Who bikes?

Workers in low income households rely more on bikes for commuting, but the data show people of all income levels cycle to work

There’s a lot of hand-wringing and harrumphing about the demographics of cycling. Some worry that bike lanes cater to higher income, spandex clad commuters, and are yet another signal of gentrification.

Workers in every income category bike, but bike commuting skews toward lower income households.

In response, experts hasten to point out that workers from low income households are the ones who be more reliant on cycling to get to work.  (That’s correct, by the way–as we’ll see in a second).  But in the process of trying to make a point, they’ve exaggerated the case.  Here, for example, is a recent tweet repeating a claim made in a CityLab article earlier this year:

That’s a pretty strong claim.  Anne Lusk’s article says data for that claim comes from a 2015 CityLab article, written by then-staffer Eric Jaffe.  Jaffe published some Census data on bike commuting by income group, and offered two charts.  The first chart shows the fraction of persons biking and walking to work by household income (lower income households are more likely to to walk or bike to work than higher income households).  A second chart shows the number of persons commuting by bike, with data aggregated by income groups in multiples of 50,000 (i.e. 0 to $50,000, $50,000 to $100,000, etc).  While Jaffe’s original article shows that lower income households are more likely to cycle to work than their higher income counterparts, it actually doesn’t support the Lusk twitter claim about the largest number of commuters being from households with under $10,000.

Let’s take a look at the most recent census data, from the five-year American Community Survey for 2013-2017.  We’ve used the data from the IPUMS website, because that let’s us tabulate data by our own custom income ranges.  We’ve narrowed our look to persons aged 25 to 64 who reported commuting to work. For this study, we look at household income bins of $10,000 each ranging from zero to $250,000.  Our first chart looks at the share of commuters traveling by bike in each income group.  (As is common in such data, we’ve excluded persons who work at home from these tabulations).

Data in this table are arranged from low incomes (at the bottom) to highest incomes (at the top).  Data show each range of $10,000 in income; and we’ve truncated incomes for those with more than $260,000.  The data show that those with the lowest levels of income are the most likely to rely on bikes for commuting. Almost 1.6 percent of commuters income incomes with less than $10,000 commute by bike, nearly three times the national average of about 0.5 percent.  Those with incomes of 10,000 to $20,000 are more than twice as likely as other American workers to commute by bicycle.  In general, the share of workers who cycle to work declines with increasing income, up to about $100,000 in household income, and then increases modestly as income rises.  (That increase in biking is definitely modest: those with incomes of $150,000 or more are universally less likely to commute by bike than those with incomes of $20,000 to $30,000).

Our second chart show the number of bike commuters in each income bin. As with the US income distribution, the number of persons in higher income categories gets smaller and smaller as household income rises above $50,000. (The high number of persons in the above $260,000 income category reflects the fact that we’ve consolidated all the bins above that dollar amount).  When we divide bike commuters into $10,000 household income bins, the modal number (most frequent category) is $20,000 to $30,000.

So the claim in the City Lab article, that “the single biggest group of Americans who bike to work live in households that earn less than $10,000,” simply isn’t true. About 30,000 of the more than 800,000 regular bike commuters in the US live in households with incomes of less than $10,000.  Every income group up to $100,000 or more has more cycle commuters in that income group than the under $10,000 group.  Based on the statistics presented in Eric Jaffe’s 2015 CityLab article, a claim about “the most households” holds for households with incomes under $50,000, but not for the category under $10,000.  But more importantly, it’s pretty arbitrary how you define income groups:  should it be $10,000 increments, $50,000, or some other measure.  Which of these arbitrarily defined groups is “largest” tells us more about where someone has chosen to draw the lines than it does about who is cycling.

A better way to look at the distribution is to consider the median income of bike commuters, relative to other commuters.  The median bike commuter had a household income of about $72,000 according to this data series, meaning about half of all bike commuters have household incomes less than that amount and half have more.  To put than in context, the median car commuter had a household income of about $82,000.  So, on average, bike commuters live in lower income households than car commuters.  For reference, the median bus commuter lived in a household with an income of about $62,000.

On average, bike-riding skews more toward lower income households, but it turns out that workers in every household income category are bike commuters.  Lusk’s article–and others–make the excellent point that we need to build cycling infrastructure in a way that is inclusive for a range of income and social groups. Accurate data can help make that case.

Will upzoning ease housing affordability problems?

More housing supply denialism–debunked

It appears that we have been a bit premature in calling the housing supply debate over. Last week’s urbanist Internet was all a flutter with the latest claim of an academic study purporting to show that allowing more density in cities wouldn’t do anything to ameliorate the housing affordability problem. The latest installment is a new paper from  new paper from Andrés Rodríguez-Pose and Michael Storper claiming that upzoning will worsen, rather than ameliorate inequality and gentrification. The paper got wide attention thanks to a Richard Florida’s CityLab, article entitled, “Building More Housing is No Match for Rising Inequality.” Florida summarizes the study as follows:

“A new analysis finds that liberalizing zoning rules and building more won’t solve the urban affordability crisis, and could exacerbate it.”

There was little surprise that the Rodríguez-Pose/Storper paper, and Florida’s endorsement would be seized upon by NIMBY groups.  In San Francisco, 48Hills, a generally anti-development neighborhood publication, wasted no time citing the study yet another piece of evidence that “challenges the notion that allowing the private market to build more housing will bring down prices.”

Making higher density housing easier reduces rent inflation and displacement.

Florida quotes Rodríguez-Pose as saying: “Upzoning is far from the progressive policy tool it has been sold to be. It mainly leads to building high-end housing in desirable locations.”

The evidence for that in the paper seems to come from citations of two recent sources. An article on in the Washington Post examining Zillow data on changes in home prices by various price tiers (page 30), and a  a study of the effects of upzoning on land prices in Chicago by Yonah Freemark (page 31).

As City Observatory readers will recall, we took a close look at the Washington Post article when it came out, and challenged all of its principal claims. We found that the Post’s analysis, which purported to address the effects of new apartment construction, relied on a Zillow rental price series that didn’t include multi-family buildings. We also found that increases in supply were actually highly correlated with declines in in rental price inflation.  While building more housing in the highest price tiers produces declines in inflation in the highest tier first, these declines are rapidly echoed throughout the market.

Alex Baca and Hannah Lebovitz have also pointed out the limits of Yonah Freemark’s study.  Almost everywhere, but particularly in Chicago, there are many discretionary and contingent elements in the land use planning process that mean that changes in zoning are a necessary, but by themselves not sufficient condition for realizing greater density:

 No one who is intimately engaged with the complexities of affordable housing in America would suggest that zoning is the sole knob to twiddle to increase affordability—and Freemark doesn’t, either. Zoning is targeted because its origins are inherently racist, bigoted, and exclusionary. But, again, it is not the sole input to making housing more affordable. It’s just the one that, by changing it, allows for many other things that make housing more affordable. . . . But, for now, these findings are inconclusive and in many ways detached from the day-to-day reality of how local-level zoning and planning work. We hope they are not used to validate a continuation of exclusionary practices, or misguided power moves by elected officials in American cities and their suburbs.

Rodríguez-Pose and Storper also cite Rick Jacobus (page 32) as their source that housing markets are deeply segmented–i.e. that adding supply in one part of the market has little or no effect on prices in other parts of the market.  But Jacobus doesn’t offer data for that assertion, and as the recent Upjohn Institute study by Evan Mast shows, the succession of household moves set off by the construction of new higher income housing quickly reverberates through all tiers of a city’s housing market, with the effect that 60 percent of the increase in vacancies is felt in lower income neighborhoods.

As Bloomberg’s Noah Smith has suggested, the easiest way to poke a hole in the argument that more housing, even at the high end of the market, won’t help address housing supply is to consider the counter-factual of somehow demolishing 10,000 or 50,000 high income housing units.  Does anyone suppose that if there were that much less high end housing in say, San Francisco, that housing prices would be lower, or the plight of the poor would be lessened? Exclusionary suburbs, like Marin County, have tightly constricted the housing supply:  would Rodriguez and Pose consider them policy models of how to build a more equitable community?

From a policy standpoint, the more useful question is:  Will the poor in a city be better or worse off if it is easier to build new multi-family housing, especially, as California Senator Scott Wiener’s SB 50 would allow, in areas well served by transit?  In an important sense, Rodríguez-Pose and Storper simply decline to engage seriously in policy discussions.  The closest they come to is to seem to imply that YIMBY advocates are calling for more widespread building on environmentally sensitive greenspaces.  This ignores that there are many ways to accomodate greater density in built up areas in ways that are likely to advantage those with modest means, say by allowing the construction of apartments near transit.

The paper is remarkably silent as to how our land use planning regime contributes to exclusion and segregation, or how this might constructively be altered.  Aside from a gratuitous swipe at “the supposed social justice aspects of reducing housing regulation, assuming it would help the less skilled and reverse a long association of zoning with racial exclusion” there’s no acknowledgement that the balkanized suburban regimes of US metro areas have deployed zoning as a tool to exclude the poor and provide opportunity and access to amenities only to those wealthy enough to afford large single family homes. Among the words you will not find in their article are “exclusionary zoning” “single family housing,” “apartments,” or “parking.” It’s well-documented that our current system of deeply decentralized land-use decision-making, coupled with the strong incentives of “homevoters” to minimize tax burdens and shift costs and congestions to other jurisdictions, produces the expensive, sprawling and segregated land use patterns in US cities.

Rodríguez-Pose and Storper sidestep these nuts and bolts issues of how to fix zoning so that it isn’t exclusionary, in favor of a knocking down a straw man claim that upzoning is somehow a cure for  inequality, (an argument that no one seems to be making).  In the process, they (and by extension, Florida) lend credence to the NIMBY-denialism about  the central need to build more housing in our nation’s cities if we’re to do anything to meaningfully address affordability.







