“Do you know what a trailer park* is?” Professor Becker smiled as he threw the question across the dinner table during a FINvite.
“Yes,” I paused, somewhat defensively, “I lived in one.”
The trailer home where I spent my teenage years. An elusive façade of affordability.
“Oh…,” He had a look on his face that I would never forget, a curious, deliberate gaze. “Well, why don’t you come research for me?” And that, kids, is how you get a research job.
Thus began the story of how I became a trailer park research enthusiast with Dr. Becker. (Actually we just call him Charlie.)
*For our purposes, trailer parks = mobile homes = manufactured housing
Due to increasing demand for affordable housing, about 20 million Americans live in mobile homes even though trailer park management might be anything but fair. Here’s how it works:
In a community like this, tenants typically own the manufactured structures that are their homes (Homeownership! The American Dream!) but not the land under it, and once they’re dropped off, mobile homes are not very mobile because it costs about $3,000 to relocate.
The low-to-moderate income tenants are often subjected to increasing monthly land rents after being lured in by the predatory sales practices, at which point they often can’t afford to relocate to another park (that could have exploitative rents anyway).
Here’s how Charlie explains it (2:27 Video):
How could anyone voluntarily subject oneself to living with such fishy property rights?
Caitlin Gorback (Duke ’11), who recently left the NY Federal Reserve for the Wharton School of business, wrote a thesis on trailer parks economics under Charlie Becker’s mentorship to answer this very question.
Photo Credit: Duke Economics
Gorback modelled the mixed-ownership method to explain how the tenant-owned-house and park owner-owned-land arrangement might maximize profit and utility for both owners and tenants: The park owners benefit from not having any toilets to fix because the tenants own the housing structures. The tenants benefit from sharing a form of governance because the park owner who owns the land has the authority to control unruly neighbors.
This creates the possibility of a mutually-beneficial scenario, where the management provides the governing structure needed to maintain a homogenous tenant base within trailer parks. This is beneficial for tenants, since they typically prefer neighbors with similar habits. So it happens that there is within-park homogeneity and inter-park heterogeneity, such as retiree trailer parks, family-friendly trailer parks, and so on. Wow! Science.
Charlie first got into trailer parks after witnessing a horrendous case of mismanagement first-hand. A relatively large trailer park changed hands shortly before the financial crisis. After suffering substantial losses and being barred from reselling, the new owner sought revenge by doubling rents, devastating the tenants. “It’s a tough story,” he said, “and also interesting to an economist… where else do you find people entrusting a valuable asset to someone else who might render it worthless?”
Before his obsession with trailer parks research, Charlie has consulted for The World Bank, advised the government of Kazakhstan on social security, and helped fix the higher education system in Ukraine by chairing the International Academic Board.
Stay tuned for Charlie’s forthcoming book with Caitlin and research with Ashley Yea on trailer park valuation and nearby apartment rents. In the meantime, check out why Charlie endorses President Obama’s plan of racially integrating neighborhoods and read up on his do’s and don’ts of purchasing a home.
You can also find Charlie busy running the unique Master of Science in Economics and Computation (MSEC) at Duke, teaching Urban Economics to undergraduates, or masterfully making fun of his students’ socks.
Exhibit A:
By YunChu Huang, Duke 2016