Rural Areas: Mistaking Want as Demand

The Kiwi Dream: A big house, a quarter acre plot, Rugby on Sundays and fresh milk from the local dairy farmer.

A Third of New Zealand lives in the Auckland “Super City”. In fact the majority of the country’s economic output comes from just three cities. 72% of the population lives in a “Main Urban Area” (of over 30,000 people).

city-share-of-nz-gdp-map-v2-724x1024
Where Does the New Zealand Economy Happen? – TransportBlog

Yet, like much of the English World, New Zealand sees itself as a country of rural dwellers. There is certainly reasons to want to live in a rural area – plentiful space, cheap housing, no noisy neighbours and no angry ones when you are making the noise. I do not want to pick on anyone in particular, but I’ll use the comments on a Transport Blog article to illustrate my point.

I think to most kiwis, bigger and more expensive means a declining city. Sustainable growth, or stable living (no growth), with affordable housing, means prosper.

Government needs to revitalise the provincial economy or NZ will no longer be a “going concern”; just a top-heavy Auckland with the countryside full of bed and breakfasts owned by James Cameron

People *do* want to live there, if there [in rural areas] is sufficient economic activity for them

Are you saying we just let the market rule? If so, fine, but I doubt your liberartian ethics actually stand up to further tests

Interestingly these comments can be framed in economic terms.

Wants are goods or services that are not necessary but that we desire or wish for.

Values a set of shared wants within a region or globally.

I propose that we can simply look at things as they stand now, and derive what the values of a region are. Purportedly New Zealanders value open space, ball games and big houses. That does not hold up to our litmus test though. As reported above, most of New Zealanders have chosen to forgo big houses, large and open (private) spaces in exchange for the vitality of a denser area.

It is not like there is a critical shortage of open land in New Zealand – you can easily buy a dozen or so hectares with a big house for below Auckland’s average house price. Rather, people do not want to live there.

When you have multiple wants, you must make a choice as to the prioritization of your wants. It seems that while New Zealanders might want the rural lifestyle they have decided to choose the urban lifestyle over it. This is where so many commentators make a mistake, they confuse wants for demand. Demand is when you not only have the want for something, but also the ability (and the willingness to expend that ability) to obtain it.

There is little demand to live in rural areas (only 20% of Kiwis live in rural areas, and most of them in “rural centers”), why? I propose that generally Kiwis value the advantages of an urban area above the disadvantages.

The results are disastrous, because we so firmly ignore the demand for urban areas Kiwis are left in a tough spot. Zoning regulations lock us into low density development, making it very expensive to live in our biggest cities. This artificially discourages cities (because urban living is artificially expensive), which makes our economy artificially inefficient. More importantly (to me at least), is the things people will do to access the city in face of these regulations: adults sharing bunkbeds,  families sleeping in tents and teenagers camping in the bush.

You will note one thing about all those examples. They are result of when laws (designed to prevent density) come up against demand (demand to live in a busy place).

Rural land is cheap. If we wanted to live like that so much we would in an instant. We see only the opposite – Auckland and New Zealand’s big cities continue to grow, even as they become incredibly expensive. This is a phenomena experienced all around the world – rural dwellers migrate to cities.

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2 thoughts on “Rural Areas: Mistaking Want as Demand

  1. Really interesting post and thoughtful post, and your point is very well made. There needs to be much more consideration of what some NZers (perhaps those in a particular generation) value about the lifestyle block or small town fantasy, as well as more understanding of why people will pay so highly (in the broadest sense) to move to/live in cities – higher chance of employment? Better paid work? Social and cultural opportunities? Less racial/gender/sexual orientation discrimination? (I’ve been a politically-minded Maori living in a Pakeha-dominated dairying community – a very lonely experience).

    On another note, I’m particularly interested in that definition of ‘values’ … if values are sets of wants which are defined as ‘not necessary’ then values are ‘not necessary’? In my social science work we’d tend to think of values as criteria which, among other things, people use to help decide what is ‘necessary’ (eg feed me or feed my kids? keep that $5 or give to those in more need? lead-free water or lower rates?). Any references or other reading to explore that definition much appreciated.

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    1. Hey Susan, sorry for my slow response. In Economics we look at values as kind of a very broad definition of what we want.

      For example you might value having fun and feeding your kids. If you have to make a trade off between feeding your kids and partying you would use the weighting of your values, the cost, legal/social pressure, etc before making definitions.

      The important distinction (which is often overlooked in economics, especially policy making) is that we make choices as to what values we will uphold with our limited resources.

      As to why people live in/around cities… well big question. Employment is the obvious one, but I question it given how much more it costs to live in certain cities (London, Auckland) when wages aren’t equally as inflated.

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