The Young and Restless in Black and White

A sharp divide by race in urban residence for young adults

Well-educated young whites are increasingly living in central cities, while well-educated young African-Americans are shifting increasingly to the suburbs

For some time, we’ve been tracking the location decisions of a group we call the “young and restless”–25 to 34 year olds with a four-year college degree.  It’s fair to call them restless, because well-educated adults in their late twenties and early thirties are the most geographically mobile segment of the adult population. The movement of talent to particular metropolitan areas and within those metro areas to close-in urban neighborhoods was the subject of our 2014 City Report.  These smart young workers fuel economic growth, because they’re the dream demographic for fast-growing knowledge-based companies, who are increasingly locating in urban centers to tap this growing labor pool.

Last month, The New York Times Upshot published an interesting bit of data journalism, highlighting the racial characteristics of neighborhood change in the US.  They found a widespread pattern of suburbanization among people of color, and also flagging a contrasting (and much smaller) movement of whites into historically black neighborhoods.

That got us thinking:  How do these patterns play out for young adults?

To get a quick look at the patterns of change, we turned to the indispensable University of Minnesota IPUMS website, which provides a convenient on-line tool for using micro-data from the Census Bureau to quickly tabulate data for custom-selected sub-groups of the population.

For this analysis, we focused on young adults, aged 25 to 34, living in metropolitan areas.  The Census Bureau codes metropolitan area residents as either living in a central city (usually the largest, first named city in a metropolitan area), or living elsewhere in the metro area (in a smaller city or unincorporated area).  It’s a far from perfect disaggregation between “city” and “suburb,” but for a first cut analysis, we’ll let it suffice.  We’ve also restricted our analysis to two racial categories, black and white.  We also tabulate the number of young adults in each geographic/race category by educational attainment, focusing on the top and bottom of the educational spectrum (those with a high school diploma or less, and those with a four-year degree or more). To get a sense of long term changes, we compare data from the 1980 Decennial Census of population with the most recent five-year tabulation of data from the American Community Survey, covering the years 2013 to 2017 (which we’ll identify using the mid-year of the sample, 2015).  So think of this analysis showing the generational change in residential location over a 35 year period, from 1980 to 2015.

Here’s the data:

Share of 25-34 Year Olds Living in Central Cities of Metropolitan Areas, 1980 and 2015
1980 2015 Change, 1980-2015
Black White Black White Black White
HS or Less 72.1% 33.3% 52.6% 25.3% -19.5% -8.0%
4 Year or More 65.0% 35.0% 47.6% 41.2% -17.3% 6.2%
Ratio -10% 5% -9% 63%

This table shows the fraction of 25 to 34 year olds who lived in the central city of a metropolitan area by race and education level in 1980 and 2015. The two right hand columns of the table show the change in the share, in percentage points, for each race/education group between 1980 and 2015. The bottom row of the table shows the ratio of the share of college educated 25 to 34 year olds living in central cities compared to the share of high school educated 25 to 34 year olds living in central cities for each year and race.

They show a couple of things, right off:  Squarely fitting our stereotypes in both 1980 and 2015 black young adults were more likely to live in central cities than their white counterparts.  In 1980, about two-thirds of black 25-34 year olds lived in central cities, in 2015, roughly half did so.  About a third of white young adults lived in cities in 1980.

Second, consistent with the findings reported by The New York Times, black young adults are much more likely to live in suburbs now than in 1980.  Roughly two-thirds of black young adults lived in central cities in 1980; by 2015, young black adults were about evenly split between central cities and their suburbs.

Third, the pattern for white young adults is mixed, and varies dramatically by educational level. White young adults with a just a high school diploma or less education were less likely to live in the central city (share down 8 percentage points) and more likely to live in the suburbs in 2015 compared to 1980.  On the other hand, white young adults with at least a four year college degree were more likely to live in center cities (share up 6 percentage points).

Finally, and most interestingly, there is a sharp contrast between locations of well educated young blacks and whites.  Relative to their less well-educated peers, blacks with at least a four-year degree are slightly more likely to live in suburbs (about 10 percent more likely–53 percent vs. 48 percent).  In contrast, well-educated young white adults are about 60 percent more likely to live in center cities (41 percent vs. 25 percent) than their less well-educated peers.

What this seems to signal is that–as Pete Saunders argues– suburbanization is still aspirational for young black adults, and that it is not for white young adults.  Better educated white young adults are dramatically more likely to live in central cities than less educated peers; Better educated black young adults are somewhat more likely to live in suburbs than their less educated peers.  There’s a sharp divergence in trend by race among well-educated young adults, over time; well educated white young adults are becoming more likely to live in central cities; well-educated young black adults are more likely to live in suburbs.

The varied racial pattern of urban location by education has important implications for understanding neighborhood change. In part, it fits with a stereotypical view of gentrification, fueled by well educated young whites. But it also shows that young black adults, especially better educated ones, are moving to the suburbs. As David Rusk has pointed out, the suburbanization of the most successful black households has contributed to the growing economic polarization of black neighborhoods.


Why road pricing is inherently equitable: Faster buses

Road pricing is inherently fairer to the poor because it speeds up buses

As economists, we’re keen on the idea of road pricing. The reason we have congestion and delay is because we charge a price for peak hour road use (zero), that doesn’t come close to covering the costs of providing roadway capacity and reflecting the delays that road users impose on others with their choices of when and where to travel.

A road user fee that makes these go faster is inherently equitable

Invariably, though, we’ll hear claims that charging a price for the road, however small, poses an undue burden on the poor. (Strangely, we seldom hear these same people arguing that, in the interests of fairness, we ought to make bus travel free, but we digress).

Superficially, that argument sounds plausible:  a road user charge would impose a higher burden on a lower income driver than on a higher income driver.

But that claim misses some much larger points. As we’ve documented at City Observatory, low income workers are far less likely to drive at all, and much less likely to drive to work during peak commuting hours than are high income workers. The average income of peak hour car commuters in Portland, for example, is $74,000, compared to $45,000 for transit riders.  Many other aspects of how we finance are road system are far more inequitable than road pricing.

An even larger issue has to do with buses. A recent analysis from the New York City Riders Alliance looked at the effect of the upcoming pricing of roads in Manhattan, using Charles Komanoff’s Balanced Transportation Analyzer. It shows that pricing Manhattan roads will increase travel speeds 20 percent in the central business district and about 7 percent elsewhere in the city.  This will mean faster travel times for city buses, and makes a big difference for this with long bus rides. For those who use express buses to commute into Manhattan from Brooklyn, the Bronx and Queens–a group that predominantly includes people living in neighborhoods with limited subway access–this analysis shows that road pricing will save them an hour or more of travel time each week.

But we don’t have to rely on models alone–real world experience shows that pricing roadways makes buses run faster.  The most recent evidence for that comes from Atlanta, where new high occupancy toll lanes on I-75, are enabling area commuter buses to move much faster. The Atlanta Journal and Constitution reports that Georgia’s State Road and Tollway Authority is going to have to revise its commuter bus schedule, shaving about 15 minutes off of peak hour travel times.

Right away, these time savings translate into real benefits for these bus commuters–who tend to have far lower incomes than those who can afford to travel by car into Manhattan. Regardless of whether the money raised by road pricing is spent on transit or not, the faster speeds enabled by road pricing are a direct benefit to transit riders, especially those who are dependent on the bus system.

And that’s not all:  the productivity and cost of the bus system is directly tied to how rapidly it delivers riders to their destinations.  A bus that can travel faster has higher driver productivity (more rider miles per driver hour), lower bus costs (again, more fare-paying passengers per service hour). And because it delivers better service, it’s more likely to attract riders, creating a virtuous circle where faster bus service lures more people out of their cars.

Think of tolling as the the fastest way to invest in a more productive, more attractive transit system: Getting (at least some) cars out of the way is one of the fastest, cheapest ways to make bus service better, and tolling allows that to happen without building expensive dedicated right of way.

The tragedy of the commons on the streets of New York has been that the limited, shared and un-priced space on the streets has been overwhelmed by demand, most recently by the advent and growth of ride-hailed vehicles. As we’ve noted at City Observatory, the growth of ride hailing is directly associated with the decline in average street speeds–and notably bus speeds–in Manhattan. The problem isn’t so much the ride-hailed vehicles themselves as the fact that street use isn’t priced; ride-hailing has simply circumvented the economic limits on the number of vehicles circulating in Manhattan due to the combination of expensive and scarce parking spaces and a tight lid on the number of taxi medallions.

The real equity issue on road pricing is that those who are dependent on buses for transportation–which typically include the lowest income citizens–bear the brunt of the costs of un-priced roads. They pay the same fare for their bus ride, and get worse service. The way to solve this problem is to price the use of the roadway at the peak hour. The buses will travel faster and that will be inherently more equitable to those with the least income and the fewest options.

A hat tip to Streetsblog New York for highlighting the New York Riders Alliance analysis.

Exit, Hope and Loyalty: The fate of neighborhoods

How neighborhood stability hinges on expectations:  If people don’t believe things are going to get better, many will leave

One of the most perplexing urban problems is neighborhood decline. Once healthy, middle-class or working class-places seem to gradually (and then abruptly) fall from grace.

As we documented in our report Lost in Place, the number of urban high poverty neighborhoods in the United States almost tripled from 1970 through 2010. Most of the growth was in places we called “fallen stars” places that had lower than average rates of poverty (under 15 percent) in 1970, but that were places of concentrated poverty (with poverty rates of 30 percent or more in 2010). What had been the solidly blue collar neighborhoods of many cities had, over four decades, become among the nation’s poorest–the kinds of places that the research of Raj Chetty and his colleagues shows permanently reduce the lifetime economic prospects of kids raised locally.

The mental picture we draw of neighborhoods and their residents is often a highly idealized, and simplified one. Particularly in describing high poverty areas and gentrification, we often focus on its impacts on “long time residents.” The idea is that people tend to be very tied to a particular neighborhood and are either scarred by its deficiencies (high poverty neighborhoods) or disadvantaged by change (higher rents due to gentrification). What this simplified picture misses is that not everyone who lives in a neighborhood has (or necessarily wants) long term tenure.

