By now you’ve heard the story. Since the pandemic, so many digital nomads are flooding cities around the world that locals are being priced out of their own neighborhoods.
The international technology publication Rest of World claimed in a recent article that “the income differential between the nomads and the Colombian professional class is immense… The result is runaway price inflation.”
https://restofworld.org/2023/digital-nomads-visa-pricing-out-locals/
Really?
Inflation is worldwide. But we’re asked to believe that in Medellín, Columbia, “runaway” price inflation is caused by the fewer than 8,000 digital nomads in the city of some 2.5 million? (The estimate is from Nomad List). Something’s wrong here.
https://nomadlist.com/people/medellin
The article is one of a growing number of such articles blaming inflation, rising rents, and gentrification on digital nomads.
Here are the six reasons why you shouldn’t believe the claims about digital nomads causing inflation.
1. Hitchens’s razor. Author and journalist Christopher Hitchens is credited with forming the general rule: “What can be asserted without evidence can also be dismissed without evidence.”
Articles blaming digital nomads for housing inflation are generally based on two sources of data: 1) interviews with locals and activists who believe digital nomads are to blame; and 2) data about flights, tourists, and short-term rental services (a group of people who are mostly not digital nomads).
What these sources lack is any link between the cost of housing and the existence of digital nomads, specifically. In other words, it’s a claim asserted without evidence and so can also be dismissed without evidence.
2. Inflation is global. And there is no correlation between the popularity of countries and cities among digital nomads and the rates of inflation in those places. For example, inflation is over 30% in Ethiopia, Sudan, and Sri Lanka, where there are close to zero digital nomads, but 6.3% in the digital nomad hotspot of Mexico and 2.7% in the digital nomad mecca of Thailand.
https://www.ft.com/content/088d3368-bb8b-4ff3-9df7-a7680d4d81b2
Articles claim digital nomads are causing Columbia’s 12.8% inflation rate, while nomadless neighboring Venezuela has a 155.8% inflation rate.
3. Housing inflation is a problem everywhere. In the United States, rents are rising nationwide and pulling away from income, which squeezes renters. The rate of rental price gains is even higher in many cities all over the world, whether they attract digital nomads or not.
Rental housing prices are rising worldwide but blamed on digital nomads only in places recently popular with remote workers.
https://www.axios.com/2023/05/22/americas-growing-rent-burden
4. Digital nomads are a tiny minority of the people occupying dwellings in any city. The biggest factor by far in the rising cost of housing in Mexico City, for example, is a soaring job market for Mexicans. The city has been shattering records for the creation of new jobs in the last three years. The covid pandemic saw a flight of companies manufacturing in China, and many of those factories moved to Mexico City.
The population of Mexico City has grown by 700,000 Mexican people over the last five years, and is now well over 22 million people.
https://www.macrotrends.net/cities/21853/mexico-city/population
It seems to me that 700,000 new permanent year-round residents, plus foreigner expats, plus 2 million or so annual tourists and business travelers would have a bigger impact on housing prices and availability than the digital nomad minority present at any given time.
Mexico City is one of the world’s greatest cities for all kinds of reasons — the culture, food, and people are all truly fantastic. The real mystery is why there aren’t a lot more foreign visitors. (Tourists to Mexico City, for example, are about one-third the number to the much smaller New York City.)
5. Airbnb users and digital nomads are not the same group. In fact, fewer than 20% of Airbnb guests work at any point during their stay, according to the company, and most of those are vacationers checking email. Yet you’ll notice that the total impact of Airbnb is blamed on the extreme minority of digital nomads.
https://www.aljazeera.com/economy/2022/12/13/youre-not-welcome-mexico-city-residents-decry-airbnb
6. Gentrification predates the remote work trend. Correlation does not equal causation, and confusing the two is a common logical fallacy. Desirable neighborhoods everywhere and for decades have been impacted by gentrification. And digital nomads prefer desirable neighborhoods. The new trend of digital nomadism can’t explain the old phenomenon of gentrification.
I hope the digital nomad phenomenon grows. If anyone can show me actual data proving that digital nomads drive inflation, increase housing costs, and gentrify neighborhoods, then I’ll change my tune. In the meantime, nobody has done that. And so we can dismiss the claims of the armchair economists and anti-foreigner activists for what they are: beliefs with no basis in fact.