Density = Economic Development?

Every good cause has lots of reasons to support it. And often, those causes change their arguments based on the times. For example, in the last three years of economic downturn, you’ve heard a lot more about how this service or that organization is a “major job creator” or has a “huge economic impact.” In my personal life, I’ve seen that a lot with regard to the arts, but it’s rampant in all fields these days. But even with all of that focus, the work of the physicist Geoffrey West stands out; it could be that he’s created the ultimate economic development argument for urban density and “smart growth.”

I first read about West’s theories in Stephen Johnson’s book “Where Good Ideas Come From,” (which I got a free copy of at the Brookings Chicago Summit!), but it really hit home for me in the New York Times Magazine’s Year in Ideas article (which, as you know, is my favorite issue). Obviously, we know that density has many advantages, particularly in terms of sustainability (less driving needed to get around, the ability to do district energy, etc.), and some of that sustainability has economic impacts (like less gas and power costs). But I don’t know that I’ve ever heard that density, in and of itself, is an economic driver.

First, West shows that cities are a driver of productivity in general:

According to the data, whenever a city doubles in size, every measure of economic activity, from construction spending to the amount of bank deposits, increases by approximately 15 percent per capita. It doesn’t matter how big the city is; the law remains the same. “This remarkable equation is why people move to the big city,” West says. “Because you can take the same person, and if you just move them to a city that’s twice as big, then all of a sudden they’ll do 15 percent more of everything that we can measure.(emphasis added) … According to West, these superlinear patterns demonstrate why cities are one of the single most important inventions in human history. They are the idea, he says, that enabled our economic potential and unleashed our ingenuity.

But, of course, we know this, particularly thanks to the Brookings Institution work that shows how metropolitan areas account for a large majority of our country’s economic activity (the largest 100 metros house two-thirds of our population and generate 75 percent of our GDP. The important point is that it’s not just about large cities, but dense cities in particular:

In recent decades, though, many of the fastest-growing cities in America, like Phoenix and Riverside, Calif., have given us a very different urban model. These places have traded away public spaces for affordable single-family homes, attracting working-class families who want their own white picket fences. West and Bettencourt point out, however, that cheap suburban comforts are associated with poor performance on a variety of urban metrics. Phoenix, for instance, has been characterized by below-average levels of income and innovation (as measured by the production of patents) for the last 40 years.

Essentially, it’s fair to say the following statement: If you want a stronger economy, create a denser city. Now, it’s not as easy as snapping your fingers, and there’s a million things that are required in order to both build the necessary infrastructure and attract the people to live there. Not to mention that, according to West, after a city doubles in size, it also experiences a 15 percent per capita increase in violent crimes, traffic and AIDS cases. “What this tells you is that you can’t get the economic growth without a parallel growth in the spread of things we don’t want,” Bettencourt says. So it’s not all panacea and good times, although there are policy and investments that can address some of those negative externalities.

Anyway, point being that it’s pretty powerful work. So don’t be surprised when your friendly neighborhood environmental advocacy organization marches down to Olympia and uses this as part of their argument for more policy and investment to facilitate density.

One Response to Density = Economic Development?

  1. Jim Potter says:

    Nice work Eric!

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