Some people may have deep ties to a place. Their family may have lived there for generations, they may own a home (or a business), they may be deeply involved in community institutions and activities. They may have a enduring attachments that lead them to stay, regardless of whether the neighborhood improves or declines.

But many residents, and arguably most renters, have far weaker ties to particular neighborhoods. The average tenure of a renter in the United States in her or his apartment is less than two years. For these residents, a particular neighborhood may be simply one stop on a journey that ultimately takes them elsewhere. And for many, moving to a different neighborhood, may be aspirational–getting a bigger yard, a shorter commute, better schools or safer streets–may be more important than staying where you are now. There’s abundant evidence that moving to a different neighborhood is one key way that families better their living conditions and prospects.

In his famous book, Exit, Voice and Loyalty, Albert Hirschman boiled the choices a citizen had for influencing a larger organization into three broad categories.  Exit (one could leave if one wasn’t satisfied), Voice (one could try to change the organization by speaking out, and Loyalty (one could go along with the organization as it was, and expect some reciprocity for their commitment).

In urban neighborhoods, we would adapt that trio as “Exit, Hope, and Loyalty.” In the face of neighborhood decline, it seems that residents have a couple of choices. They can stick around (loyalty) or, if they want, they can leave.  Whether they do so or not depends critically on that middle factor “hope”–if people lose hope, if they have no reasonable expectation that things are going to get better, they may be well advised to cut their losses and leave before things get worse (for example, selling before their home has lost even more value).  Some will be extremely loyal to a neighborhood.  They may have deep ties, personal, social, and financial, and be willing to expend considerable personal energy to help their neighborhood survive, thrive and improve.

But for many, the choice of exit may be highly pragmatic. Some may not have deep roots in a community, and leaving may imply little personal or social loss. Even those with roots or loyalty however, may make the carefully calculated decision that they can’t afford to wait for the neighborhood to get better in order to improve their own lives (and the lives of their families and children). Even those who are loyal are unlikely to remain, if they’ve lost hope.

One of the paradoxes of civic engagement is that it is essentially uncorrelated with measures of community satisfaction.  People tend not to speak out, attend meetings, write letters, and so on, when they’re satisfied that things are going well in their neighborhoods.  A 2010 survey of residents of 29 cities by the Gallup Organization for the Knight Foundation found that civic engagement was the factor least correlated with community satisfaction.

The challenge, of course is that once the dynamic of “exit” gets put in place, it is self-reinforcing. When the people with means and choices start leaving a neighborhood, it can lose its economic and social vitality.  Fewer residents, and fewer middle class families means less money to support local businesses and more limited social capital to support schools and other institutions and to maintain the community’s collective sense of identity and well-being. As Alan Mallach describes, the neighborhood decline starts a cascade of events, a decline in property values that saps community wealth, leading to a downward spiral:

As the number of vacant properties increases, the value of the remaining properties declines further, and the confidence of the remaining homeowners begins to disappear.  Signs of disorder begin to appear, from litter in the gutters to graffiti on the walls of vacant houses or storefronts. Decline gradually undermines a neighborhood’s ability to maintain its stability in the face of problems.

Writ large, this process is fueling urban decline and concentrated poverty in many of the nation’s metropolitan areas. A recent report from the University of Minnesota’s Institute for Metropolitan Opportunity shows that the most common pattern of neighborhood change in the US is for low income residents to find themselves in neighborhoods of even more concentrated poverty.  As Jason Segedy writes:

Instead of displacement by gentrification, what we are seeing in most cities could be described as displacement by decline – as black middle class residents, in particular, frustrated by the continued social and economic disintegration of their neighborhoods, are moving to safer and more attractive neighborhoods in the suburbs.

Whether residents of struggling urban neighborhoods choose to remain loyal to the place they live, or whether they instead decide to exit depends directly on hope:  do they have a reasonable expectation that their neighborhood is going to get better, or at least not deteriorate further? Consequently, one of the critical factors in stabilizing or revitalizing these neighborhoods is addressing these expectations. Our colleague Carol Coletta once asked then Mayor, now Senator Corey Booker what the toughest challenge was that he faced as Mayor of Newark.  “He replied, “convincing people that things can be different.”  If the residents of a community no longer believe it is going to get better, not only will they be less inclined to invest their time and energy in supporting it, but their attitudes will likely fuel a more widespread perception of neighborhood decline, and this stigma, once established may be impossible to reverse.

A key challenge for fighting neighborhood decline, and overcoming concentrated poverty is building a credible expectation on the part of neighborhood residents that things are going to change, and change for the better. Building hope is needed to reinforce loyalty and minimize exit. That’s a major task for urban leaders.


Inclusionary Zoning’s Wile E. Coyote moment

You won’t know that your inclusionary zoning program is wrecking the housing market until it’s too late to fix.

How lags and game theory monkey wrench inclusionary zoning.

One of the toughest problems in economics and economic forecasting is dealing with markets and decisions that involve considerable lags. There’s often a lag, or length of time between the time an economic actor recognizes a changed circumstance and the time that anything they do will act upon it.  The Federal Reserve Board is always trying to anticipate future conditions in the economy (incipient inflation or a potential recession) because it knows any policy action it takes will require several months to influence the larger economy.

Lags are an especially important problem with investment decisions.  Investments, particularly those involving new construction, often involve significant lags. In the housing market, for example, it can take a couple of years between the time a developer identifies a potential market, and goes through all the steps of searching for and buying property, developing plans, submitting plans for government approval, lining up financing, hiring a construction firm, and actually building something.  A key cause of the run up in rental prices in many cities was this lag, or what we might technically call the “temporal mismatch” between demand (which changed quickly) and supply (which took several years to respond).

Lags can also play out in the economic data–sometimes the negative effects of some policy don’t show up right away–it can take months or years before the effect of some decisions are apparent–and by then, it can be too late to do anything to correct the underlying problem.  You can call this the Wile E. Coyote problem.

As you know from the Warner Brothers cartoon, the Coyote can go wildly charging off a cliff, and keep going forward for some time before he looks down, and then discovers there’s no longer any ground beneath him.

The open question right now is whether the City of Portland’s housing market is in its Wylie Coyote phase. To hear the City of Portland housing bureau tell the story, everything is fine:  Housing permit activity is chugging along at relatively high levels.

But what this misses is that the pipeline to produce housing is a long one, and there’s abundant evidence that its drying up.  While there was a surge of housing proposed to beat the city’s deadline for complying with new inclusionary housing rules (February 1, 2017); since then, new proposals have slowed sharply.

Portland’s Daily Journal of Commerce reports that a number of developers say that apartment projects in Portland no longer provide an adequate rate of return to attract financing:

Inclusionary housing pushes the return on costs below a level that is really acceptable to capital markets,” said Brian Wilson, a partner with Mainland NW. “It is very difficult to underwrite them even in the best of circumstances.” Mainland has planned to develop several properties in the Cathedral Park neighborhood of North Portland, but the developer has been unable to raise adequate equity, Wilson said.

The housing industry group Up for Growth has tabulated figures on proposed new development and concludes that there’s been a significant drop off in proposed construction. They also report a substantial up-tick in proposed new apartment developments smaller than 20 units (to which the city’s inclusionary zoning requirements don’t apply). That signals developers are actively seeking to avoid the requirements, and (unfortunately for the city’s housing supply) may be under-building on some sites that could accomodate more housing.

Source: Up for Growth

For now, city officials appear to be in denial that anything’s amiss.  But there are some cracks in that optimistic facade.  As originally adopted the city’s inclusionary zoning ordinance provided for a step-up in the inclusionary set asides. In the first year of the program, developers were required to set aside 8 percent of units for households of 60 percent or less of Area Median Income (AMI) or 16 percent of units for households at 80 percent of AMI.  After the first year, that was scheduled to step up to 10 percent and 20 percent respectively.  But the city backed off implementing that requirement.  Why, if the inclusionary zoning program was working as planned, did the city drop those requirements?

It’s a sign that the city isn’t particularly comfortable with its claims of success.

More alarmingly, the situation the city now finds itself in, is in many ways problematic, for reasons suggested by game theory.

Game theory and inclusionary zoning

Game theory studies how people respond to incentives. One well-known game theoretic workhorse, for example, is the prisoner’s dilemma, which considers the incentives a criminal co-conspirator has to to turn state’s evidence against and accomplice in return for a lighter sentence.

Game theory is important to policy, particularly when it comes to the timing of investment. The prospect of changes in the rules often shapes behavior.  Changes in the tax rates of capital gains, for example, can prompt investors to do things differently (leading to an uptick in sales before increases in tax rates, or a deferral in sales until after tax cuts take effect).

We can think of apartment developers and investors as playing in a housing game.  One part of the “rules” of that game are the city of Portland’s land use planning process, and the players in this game will keep a close eye on possible future rule changes in deciding whether, and when, to invest in Portland.

The advent of new land use planning requirements, like Portland’s inclusionary zoning requirements, adopted in December 2016, but which took effect in February 2017, are subject to just this kind of game theoretic effects.  The city’s adopted ordinance projects that filed after February 1 to set aside a portion of newly constructed units for low and moderate income families. Projects that filed for land use approval before the law went into effect were exempt.

Unsurprisingly, there was a land rush of developers to file under the older, laxer rules.

From a policy standpoint, that was a huge plus, at least in the short run.  Despite concerns that the cost of complying with the IZ requirement would reduce apartment investment, any negative effect has, at least so far, been more than offset by the flood of new development approval applications.

So the first two years of inclusionary zoning in Portland have been a game-theory win-win for housing affordability. The threat of tougher future requirements prompted a whole lot of investment to happen much earlier than it otherwise would have, and new developments, added to those already under construction, have helped deliver a lot more new apartments in Portland. That came at a good time, and has clearly helped with affordability– vacancies have ticked upward, and rents have leveled off and even declined.  Yardi Matrix says that rent increases in Portland in the past 12 months were lower than in 19 of the 20 largest metro markets–a huge reversal from just four years ago, when Portland rents were increasing faster than almost any other market in the US.

