What do U-haul prices tell us about America?
Read what Chris Lightfoot has to say about this question here.
The origin of the idea for the analysis appears to be in this marginalrevolution post.
The idea is that large differences in prices for one-way trips from Detroit to Las Vegas compared to one-way trips the other direction reflects differential migration. The answers aren’t so surprising: the flow tends to be South and West, and especially towards Las Vegas.
In one sense, this analysis is very Freakonomics-y. He answers a question by cleverly using data that were created for a completely different purpose, but contain useful information nonetheless. In another very important sense, however, there is something unFreakonomics-y about it. If we want to know about American migration patterns, there are easy ways to use census data to do it. In general, I’m not in favor of doing things the hard way, just for the sake of it being hard. So, at one level, using U-haul data for this question is kind of pointless. When I take roundabout approaches to answering questions, it is only because there is no easier path I can see to the answer. This is a key insight that people often overlook.
Still there are at four reasons to applaud the U-haul analysis:
1) It is clever and insightful. Seeing it, others might be inspired to find another
application in the same vein.
2) It was a lot of hard work, and I am generally in favor of rewarding hard work.
3) It uses prices. Prices are an incredibly valuable tool for understanding what is going on. Indeed, the Center I run at University of Chicago is called the Initiative on Chicago Price Theory for just that reason.
4) It provides a good test of indirect strategies to identifying patterns of interest. Because we have more direct measures, we can compare the results. In this case, what Chris Lightfoot found matches well what we expected, validating the methods.
(Thanks to Tom Steinberg for forwarding the link.)