Extraordinary Observations

What better way to begin blogging for the new year than drawing attention to a working paper by Gerald Carlino of the Philadelphia Fed and Albert Saiz of the Wharton School. The key to economic growth in American cities may be as simple as creating beautiful places with high quality amenities:

The City Beautiful movement, which in the early 20th century advocated city beautification as a way to improve the living conditions and civic virtues of the urban dweller, had languished by the Great Depression. Today, new urban economic theorists and policymakers are coming to see the provision of consumer leisure amenities as a way to attract population, especially the highly skilled and their employers... “Beautiful cities” disproportionally attracted highly educated individuals and experienced faster housing price appreciation, especially in supply inelastic markets. Investment by local government in new public recreational areas within [a metro area] was positively associated with higher subsequent city attractiveness. In contrast to the generally declining trends in the American central city, neighborhoods that were close to “central recreational districts” have experienced economic growth, albeit at the cost of minority displacement.

Of course, Carlino and Saiz aren't the first to imply that aesthetics and amenities are critically important. In his new book, Richard Florida suggests that physical beauty is perhaps most important in determining whether people appreciate and would prefer to live in a particular community. Some cities are naturally beautiful (think San Diego or Miami) while others tend to be industrial and gritty (think Detroit or Pittsburgh). Perhaps a good example of urban beautification can be seen in Chicago, where the lakefront development, along with major turnarounds in neighborhoods like the Gold Coast and Lincoln Park have seen economic development accelerate as the places themselves became more aesthetically pleasing.