As everyone acknowledges, though, that one-time surge in applications is just temporary.  As those projects get built, its increasingly apparent that very little new development is following in its wake. There’s credible evidence that development is slowing because the IZ requirements dramatically reduce the attractiveness of new apartment investment in Portland.And now is when the game theoretic aspects of the policy process come back to bite the city and threaten housing affordability.

So here’s the game theory problem:  If (as we believe) the IZ requirements are stifling development, what does the city do?  Broadly speaking, it has two choices:  It can “stay the course” and maintain the adopted IZ requirements, or it can lessen them.

If it pursues option one and  signals it’s going to stay the course, it probably just prolongs the pain. If investors are convinced that Portland would stay the case no matter what, they’d probably adapt to the new regime–some would move forward with their plans, many would likely leave the market. As several developers have noted, the market will rebound when the shortage becomes so severe that rents rise enough to offset the costs of complying with the IZ ordinance–which will mean that the IZ policy will have failed in its primary objective to make housing more affordable.

Option 2 may ease the pain of the IZ requirements, but potentially comes at a price. If the city signals it’s considering relaxing or adjusting the requirements, that would likely have the  perverse effect of encouraging investors to wait and see, at least until new rules are adopted.  Why move ahead with a project under expensive or burdensome IZ regulations now, when, if you wait a little while, you might get a much more favorable deal?  A prolonged debate over whether to walk back its IZ requirements could further dry up the development pipeline.

This puts city officials in an difficult policy bind:  They can stick belligerently to their beliefs that they’ll execute the law, even if it has adverse consequences (which may provide some certainty) , or if it actively entertains doubt and floats the possibility of liberalization or relaxation of requirements, unless it acts to implement them immediately or abruptly, it invites investors to postpone any plans to work in Portland.

Option 2 effectively constitutes the city’s “Wile E. Coyote” moment:  when it looks down and sees no ground holding up its IZ policy, things will start falling, fast.

As a result, we’re quickly moving from the “can’t lose” to “can’t win” portion of the housing affordability policy game. It will be interesting to see how the city responds.

The Week Observed, May 3, 2019

What City Observatory did this week

1. The idea of cities and the city of ideas. What cities do is bring people together, and the heightened interaction among people invariably generates friction, but also new ideas. City Observatory’s Joe Cortright delivered the annual Harold Vatter Memorial Lecture on Economics at Portland State University on May 2, on the topic of “Cities and the Knowledge Economy.”  As we look back to the earliest great cities, like Athens, their greatest contribution was the generation of new knowledge. That’s still the case today:  what powers city economies, and makes them so important to our overall well-being and long term growth is that they can be the places that continually generate new and better ways of living.

2. We add more voices to the chorus of national experts decrying Portland’s proposed half billion dollar freeway widening project and other road expansion efforts. Portland has for a long time prided itself on its pioneering transportation reputation, based on removing downtown expressways, investing early and extensively in transit, and successfully promoting cycling. That makes the current plans to spend half a billion dollars widening the I-5 Rose Quarter Freeway, and spend half of a proposed multi-billion dollar regional transportation plan on even more roads come as a stunning shock to national experts.  In recent weeks, Jeff Speck (author of Walkable City Rules) and Transport Politic blogger Yonah Freemark, have added their voices to those of other national experts telling Portland it’s now headed in the wrong direction.

Must read

1. Brussels muscles cars out of its center, creating more room for pedestrians.  CityLab’s Fergus O’Sullivan has an on the scene report from Brussels, which is midway through a plan to systematically remove car traffic from much of its urban core, including both narrow streets and squares and axial boulevards. The news is:  it’s working. Moreover, concerns that traffic would be displaced and worsened in the area just outside the pedestrian zone haven’t been realized.  Just as in the case of Seattle’s closing of its Alaskan Way viaduct, removing road capacity lessens overall car traffic, the hopeful inverse of “induced demand.”  When we make more room for people instead of cars, cities flourish.

2. We’re gradually becoming more integrated.  The very data savvy New York Times Upshot team has been on a tear lately with their analysis of Census data on the racial and ethnic makeup of US neighborhoods.  Their latest effort chronicles the overall decline in segregation in the US.  As recently as 1980, fully a quarter of US Census Tracts had populations that were composed of a population that was 97 percent or more non-Hispanic white, and a third of the white population lived in such neighborhoods.  In recent years, that figure has declined to about five percent.

3. Portland’s inclusionary zoning law appears to be reducing new multifamily housing construction.  Portland’s Daily Journal of Commerce reports a number of developers are holding off from moving forward with new apartment construction projects in Portland due to the cost of complying with the city’s inclusionary zoning law. While some projects have moved forward under the inclusionary requirements, the overall pace of development is waning rapidly. Several developers have said that project’s in Portland no longer “pencil out”–the financial returns from expected rents don’t provide a sufficient profit margin to attract the financial investment needed to move forward. Two downtown towers which have made it all the way through the city’s design approval process are stalled. Given the long lead times to develop and build new apartments, the slowdown in construction now is likely to lead to a renewed housing shortage in a couple of years. The bad news–for renters–developers expect that shortfall to push up rents enough to cover the added costs of complying with the inclusionary zoning requirements.

In the News

BikePortland cited City Observatory’s Joe Cortright in its coverage of efforts to use a proposed Albina Vision re-development project to provide political cover for freeway widening.

Image courtesy BikePortland.

The Week Observed, May 24, 2019

What City Observatory did this week

Exit, hope and loyalty:  What’s behind neighborhood change? America’s neighborhoods are always changing, and it’s often a question of whether change is driven more by hope or despair. We offer a slight tweak to Albert Hirschman’s trinity of “Exit, Voice, and Loyalty” to explore the choices and decision-calculus confronting neighborhood residents. In struggling neighborhoods, long-term residents often have to choose between their loyalty to a particular place, and the potentially greater opportunity that they can realize by leaving. What mediates their decision in many cases is the hope or expectation that despite its current problems, that a neighborhood may get better. Almost all neighborhoods have loyalists, who will stick things out no matter what happens, but most, when they see decline, and lose hope, will move on. This dynamic makes it imperative that urban leaders provide a clear path to improvement, if they’re to reverse steady and self-reinforcing decline.

Must read

1. The unsustainable economics of single-occupancy vehiclesThe Economist has a thoughtful essay on the deep subsidies that prop-up automobile transportation. The recent initial public offerings of Uber and Lyft have pointed up the stupendous billions of dollars of losses the company’s investors have underwritten to attract riders. As The Economist points out, these are just the venture capital equivalent of what the public sector has been doing for decades:  insulating travelers from the actual cost of operating private vehicles, particularly in dense urban environments.

2. Travel demand modeler’s can’t even see they have a Ben and Jerry’s problem. There’s a very wonky website/list-serv for traffic modelers called “TMIP” (the Travel Model Improvement Portal) which explores the quite arcane details of how one builds complex mathematical models of road systems and then tries to forecast the behavior of travelers using the system. A recent discussion wrestled with the question of how to deal with induced demand–the idea that adding more capacity to roads in dense metropolitan areas simply tends to trigger additional driving on those roads. There’s a lot of debate about what causes induced demand (is it new trips, or just a reallocation of trips in time, between mode or across space), and some hair splitting rhetorical arguments about whether it ought to properly be called “induced” or “latent” demand.  To the economist, however, this is mostly and irrelevant side-show:  travel modelers are obsessed with computing travel behavior for a system that effectively charges zero price.  Just like Ben and Jerry’s on free ice cream day, the number of ice cream cones “demanded” will always be large, and outstrip the store’s capacity.  The modeling profession has so thoroughly internalized the “free ice cream” model that it really can’t talk about demand in a coherent way.

3. Jenny and Matt explain American’s housing problem(s).  The Brookings Institution’s Jenny Schuetz sat down with Vox’s Matt Yglesias to talk housing, and the result is well worth a read–or better, a listen. Housing is really a series of inter-connected problems, including high rents, low incomes, and a lack of supply.  Schuetz outlines seven distinct steps we ought to be taking to address housing and housing affordability:  these include more universal and automatic rent assistance for low income households, greater housing supply, especially in high demand regions and neighborhoods. There are important steps for federal, state and local policy makers, key among them will be measures to change the way state’s delegate authority for development decisions to local governments.  As Yglesias puts it:

The most socially and economically valuable place to build new housing would be in the most expensive, most affluent neighborhoods and suburban towns — but to make that happen, state governments will have to override local zoning regulations.

We rarely recommend podcasts and interviews:  The time commitment is often large, it’s difficult to glean the highlights quickly, and the information density is just less than in well laid out web pages or documents.  This is an exception:  In less than an hour with this podcast, you can get a crash course in housing economics from one of the smartest scholars in the field, interrogated by a well-informed host. It’s well worth the time spent.

New Knowledge

Car ownership, income and density. Trulia economist Issi Romem has a new analysis of Census data on the patterns of car ownership, and how they vary across metropolitan areas, based on neighborhood income and population density.  Romem has tabulated and mapped zip code level data. In general, we know that car ownership is positively related to income (households with more income are more likely to own cars, and own more cars per household member); and that car ownership is inversely correlated with density (people who live in denser neighborhoods tend to own fewer cars.  Romem’s analysis shows how these two general tendencies play out in different metropolitan areas.

Here are charts showing the relationships between income, density and car ownership for four major US cities:  Boston, New York, Houston and Los Angeles.  In these charts, density is shown on the vertical axis (densest zip codes are higher), and income is shown on the horizontal axis (higher incomes are to the right).  The color of dots on the charts correspond to the number of persons per vehicle, with darker colors indicating lower rates of car ownership per person.

