As politicians weigh economic stimulus for cities, research suggests a surprising way to succeed: make it fun
WHEN MASSACHUSETTS DECIDED to boost its biotechnology sector, it turned to a traditional model of economic development: Spending $1 billion over a decade to build infrastructure and encourage employers, hoping that jobs - and growth - will follow. The federal government appears ready to stick to a similar strategy for a stimulus package next year that could commit as much as $1 trillion to the construction of bridges, schools, and industrial facilities in the hopes of reviving struggling communities around the country.
Yet some social scientists who study regional growth have turned away from such joyless nitty-gritty and are instead turning to another tool for improving economic health: fun.
In a paper published this month by the Federal Reserve Bank of Philadelphia, economists Gerald A. Carlino and Albert Saiz looked at 150 metropolitan areas around the United States and found hat those rich in what they called "consumption amenities" - the things that make a city delightful, such as parks, historic sites, museums, and beaches - "disproportionally attracted highly educated individuals and experienced faster housing price appreciation."
In other words, urban growth and prosperity have less to do with transportation links and industrial infrastructure than the patterns that govern behavior at a social mixer: Beautiful and charming cities draw a crowd, while the featureless and unattractive wilt like wallflowers.
Carlino and Saiz's paper could give policy makers a new way to think about the conditions necessary for economic growth. As they consider how to boost the economy, they should think not about the raw materials of business, but about what will bring together talented people in the same place. This suggests a different approach to stimulus spending - and, likely, stark assessments about where to spend it that will not make for popular politics.
"If you have sun and a beautiful beach and 300-year-old buildings, it's no wonder that you're going to attract people," said Saiz. "But that's no use for Detroit or Syracuse."
Social scientists had long studied the growth of cities, but in the 1990s they started to notice something puzzling: Cities like Seattle and Austin were booming as new-economy hubs for no apparent reason other than the fact that the people responsible for the greatest innovations in high technology had chosen to live in places that were bike-friendly, had good music scenes, and allowed them to show up to business lunches in jeans.
Elsewhere, downtown enclaves in cities like Philadelphia and Providence had also begun to rebound, with new condominiums and coffee bars, even as the fundamentals of the local economies around them seemed to change little. What puzzled the experts was why, if the "American central city generally did not 'come back' in the 1990s," as Carlino and Saiz wrote in their paper, "the 'beautiful city' within flourished."
In 2000, Edward Glaeser, a Harvard economist, along with California economist Jed Kolko and Saiz, then a Harvard graduate student, authored a pioneering paper titled "Consumer City" challenging traditional urban economic theory that companies flock to cities because of the economic benefits of being near one another.
Instead of counting the things on which economists had traditionally focused, such as factories and freight lines, the authors tabulated the number of restaurants and hotel rooms in French and English cities to look for a connection between tourist activity and city growth. Changes in communication and transport technology had reduced the importance of location for businesses, all while individuals and companies became more mobile than ever before. Those who could live wherever they wanted to, the authors concluded, would probably choose to live in the same kinds of places they would want to vacation.
Carlino and Saiz tried to figure out what exactly made those locales special. They relied on a trove of market research data tallying leisure visits to American cities and matched it against local characteristics to identify what people found attractive about cities. They identified 15 attributes that contributed to tourist appeal: Sunny days and a nearby coastline were good, along with short average distances to parks and golf courses. High rates of poverty and toxic polluters were bad.
More than others before them, Carlino and Saiz offered statistical support for the idea that environmental characteristics could be as important a draw to an area as the built environment. "The amenity debate in general has understated the force and power of natural amenity," said Richard Florida, an urban planner who has written four books about the mobile, post-industrial workers he calls "the creative class." "People really care about attractiveness, aesthetics, and physical beauty."
In their paper, Carlino and Saiz found a statistical correlation between the number of leisure visits to a metropolitan area and the growth of factors like population and housing values. They controlled to determine that the tourism itself wasn't causing the growth, and argue in their paper that people move to the cities for the same reason they visit as tourists. They also demonstrate that investment by local governments in such "recreational capital" - spending on parks, cultural institutions, sports facilities, and other public-private spaces - has succeeded in making cities like Charlotte and San Antonio more attractive to tourists. They compute that a 10 percent boost in such spending yields a 2.3 percent increase in leisure visits, and, if the correlation holds, will also increase growth.
"If you have things that attract high-skilled, high-income individuals, they are more productive," said Carlino, an economist at the Federal Reserve Bank of Philadelphia. "They are the ones who are likely to start up new companies."
Some economists are hoping that the new thinking could change the way Congress funds building projects for what is being called President-elect Obama's "New New Deal." Legislation guided by this new logic, they say, would generate more growth than the politically expedient, project-for-every-congressional district model.
"It tends to be fairly predictable: A lot of aid for declining areas rather than support for successful areas," said Glaeser, director of the Taubman Center for State and Local Government at the Kennedy School of Government. "It may well be that it would have more value in a place that is already doing well."
The question is a politically unpalatable one: If the goal of a stimulus package, or any economic development plan, is to stimulate growth, does it make sense to continue investing in places that will never be attractive?
Many of the 15 variables that Carlino and Saiz have identified as triggers for new growth - like coastlines, historical buildings, and a lack of rainy days - are not something a city can choose to build. Rather, they are permanent elements of place based on irreconcilable fates of history and geography. Why send another federal dollar to bolster manufacturing in Akron when it could support a golf course in sunny Phoenix?
"If you don't have 14 out of 15, how useful is the investment going to be?" asked Saiz, now at the University of Pennsylvania's Wharton School.
For those seeking to devise a development strategy, however, the Carlino-Saiz categories do little to account for the ways tastes could shift away from current preferences. Longtime residents of Boston's South End, after all, know that Americans have not always had an instinctual preference for living in historical neighborhoods. The same is true of the sea: Only in the 19th century was unappealing coastline transformed into the romantic European notion of the "seashore," as the French cultural historian Alain Corbin has written.
As amenity-centered development has gained currency among social scientists, more traditional thinkers have criticized it for offering a narrow, faddish appeal to upscale consumers who make up a small share of the country's population.
"Amenity is in the eye of the beholder," says Joel Kotkin, the author of "The City: A Global History." He has ridiculed amenity-driven development as an attempt to draw the "hipster set" with the "lure of 'coolness' " while ignoring basic city services. "To some a place with nice parks, low crime, good schools, and good jobs is paradise but boring for visitors."
While Carlino and Saiz both acknowledge it is intriguing to imagine federal dollars shifted from overpasses to skateparks, both caution that they have yet to measure the effects such a policy change could have.
"Even if we know that building a nice park or historical district could cause growth to go up a certain percentage, it still costs money," said Carlino. "Is it worth it?"
Sasha Issenberg is a reporter in the Globe's Washington bureau and the author of "The Sushi Economy: Globalization and the Making of a Modern Delicacy."