating the explosive customer growth creating the explosive growth in sin taxes while making it easy for police to round up and arrest the violent men and meth and coke dealers who survive the gun fights.

It's the Copenhagen model.

But that's before the GOP started catering to the Bible thumper and their war on sin and defending any business startup was a great counter to liberals whining about exploiting women. The GOP could point to Hugh Hefner and the intellectual articles in Playboy and say men looking at naked women is the highest form of respecting women.

Property zoning should be ended. In 1926 the Supreme Court in a split decision upheld property zoning. Why?

Gratuitously, one judge offered that apartments built in single-family detached neighborhoods were "parasitic."

And when did push-cart vending become a criminal activity in America?

Property zoning is class warfare, but from the top down.

You can have end of zoning, when racially restrictive covenants can be enforced in court and the Fair Housing Act of 1968 (and various state analogs) are repealed.

Obviously this research is just a starting point. I'd happily participate in building a new dataset through personal observation.

Regulation of strip clubs, though, seems more a function of political pressure than economic.

Comments for this post are closed