The there’s a striking difference in the patterns for the two sets of metro areas.  New York and Boston show a pattern of horizontal stripes–car ownership varies by density for people of all incomes.  Even wealthy people in dense neighborhoods own fewer cars.  In Los Angeles and Houston, the stripes are nearly vertical:  car ownership varies almost entirely by income, and very little by density.  If you have income, you own a car.  It’s also worth noting that very few neighborhoods in Los Angeles and Houston exceed about 50,000 persons per square mile–the level at which both high and low income households are very likely to own few cars, according to Romem’s analysis.

Romem helpfully provides zip code level maps and data for all of the nation’s large metropolitan areas, so you can examine where your city falls on this spectrum, and look at values for particular neighborhoods.

Issi Romem, Trulia, “Getting around, or just getting by:  Where people live with fewer cars,” May 16, 2019.


The Week Observed, May 31, 2019

What City Observatory did this week

1. Who bikes? Discussions of investing in bike infrastructure are often fraught with arguments about who benefits, with oft-expressed fears that bike lanes chiefly benefit a spandex-wearing elite.  How does cycling correspond to income.  There’s a misleading claim floating around the twitterverse that the single largest group of bike commuters is from households earning less than $10,000 per year. That’s not correct, but our analysis of the most recent census data on daily journeys to work shows that it is actually the case that workers lower income households are more likely than most American’s to commute by bike.  Those earning less than $10,000 are about three times as likely to be bike commuters than the typical worker.  In general, the more income you have, the less likely you are to commute by bike.  While there is a slight uptick in bike commuting for those from households with incomes of more than $100,000, workers from high income households are still much less likely to commute by bike than workers from low income households.

2. The constancy of neighborhood change.  There’s a subtle bias in the way we talk about neighborhood change. Many discussions seem to assume that neighborhood populations are fixed, and un-changing, and that absent some dramatic external event–like gentrification–they’ll tend to stay just as they are. But all neighborhoods are constantly changing. We review a recent study that looks at the dynamics of population change in neighborhoods and finds:

  • The population of urban neighborhoods is always changing because moving is so common, especially for renters.
  • There’s little evidence that gentrification causes overall rates of moving to increase, either for homeowners or renters.
  • Homeowners don’t seem to be affected at all, and there’s no evidence that higher property taxes (or property tax breaks) influence moving decisions.
  • While involuntary moves for renters increase slightly in gentrified neighborhoods, there’s no significant change in total moves

For most neighborhoods, the question isn’t whether they’ll change, but how. As we noted in our study, Lost in Place, high poverty neighborhoods that didn’t improve materially hemorrhaged population, losing 40 percent of their residents over four decades.

Must read

1. Updating London’s Congestion Charge. For the past two decades, London’s central area-congestion charge, a fee charged for vehicles crossing a cordon in Central London, has been hailed as one of the pioneering efforts to priced congested urban roads. The charge has helped moderate traffic entering the central area, and provided funding to improve transit. But the charging scheme, which is based on decades-old technology, and which is riddled with exemptions, is, in that quaint British-phrase “no longer fit for purpose.” Or so argues a new report from the Centre for London, which calls for updating the congestion charge, and integrating all of the systems for paying for urban transportation. Under their proposal, payment for car travel on city roads would be combined with charges for public transit (i.e. the current Oyster card), with all private vehicles paying per kilometer of travel, and with charges varying according to place and time of travel.

Our fundamental recommendation is for London to move to a more sophisticated and comprehensive distance-based road user charging scheme, closely integrated with the rest of the capital’s transport system. The aim would be to replace the various charges currently spreading across the city with a single scheme that reflects all impacts of a journey.  The scheme, which would apply to all motor vehicles every day and at all times, could be extended gradually, with charges first applied only to the most congested and polluted areas of the city. In return for any charge 16 incurred, drivers would benefit from improved traffic flow and journey time reliability, enabling TfL to offer a guaranteed level of service and potentially refunds for excessive journey delay – on the same model as ‘delay repay’ for trains. All funds raised would go back into maintaining and investing in London’s roads and streets, public realm and public transport.

2. German economists urge road pricing in cities to reduce pollution and congestion. The widespread adoption of diesel vehicles has aggravated urban air pollution in Germany, and some cities are responding with bans on polluting vehicles. A group of German economists argues that banning some vehicles (while allowing others, like electric vehicles) is unfair to those who can’t afford cleaner transport, and is inefficient.  Instead, they’ve urged German cities to set up road pricing systems which would allow everyone to access city centers by vehicle when they needed to, provided incentives for lower pollution travel.  Revenue from the charge could be used to improve public transport services, cycling infrastructure and subsidize less affluent citizens in using cleaner transport modes. They write:

. . . a city toll, i.e. a charge for using a car in the city, would be the socially fairer and economically much more sensible alternative. More environmentally friendly and traffic-relieving alternatives to cars would become more attractive and municipalities could benefit from additional revenues. [And] nobody who needs to rely on car transport would be banned from driving in the cities.

Hat tip to the Clean Energy Wire.

3. We used to do this everywhere. Strongtown’s Daniel Herriges has just returned from a visit to New Orleans French Quarter and asks a question that’s always been top of mind for us: How have we forgotten how to build great urban spaces? Walkable, interesting, human scale settlements are so rare that they’ve become tourist-saturated anomalies.  Why, if with the much lower incomes (and public infrastructure budgets) of the 18th century were we routinely able to build such places, and yet we find it impossible to build them today? Herriges points out that attributing the urbanity of the French Quarter to the french is a bit of a misnomer, as the design principles for New Orleans were handed down largely in the era of its Spanish governance, when the colonial “Law of the Indies” prescribed development patterns. Those rules, which were applied throughout Spanish colonial America laid out cities in a familiar pattern, with a central square, usually bordered by important public buildings, a grid of surrounding narrow streets offset from the North-South axis to maximize shade. Those principles are apparent today in cities in Latin America, as well as in older cities in the US Southwest. This story reminds us of the importance of land use planning:  just as the maxims of the Law of the Indies produced enduring walkable spaces, our current land use laws which widely separate land uses, mandate parking and building setbacks, and build infrastructure primarily to expedite car movement and everywhere produced spaces that are as thoroughly hostile to human enjoyment as these older towns were (and are) conducive to it.

New Knowledge

The health of the air. While we’ve made substantial progress over the past several decades, air pollution remains a major health challenge in many US cities.  New York University’s Marron Institute has a new report on the health effects of two key sources of air pollution:  fine particulates and ozone. The good news is that we’re continuing to make progress in reducing fine particulate matter, with the number of estimated deaths from this source of pollution declining from about 12,000 per year to about 6,000.  But we’ve made less progress on ozone, and despite overall improvements, both forms of pollution are still disproportionately severe in some locations.  The Marron Institute report flags these hot spots with data and maps for states and metropolitan areas the levels of fine particulates (particles smaller than .25 mm) and ozone, and the number of deaths and illnesses associated with pollution.

Among US cities, the health effects of fine particulates are most severe in Southern California, with Los Angeles, Riverside and Bakersfield ranking first, second and third in most excess deaths per capita from this pollutant.  Los Angeles and Riverside also top the list for most excess deaths associated with ozone.

Marron Institute, Health of the Air, 2019, (https://healthoftheair.org/)

In the News

Writing at CityLab, Richard Florida laid out his take on the ongoing debate about whether upzoning cities would help improve housing affordability, quoting City Observatory’s argument that answered that question strongly in the affirmative.

The Week Observed, May 17, 2019

What City Observatory did this week

1. Will upzoning help housing affordability?  Housing supply denialism–claims that the laws of supply and demand don’t apply to housing markets–have a ready audience in the NIMBY community.  The latest study to make the rounds comes from Andres Rodriguez-Pose and Michael Storper, with an added boost from CityLab’s Richard Florida. This study claims that building more market rate housing in high cost cities will somehow only make inequality worse, citing, among other things, a Washington Post article from last year, which we de-bunked at City Observatory.  What this, and other similar critiques leave out, is any explanation of how failing to build housing in markets where there’s obviously overwhelming demand for it is going to alleviate any of the social, economic or environmental problems we see in cities today.

2. Inclusionary zoning’s Wile E. Coyote moment.  It’s been two years since Portland’s inclusionary zoning requirements took effect, and to date, there have been few apparent negative effects. In fact, what happened was that the law triggered a land rush of development applications, and that surge of new construction has actually cause rent inflation to drop precipitously. But now that developers have worked through the backlog of grandfathered projects that were exempt from the inclusionary rules, there’s growing evidence that the development pipeline in Portland is drying up. While the city’s housing bureau denies anything is amiss, they’ve already backed off from a scheduled increase in the inclusionary requirements that was to take place last year. The problem now is that if the city signals it may have doubts about the program’s success, that will prompt developers to postpone investment, hoping for some relaxation of requirements, which would actually worsen the housing problem.  Like Wile E. Coyote, the inclusionary zoning program may really start falling when it looks down and sees it’s no longer standing on firm ground. The problem with investment markets with long lags is that problems can become quite serious, and go largely unrecognized until its too late to do anything about them.

3. The Young and Restless in Black and White.  City Observatory has long tracked the residential location of the nation’s college-educated 25- to 34-year olds, who’ve increasingly moved to large metropolitan areas, and within those metro areas, to close-in urban neighborhoods. But how do those location patterns diverge for different racial/ethnic groups?  We took a quick look at data from the American Community Survey to compare the historical pattern of urban location of well-educated black and white young adults. Historically, college educated young white adults are disproportionately concentrated in suburbs, while their black counterparts are disproportionately concentrated in cities.  Since 1980, the locations of these two groups have trended in opposite directions:  young white adults with four-year degrees are now much more likely to live in central cities, while young black adults with four year degrees are more likely to live in suburbs. While suburbanization is no longer aspirational for many well-educated white young adults, it seems like it continues to be alluring for well-educated black young adults.

