UHERO publications

In 2016, Auckland, in Aotearoa New Zealand, upzoned ~75% of the city. As a result, permits went up ~80%, and after six years, rents were 22% lower than they otherwise would have been. Auckland’s a useful case study for Honolulu: similar geography, population mix, initial zoning, and affordability. So, a UHERO economist asked: what if Honolulu did the same, and got the same results? Renters would save ~$500/month by 2032 (more for families in 3-bedrooms, $700+) — that’s equal to a ~$8,500/year pay raise per renting household. And most existing homeowners don’t lose out: many gain value from the new right to redevelop. New townhomes are more affordable and replenish the aging housing stock. A rent cut of this size is like a massive pay rise that housing policy can deliver, even when wage growth doesn’t.

Hawaiʻi is one of the most desirable—and most expensive—places to live in the world. But for 23 of the past 25 years, more residents have moved to other states than new arrivals have come to the islands. Rhetoric about being “priced out” is usually tied to expensive places where otherwise thriving economies drive gentrification, rising prices, and inequality, pushing middle- and lower-income residents to leave. Hawaiʻi, however, has neither the high incomes nor the extreme inequality of those places. Instead, Hawaiʻi’s experience may more closely resemble economically distressed or “left-behind” regions—marked by stagnant productivity and limited opportunity, though typically with much lower costs of living. In Hawaiʻi’s case, a persistently high relative cost of living may even mask these structural weaknesses and the extent of its economic decline.

So, is Hawaiʻi’s economic distress really about its high cost of living? Or is Hawaiʻi more like left-behind regions with stagnant local economies? Motivated by this puzzle, we re-examine Hawaiʻi’s economic performance by adjusting GDP per capita, per capita personal income, per capita growth, and GDP per hour worked for its high cost of living, revealing a deeper perspective that casts the “price of paradise” in a new light.

The analysis places Hawaiʻi’s economy alongside economically distressed places rather than priced-out metros and shows that its economic distress reflects more than 30 years of lagging per capita growth and productivity, not a rising cost of living, which has remained high but relatively stable compared to other states.

This report examines the Maui County proposal to phase out transient vacation rentals (TVRs) in Apartment districts, including removing long-standing exceptions for pre-1989 properties widely known as the “Minatoya List.” The policy aims to improve housing affordability, worsened by the 2023 wildfires, by converting TVRs into long-term housing units. Our analysis includes effects on tourism, employment and output, the housing market, and county tax revenues.

This report examines the health disparities between rural and non-rural areas in Hawai‘i, using data from the June 2023 UHERO Rapid Survey. While rural areas offer benefits like proximity to nature and strong community ties, they also face challenges such as reduced access to quality healthcare. Our analysis reveals significant health disparities, particularly among people with disabilities and those with low incomes. These findings highlight the need for targeted policy responses to address the unique health challenges faced by rural populations in Hawai‘i.

The economy of Hawai‘i is extraordinarily concentrated in the tourism industry. As a result of tourism’s dominance, Hawai‘i’s economy faces short-term risks from shocks that impact visitor numbers and long-term stagnation from flat and volatile tourism spending over the last three decades. In response to these issues—which became especially salient during the COVID-19 pandemic—policymakers in Hawai‘i increasingly emphasize the need to diversify. Still, it is not clear which industries Hawai‘i could diversify into.

Hawai‘i’s small size and isolation present particular challenges to the healthcare industry, including lower productivity and higher costs, due to its limited ability to take advantage of economies of scale. The state’s high cost of living likely compounds these problems by hindering the recruitment of healthcare professionals who must often be hired from out-of-state. Furthermore, national reimbursement policies that fail to reflect regional price or productivity differences in Hawai‘i may also contribute to healthcare service shortages. These issues are potentially even more acute in Hawai‘i’s rural and isolated communities, underscoring the need for evidence-based strategies and policy designs that address the unique challenges facing the healthcare industry in Hawai‘i.

This report takes a high-level view of key recovery issues. At this point, our intent is to identify the scope and scale of impacts already evident and to try to anticipate what the greatest challenges will be. Additional work, together with the Maui community and other experts will be forthcoming in the months and years to come. In that sense this report is intended to initiate an ongoing research agenda to support the people of Maui through this difficult time, and their decision making in the period to come.

Astronomy continues to be a sizable and stabilizing source of economic activity. In 2019, local astronomy related expenditures in the state totaled $110.02 million with $57.18 million, $35.22 million, $0.28 million, and $17.33 million spent in Hawai‘i, Honolulu, Kaua‘i, and Maui counties respectively. Including indirect and induced benefits and adjusting for inter-county feedback effects, the astronomy sector had a total impact on the output of goods and services in the state of $220.95 million. Astronomy activities also generated $68.05 million in labor income, $10.10 million in state taxes, and 1,313 jobs statewide. The astronomy industry also generates knowledge, expertise, and technology benefits for the wider economy, beyond the direct, indirect, and induced impacts accounted for by the standard economic impact methods. These additional impacts are described as spillovers and underpin the case for public investment in research.

Hawai‘i’s vulnerability to economic shocks has become a paramount concern during the pandemic. Extreme specialization in the visitor industry exposes Hawaiʻi to risk and volatility when events such as a pandemic, recession or terrorist attack trigger collapses in visitor numbers. In response, policy-makers in Hawaiʻi are placing an increasing emphasis on diversification. Those with an interest in alternative industries are asking for support. Others are justifiably concerned that diversification policy is futile and will support special interests rather than genuine policies to achieve diversification. Tourism is Hawaiʻi’s comparative advantage after all. Policy-makers need to consider, is there a way to balance concentration and risk while promoting diversification, growth and prosperity?