Must read

1. Why the price tag is the least important part of any infrastructure package. Washington is all abuzz with talk of a bi-partisan deal on infrastructure which could amount to as much as $2 trillion.  While we’re not holding our breath that anything will happen, we think Beth Osborne of Smart Growth America has some very sage advice.  In an op-ed at the Washington Post, Osborne argues that its bad policies and misplaced priorities, rather than a lack of funds that is the biggest problem with American infrastructure.  We’ve got a system that is still obsessed with building more capacity, even though it routinely fails to maintain what its built, and makes us steadily more dependent on driving, killing an increasing number of Americans and endangering the plant.

So what would a reimagining of federal transportation policy look like? We could set enforceable goals to prioritize improving the safety and condition of our roads and bridges first. Then we should talk about reducing greenhouse-gas emissions and providing better access to jobs and services. Congress should guarantee measurable benefits and hold states accountable for fulfilling those promises before giving them any more money.

2. The elusive definition of “gentrification.”  Slate’s Henry Grabar is on a roll.  He has a trenchant article pointing out that no one can seem to agree on what constitutes gentrification, and that conspicuously includes, not just journalists, but also the academics who’ve studied the subject. While the data show that gentrification, by almost any definition, is rare that doesn’t stop virtually every community from deploying concern about gentrification as the basis for opposing new development.  As Grabar explains, the widespread colloquial and academic ambiguity of the term is helping to fuel an increasingly incoherent and destructive debate:

Being more precise is important, because the specter of gentrification is invoked by communities on all ends of the income spectrum to forestall new housing as the country is building fewer homes per capita than at any time since World War II. When the Beverly Hills City Council is arguing that permitting small apartment buildings within city limits would “directly contribute to gentrification,” it might be time to finally come up with a clear-cut definition of the term. . . . There’s a well-documented false consciousness in the United States in which everyone thinks they are middle class. It has a neighborhood corollary: Everyone thinks their neighborhood can gentrify. If they’re right, the word is useless.

3.  Why we need full data from ride-hailing firms. The newly publicly-traded Uber is making some of the vast trove of its data on travel system performance available through an application called “Movement.” For example, current versions of Movement provide data on variations in travel speeds on city streets by time of day.   It’s indicative of the kind of richly detailed information that is generated from the smartphone backbone that monitors, routes, and bills ride-hailed trips.  But as the Transit Center notes, city’s shouldn’t settle for just a subset of the data provided by Uber and Lyft, but instead should insist on data that will show how the ride hailing firms patterns of activity impact traffic congestion at different times and locations.

New Knowledge

New research on gentrification and displacement. One of the biggest challenges in researching neighborhood change is constructing what economists call a “longitudinal” data set–one that tracks individuals, rather than one that just compares  snapshots of the overall demographics of a neighborhood at different times. New York University’s  has a new study using administrative data from the Medicaid program to track the residential location of kids born in New York City over a period of years.  Because this data captures each child’s location a birth, and their residence in subsequent years, it provides exactly the kind of longitudinal data that’s often missing from other research. Dragan, Ellen and Glied use the Medicaid records to compute how likely kids from poor families were to move to other neighobrhoods over time, and compares the difference in migration rates between families living in neighborhoods that gentrified and those that didn’t.

The report has two key findings:

First, consistent with other research, they find that poor children living in gentrifying neighborhoods are no more likely move than children living in non-gentrifying neighobrhoods, although when they move, this study finds they move slightly longer distances.

Second, the study finds that those who move out of gentrifying neighborhoods do not end up moving to neighborhoods that are any worse than the destination neighborhoods of poor children moving out of non-gentrifying neighborhoods

 . . . among children who moved during the 7-year period, we see no difference in poverty rate changes between those who start in neighborhoods that gentrify and those who start off in neighborhoods that remain persistently low-SES. Indeed, children who move from gentrifying neighborhoods move to somewhat safer neighborhoods. .

As the authors point out, moving is common among low income households, especially in expensive housing markets like New York City.  There’s little or no evidence that neighborhood gentrification plays a substantial role in escalating the rate at which poor families move out of gentrifying neighborhoods.

Kacie Dragan, Ingrid Ellen, Sherry A. Glied, “Does Gentrification Displace Poor Children? New Evidence from New York City Medicaid Data,”
NBER Working Paper No. 25809, Issued in May 2019

In the News

The Portland Tribune featured City Observatory’s analysis of Portland’s inclusionary zoning law in its article, “Group blasts Portland’s inclusionary policy.”

Correction:  Last week’s Week Observed incorrectly identified Rachel Bogardus Drew, author of what we called “a Rosetta Stone for gentrification studies“–the excellent tool for comparing the practical, on-the-ground meaning of competing definitions of gentrification.  City Observatory apologizes  for this error.

This post has been updated to correct a typographical error in our summary of the commentary “The Young and Restless in Black and White.”

The Week Observed, May 10, 2019

What City Observatory did this week

1. The limits of design thinking. Really good design can frequently improve the utility and performance of everyday objects, and there’s little question that the attentiveness to software design and user experience has made smart phones indispensable adjuncts to our lifestyle. But while design thinking can improve many things, not all problems are susceptible to solution by design tinkering. For example, Ford hired design firm Ideo to reconceptualize the transport experience, leading them to do a side-by-side test of ride-hailing, transit and bike-share, to better understand user experience en route. What that misses is the way the density and layout of the urban environment determines how many trips we have to take, and what our options are. Too narrow a focus on optimizing the experience of getting from A to B often blinds to the importance of making sure that the As and Bs in our world are laid out in a way that minimizes the need to travel.

2. Why road pricing is inherently fair: It makes buses run faster. One of the most widespread myths in transportation policy is that pricing roads is harmful to the poor.  That argument ignores the fact that high income households are far more likely to be peak hour car drivers who might pay a toll, but more importantly, road pricing is the one fast-acting, sure fire way we have to make buses run faster–which disproportionately benefits low income riders.  The latest evidence for this come from Atlanta, where the implementation of priced lanes on Interstate 75 is enabling the state to shave 15 minutes off the scheduled travel time of buses. That has the added benefit of making bus travel more attractive and cheaper to deliver (a driver can carry more passengers per hour worked), potentially enabling transit dollars to provide more service.

Must read

1. Noah Smith on gentrification: Yes, some black neighborhoods in most US metro areas are seeing new white neighbors, as reported in the New York Times last month, while the reverse of the much noted white flight of previous decades, it’s still a tiny trickle.  And strikingly as Bloomberg’s Noah Smith reports, its not causing places to “tip” into majority white neighborhoods–neighborhoods that become more diverse tend to stay more diverse. Concentrated poverty is a much larger, and more pernicious problem than gentrification, yet as Smith argues:

This is dangerous, because excessive worry about the potential harms from gentrification might cause some policy makers to discourage investment in poor minority communities, out of fear of displacement. But discouraging that investment would cause many more problems than it would prevent.

2. The Frog Ferry Fantasy.  There’s a glib and glitzy proposal to initiate a ferry service between Vancouver Washington and Portland Oregon. The main roadways between the two cities are frequently congested at the rush hour, and the hope is that ferry boats can avoid crowded highways. Human Transit’s Jarrett Walker painstakingly describes the needed ingredients for successful urban ferry service: population and job density at ferry terminals, short, direct water routes, limited competition, and great interconnections with existing transit service. The proposed “Frog Ferry” would ply a circuitous 13-mile route along the Columbia and Willamette Rivers, would take as long, or longer than current car trips, and have terminals distant from population and job concentrations and weak transit connections. (At 5.30 pm, this past Monday, Google Maps reported a car trip would take about 40 minutes, and transit less than 50 to travel between Portland’s waterfront park and downtown Vancouver; the Frog Ferry would need to make an improbable 20 knots or more just to equal that travel time dock-to-dock).  A careful reading of Walker’s analysis could save the City of Portland $200,000 the Mayor’s budget has proposed to chip in for a feasibility study.

3. The Highway Trust Fund is going broke even faster than we thought.  The Congressional Budget Office released new financial projections for the next decade, and now forecasts that the Highway Trust Fund will have a deficit of about 176 billion by Fiscal Year 2029.  The Eno Foundation’s Jeff Davis has a detailed examination of the forecasts. Overall, it is it clear that the claim that roads are paid for by users is a fiction–the Highway Trust Fund has been bailed out by more than $100 billion in the past, and looks on path to continue to need similar infusions into the indefinite future.  And of course, this is just the direct cost of building and maintaining roads, to say nothing of the prodigious external costs they create in injuries and deaths, pollution traffic congestion and the destruction of urban space.

4. Induced demand, yet another chapter. In Los Angeles, the state Department of Transportation spent five years and a billion dollars to add an additional travel lane to I-405 over the Sepulveda Pass, in yet another vain attempt to reduce traffic congestion by increasing freeway capacity. Just as with every other urban freeway expansion, it failed. Travel times on the wider I-405 are now even longer than they were before the project was built–the only thing that has increased is vehicle miles traveled and carbon emissions.  Curbed Los Angeles reports:

For four years, from 2015 to 2019, Inrix measured the length of commutes along the widened stretch of the 405 during a four-week period between January and February. In that time, average commutes in both the north and southbound directions worsened or stayed the same during all hours of the day. Average vehicle speeds also dropped or stayed the same during both peak- and non-peak-hour periods

New Knowledge

A Rosetta Stone for gentrification studies.  Rachel Bogardus Drew of Enterprise Community Partners has delivered a major boon to everyone who studies or tries to understand neighborhood change. While there are a host of studies of gentrification, and various statistical schemes for discerning which census tracts have gentrified, based on a look at changes in incomes, home prices, education levels and racial/ethnic composition, each author (it seems) has chosen their own data sources, time periods and–critically–definitions, to classify places as gentrifying or not.  Another frustration of many (though not all) such studies is that while they present their summary metro or national level conclusions, it’s hard to discern whether any particular neighborhood is classified as “gentrifying” or not.  The Babel surrounding gentrification makes it difficult to interpret the findings of individual studies, and almost impossible to sort out the varying claims made by different studies.

What Drew has done is take three major published studies on gentrification (one from Columbia’s Lance Freeman, a second from Ingrid Gould Ellen of NYU and a third from McKinnish, Walsh and White, and using a common data set (one stretching from 1970 through 2010) to show how the different schemes classify city neighborhoods. Drew’s on-line comparison tool lets you select a metropolitan area, and see, side-by-side, how each of the three different definitions classify city census tracts, whether they’re eligible to gentrify (this definition varies by author, too) and whether in fact, they gentrified in a particular neighborhood.  A table integrated into the tool tells you how much agreement or overlap there is in the three definitions for the city and time period you’ve chosen.  In the graphic below, the darker colored tracts represented Washington DC neighborhoods that gentrified, according to each author, between 2000 and 2010; while lighter colored tracs are the areas “eligible” to gentrify.  It’s apparent that each definition produces a different set of places subject to gentrification.

There’s little doubt that the term gentrification is one of the most fractious and elastic terms in the social science.  A lack of clarity about how it is defined has contaminated the policy debate for decades.  Drew’s comparison tool is a terrific first step in sorting out the various assumptions, theories and claims that are often concealed by the technical workings of many academic studies.  As Drew takes pains to point out, her work doesn’t resolve the question of what constitutes the “right” definition of gentrification (good luck with that, everyone), but instead brings a degree of clarity to the debate that simply hasn’t existed before.  This is a genuinely useful bit of statistical work:  Going forward, anyone who offers up their own definition of gentrification and a statistical analysis of the phenomenon ought to figure out how to add their data and rubrics to this comparison tool.  Famously, the discovery of the Rosetta Stone, with its parallel translations in Greek, Demotic and Hieroglyphics was a key to deciphering previously opaque Egyptian symbol-writing.  Maybe this will serve the same purpose for gentrification research.

In the News

Archinect News summarized City Observatory’s commentary on all the things we blame for causing gentrification in an article entitled: “ABC’s of Gentrification.”

Correction:  The original version of this note incorrectly identified Rachel Bogardus Drew–our apologies for this error.

The constancy of change in neighborhood populations

Neighborhoods are always changing; half of all renters move every two years.

There’s a subtle perceptual bias that underlies many of the stories about gentrification and neighborhood change. The canonical journalistic account of gentrification focuses on the observable fact that different people now live in a neighborhood than used to live there at some previous time. We seem to assume that most neighborhoods are stable and unchanging, and that absent some dramatic change, like gentrification, the people who lived in that neighborhood are the same ones who lived their a decade ago, and without such change, would be likely to live there a decade hence.  But constant population change or turnover is a regular feature of most neighborhoods, a fact confirmed by a recent study. To summarize the key takeaways:

  • The population of urban neighborhoods is always changing because moving is so common, especially for renters.
  • There’s little evidence that gentrification causes overall rates of moving to increase, either for homeowners or renters.
  • Homeowners don’t seem to be affected at all, and there’s no evidence that higher property taxes (or property tax breaks) influence moving decisions.
  • While involuntary moves for renters increase slightly in gentrified neighborhoods, there’s no significant change in total moves

In an article published in Urban Affairs Review, “Gentrification, Property Tax Limitation and Displacement,” Isaac William Martin and Kevin Beck present their analysis of longitudinal data from the Panel Survey of Income Dynamics that track family moves over more than a decade.  An un-gated version of the paper is available here. One of the challenges of studying gentrification and neighborhood change is that most data simply provides snapshots of a neighborhood’s population at a given point in time, and provides little information about the comings and goings of different households. The PSID sample is unusual, in that in tracks households and individuals over a period of decades–this study uses data on the movement of household heads from 1987 through 2009. Martin and Beck were able to access confidential data that reports neighborhood location and enables them to identify the movement of households to different neighborhoods.

Richard Florida reviewed the Martin and Beck paper at City Lab and highlighted two of the study’s key findings:  that homeowners don’t seem to be displaced by gentrification and a subsidiary finding that property taxes (and tax breaks for homeowners) don’t seem to affect displacement.  These are both significant findings, but we want to step back and look at the broader picture this study paints of how neighborhoods change, because this study provides a useful context for understanding the complex dynamics of migration that are often left out of discussions of gentrification.

Change is a constant–Most renters have moved on after two years

One of the most striking findings from this study is how frequently renters move. These data show than in any given two-year period a majority (54 percent) of renter households had moved to a different neighborhood. The average tenure (length of time they’ve lived in their current residence) is on average 1.7 years. (Table 1).  Moving rates are lower (16 percent over two years) for homeowners, and average tenures are considerably longer (4.9 years, on average).  But the important thing to keep in mind is just how much volatility and turnover there is in neighborhood populations. Statistically, if about half of all renters move out of a neighborhood every two years, the probability than any current renter will live in that neighborhood ten years hence is about 3 percent (0.5 raised to the fifth power).

Many of the public discussions of gentrification assume that somehow, in the absence of gentrification, neighborhoods would somehow remain just the same, and that few or no residents would move away. This study shows reminds us that this isn’t true. In addition, we know that for poor neighborhoods that don’t see reductions in poverty rates, that population steadily declines. Lost in Place, our own study of poor neighborhoods shows that over 4 decades, the three-quarters of poor neighborhoods that didn’t rebound lost 40 percent of their population.

Most moves are voluntary

Unlike many other studies, the Martin and Beck paper is able to use survey data to try and discern the motivations for household moves. Broadly speaking they divide moves into “voluntary” and “involuntary” moves.  The PSID asks movers why they moved, and those that respond to this open-ended question with answers coded as “moved in response to outside events including being evicted, health reasons, divorce, joining the armed services, or other involuntary reasons” are treated as involuntary moves.As they note, the distinction isn’t always as sharp as one would like, and it may be that some respondents rationalize some involuntary moves as voluntary ones, but the self-reported data are clear:  among renters, voluntary moves dramatically outnumber involuntary ones.  About 54 percent of all renters moved in the last two years; about 13 percent of all renters reported an involuntary move.  That means that about 75 percent of all renter moves were voluntary and about 25 percent of renter moves were involuntary.  As Margery Turner and her colleagues at the Urban Institute have shown, moving to another neighborhood is often the way poor families get better access to jobs, better quality schools, safer neighborhoods and better housing.

Gentrification has no impact on overall renter moves, but is associated with a small increase in involuntary moves

One of the most important studies of gentrification is Lance Freeman’s 2005 paper “Displacement or Succession?: Residential Mobility in Gentrifying Neighborhoods” which found that gentrification had essentially no effect on the rate at which households moved out of gentrifying neighborhoods.  Martin and Beck replicate this finding for all moves by renter households, they write:

Consistent with Freeman’s findings, Model 2 indicates that we cannot be confident that the average effect of gentrification on the probability of moving out is different from zero.

Graphically, Martin and Beck’s findings are can be depicted as follows.  About 54 percent of all renters move within two years. According to Martin and Beck’s modeling, the probability that a person in a gentrifying neighborhood moves in two years is about 1.7 percentage points  greater than for the typical person (after controlling for individual household characteristics). That suggests that for a typical resident, their probability of moving in a gentrifying neighborhood is about 55.7 percent, but that estimate in not statistically significant.

When they look just at “involuntary” moves, however, they find that there is a statistically significant effect of gentrification on the probability of moving.  Specifically, they find that rental households in in gentrifying neighborhoods are about 2.6 percent points more likely to report an in “involuntary move” in the past two years than those who don’t live in gentrifying neighborhoods.  Its important to put that in context.  According to the paper, about 54% of all renters moved in the last two years, and about 13 percent of them experienced an “involuntary move.”  The estimate in the paper is that the effect of living in a gentrifying neighborhood is about a 2.6 percentage point increase in the likelihood of an “involuntary” move.  That means if the average renter has a 13 percent chance of an involuntary move, a renter in a gentrifying neighborhood has a 15.6 percent chance of such a move.  These results are shown below:

Here, the estimate that a renter makes an involuntary move from a gentrifying neighborhood  (+2.6 percentage points) is greater than the 95 percent confidence interval, which suggest that there is a statistically significant difference between the share of the population experiencing involuntary moves in gentrifying neighborhoods as compared to all neighborhoods.

What would that look like in a typical neighborhood?  If you have a neighborhood with 2,000 households (about 5,000 people, with about 2.5 persons per household), and about half are renters and half are homeowners, you would expect of the 1,000 renting households that about 130 households would experience an involuntary move over a two year period.  If that tract gentrified, you would expect an additional 26 households to experience an “involuntary move.” But you would also expect 530 total households to have moved out of the neighborhood in that time, for all reasons, voluntary and involuntary.  These data put the scale of the gentrification effect in perspective. Whether or not they gentrify, there’s going to be enormous change in the renter population of any given urban neighborhood.

Gentrification has no impact on homeowner moves

Martin and Beck find no evidence that homeowners in gentrifying neighobrhoods are more likely to move, either in the aggregate, or involuntarily.  They test a number of different models of the connection between gentrification and moving: none produce statistically significant correlations between gentrification and moving; in some cases (though statistically insignificant) the correlation is negative: gentrification is associated with fewer homeowners moving from a neighborhood.  Their conclusion: for homeowners, their study “produces no evidence of displacement from gentrifying neighborhoods.”

Property taxes (and tax breaks) seem to have no connection with homeowner movement from gentrifying neighborhoods

One popular argument is that gentrification pushes up property values and results in higher property taxes for homeowners, and that especially for households with a fixed income, the burden of higher property taxes is likely to force them to move. Martin and Beck look closely at this question, and examine how changes in property assessments and property taxes correlate with the probability of moving. They find that there’s no statistically significant link between property taxes and moving in gentrifying neighborhoods.  Several states and localities have enacted property tax or assessment limitations, in part with the objective of lessening the financial exposure of fixed income households to the burden of higher property taxes. Martin and Beck look at the relationship between such limits and the probability of moving, and find that such limits don’t seem to have any effect on whether homeowners move out of gentrifying neighborhoods or not.

While homeowners in gentrifying neighborhoods have to shoulder the burden of paying higher property taxes, its typically only because their homes have appreciated more in value. In most cities, property taxes are levied at a rate equal to about 1 to 2 percent of a property’s market value, so the wealth effect of property appreciation dwarfs the negative income effect of having to pay higher property taxes.

Urban renters are a highly mobile group. Most renting households are likely to have changed neighborhoods in the past two years. We observe the same overall level of movement out of neighborhoods whether they gentrify or not.  This study suggests that somewhat more of those moves would be involuntary rather than voluntary.



The limits of design thinking

The most difficult design challenge is asking the right question

Not long ago, a feature article at the New York Times described how the design wizards at IDEO are helping stodgy old Ford Motor Company re-imagine how transportation might work in the future.

IDEO conceptualized the design task by sending groups of its employees to a restaurant a few miles away via different transportation modes, so they could assess the challenges each faces: the subway (too smelly), Divvy bikeshare (too dirty), and Uber (too expensive).

The hope is this exercise sheds light on how will enable IDEO to brainstorm clever new ways to get from point A to point B in the future. (We’re pretty sure the solution will involve apps.)

In our view, this is an epic fail for several reasons. First, it just gets certain things wrong. For example, according to the article, one of IDEO’s big complaints about the subway was the lack of cellphone reception—a problem the CTA had already announced it would be fixing when they took their ride in October, with full coverage in all subways rolled out in December.

But there’s a more fundamental problem: Is the optimal place for a quick work lunch four miles from IDEO’s office? If it is, isn’t the real problem here that a company has located its office in a place where its employees have to travel four miles just to get lunch and have a meeting? And isn’t the restaurant’s problem that it’s located in a place where its customers are four miles away?

Google results for "restaurants" in IDEO's West Loop Chicago neighborhood.
Google results for “restaurants” in IDEO’s West Loop Chicago neighborhood.


And in fact, IDEO has already solved this particular design problem for itself. Fork and Tine, the restaurant they chose, might be four miles away, but there are dozens and dozens of restaurants within a quick walk of its downtown offices. City Observatory’s Chicago bureau chief, Daniel Hertz, spent an afternoon walking around IDEO’s West Loop neighborhood to find a bite to eat in the name of research. A five minute walk in one direction is Greektown, where you can get a quick gyro or souvlaki. A few minutes north of there is Randolph Street, one of the premier dining destinations in the city, with everything from high-concept burgers to Indian curries. Or, just about ten minutes straight north of IDEO’s offices is the French Market food court at a major commuter rail station, a hugely popular workday lunch spot. Not to mention that you pass at least a couple places to eat on every block on your way to any of these destinations.

It’s not a coincidence that there’s so much to do within a quick walk of IDEO’s offices—that’s almost certainly a major reason they chose to locate in the West Loop. Indeed, it’s a big reason that Chicago’s downtown has seen a steady stream of companies opening new or relocated offices there.

In other words, the issue here has at least as much—if not much more—to do with the design of cities than the relatively superficial features of different transport modes.

With rows of restaurants down the street from the IDEO offices, they don’t have to travel at all, save to walk a few hundred feet, saving them bundles of valuable time. So being in a dense urban location turns out to be the optimal design solution: relying as it does on the healthiest, least expensive, lowest carbon and most fully deployed transport technology in human history: walking. IDEO already knows this: that’s why they pay premium rents for their tidy, exposed-brick office space in the West Loop.

A train leaves the Ogilvie commuter rail station in the West Loop. Credit: Seth Anderson, Flickr
A train leaves the Ogilvie commuter rail station in the West Loop. Credit: Seth Anderson, Flickr


One of the subsidiary tasks IDEO assigned its testers was schlepping a couple of large shopping bags—to simulate, in some way how a busy person might have to mix some domestic errands with their business lunch. Fair enough. But if one lived in a mixed use neighborhood, where there was say a corner store or bodega down the block, one might easily handle all one’s shopping with more frequent but much more convenient walking trips to buy just a handful of necessities, rather than having perforce to carry a week’s worth of groceries because it was several miles to the big box store.

If we think about it correctly, dense, mixed use urban spaces are the ultimate design solution to our transportation problems. They provide low-cost, no-carbon, time-saving access to all manner of things that consumers want and need in their daily lives.

The real failure in design thinking here is IDEO viewing this task as primarily choosing between different transportation modes. Of course, they are free to frame this question however they—and their paying client—would like. But from a broader policy perspective—and from the perspective of citizens and consumers, we’d all be a lot better off if we’d make the design conversation about how we arrange our cities. And the design lens is often blinded by the look and feel of things, rather than comprehending basic, systemic issues: the quality of bus service, for example, has much more to do with schedule frequency, and running times, than the features of the transit system’s arrival time notification app: we think bus riders would be much more impressed with buses that arrived every ten minutes and made the trip faster thanks to dedicated lanes, than they would be by an app that told them the next bus was exactly 22 minutes from now.

Just focusing on transportation ignores and rules out the very substantial gains that could be made by better designing our cities for living. It’s hard to get the right answers under the best of circumstances. It’s just impossible to get the right answers if you ask the wrong questions.

A version of this commentary originally appeared at City Observatory in February 2016.

City of ideas, and the idea of cities

Cities have always been about bringing people together and creating new ideas

Editor’s Note:  City Observatory Director Joe Cortright will be giving the Harold Vatter Memorial Lecture in Economics at Portland State University on Thursday, May 2.  His theme will be “Cities in the Knowledge Economy.” As a prelude to that lecture, we’re offering this 2015 commentary based on a visit to Athens.

Though the local economy is still in turmoil, Athens is still awash in the steady tramping of tourists.  Compared to your correspondent’s last visit to this city three decades ago, the distinguishing mark of tourism is no longer the long lines of foreigners looking to exchange deutsche marks, yen, pounds and travelers checks for drachmas, but rather the parade of latter day Narcissus, with smart phones appended from selfie-sticks dutifully capturing the ancient sights as backdrops of a digitized odyssey.


Credit: Galería de Faustino, Flickr

As ever, the Parthenon looms over the city, a visible reminder of the sublime accomplishments of the Ancient Greeks.  The building is a ravaged remnant of its former self, but is nonetheless majestic, and its image, like so much of what the Greeks created is still deeply imprinted on our collective conscious—which is probably why the city remains such a compelling destination.

The Greek original seems so familiar because it has been so widely copied. In my own American hometown, as in countless others, the headquarters of the local bank copies in proportions, details and material the design of the Parthenon—it is the temple of money.

But the imprint of Greek culture on current life, of course, runs much deeper than architecture.  So many of the concepts that guide or define modern life were either devised or at least given names here:  our notions of democracy, the polity, the agora, as well as enduring contributions to art, science and mathematics.  And Greece was fundamentally structured as a series of city-states.  The Greek nation was a purely modern invention; Ancient Greece was always a constantly shifting, often warring set of cities, occasionally–but always temporarily–welded together by invading empires (or the threat of invasion).

As Ed Glaeser says in Triumph of the City, cities are mankind’s greatest creation.  And much, though certainly not all, of what we treasure about cities can trace its routes to the city-states of this region, most notably Athens.  But there was a flowering of cities in this part of the world two to three millennia ago.

Some of the earliest known human settlements trace their roots to this region, in fact.  As Jane Jacobs famously relates in her book The Economy of Cities, the excavation of one particularly ancient settlement Catal Huyuk, in Asia Minor—modern day Turkey—provides a compelling insight into the importance of cities to civilization.

The generally received wisdom about cities is that urbanization and permanent settlements were the accidental, or perhaps incidental by-product of improvements in agriculture:  that our hunter-gatherer ancestors stumbled upon or made some advances in crop raising that led them to settle permanently in some locations, and that as agricultural productivity improved, people had more time for alternate pursuits and managed to develop other skills.  Jacobs turns this agriculture-led creation myth on its head.

In her imaginative tale of how things could have happened, Jacobs describes the development of a settlement she calls New Obsidian, which begins as a place of assembly for nomadic groups where bartering of diverse commodities and crafts, leads to the establishment of a permanent settlement. The settlement then becomes a place, not just for trade, but also for animal husbandry, inadvertent cross-pollination of grains, the refinement of crafts and tool making, and ultimately increasingly sophisticated production. In Jacobs’ story, the creation of “new work” in cities leads to higher productivity in agriculture and stimulates development.

Ultimately, that process of developing more advanced technology, more complex economies, successively larger cities and the institutions needed to organize and govern them led to the city-states whose remnants we see today, in places like Athens. And that process continues apace today.  Cities are even today steadily creating the “new work” that propels economic growth and improves our standard of living.  There’s little reason to believe this process has reached its culmination.

As Paul Romer provocatively argues, we should be thinking about new cities as a way to tackle the problems of improving the living standards of the billions of people who still lag the most advanced nations. In his proposal for “Charter Cities” Romer argues for innovative institutional arrangements that would allow for experimentation with policies to deal with development, transportation, criminal justice and global warming.  Romer comes to cities from an interesting perspective:  in the 1980s, he authored two seminal papers on “New Growth Theory” that pointed to our ability to continually create new ideas as the driving force behind long term economic growth.  In recent years, he’s turned his attention to cities as the venue for devising new institutions that can easily give rise to and apply new ideas.  You can read a recent interview with Romer here.

There’s much glib talk of “Smart Cities” with an excessive focus on how new technologies – from the so-called “Internet of Things” to autonomous vehicles will reshape city life.  It is likely that these things will emerge, evolve  and be applied in cities.  And it will be the cities that bring people together, that promote the free flow of ideas, that exhibit a certain democracy in their affairs, that are likely to be the most successful in realizing these technologies.  And while the technologies would amaze the ancient Greeks, the kind of values that such a community would embody would not seem unfamiliar to them.