Friday, February 14, 2014

How low-density policies make us fatter, poorer, and less productive

Hong Kong: what are they getting wrong here?
I've been criticizing anti-density policies pretty heavily lately and I realize that I haven't made the case as to why density is good in the first place. I'll try make just a few points.

1. Long commutes are horrible for your health. Research shows that "when you control for sociodemographic characteristics, smoking, alcohol intake, family history of diabetes, and history of high cholesterol that commuting distance is negatively associated with physical activity and cardiorespiratory fitness and positively associated with BMI, waste circumference, systolic and diastolic blood pressure, and continuous metabolic score." That's from Matt Yglesias. Interestingly, he also explains that one still suffers negative health effects from driving even if they're adding physical activity into the mix.

2. Density makes us richer and more productive: From Ryan Avent: "Economists studying cities routinely find that after controlling for other variables, workers in denser places earn higher wages and are more productive. Some studies suggest that doubling density raises productivity by around 6 percent while others peg the impact at up to 28 percent. Some economists have concluded that more than half the variation in output per worker across the United States can be explained by density alone; density explains more of the productivity gap across states than education levels or industry concentrations or tax policies." See also herehere and here.

3. Denser networks of bus/train routes and more frequent service are possible in higher density areas because the people (and tax dollars) are there to justify them.

4. In denser areas, retail is able to specialize into more niche markets. Restaurants are able to specialize and thus the food is better. Density makes it easier to find a job that fits your skills and to be an entrepreneur. This is all touched on by Ryan Avent:
Density doesn’t work without talent. A small market may only support restaurants producing food that caters to a broad range of tastes. These restaurants will have to hire generalists — cooks who can produce a broad range of cuisines. Specialization and fine-tuning of one’s skills aren’t rewarded; too few patrons will have the specific taste for the particular cuisine to appreciate the quality. Time spent nailing down the nuances of one cuisine is time a chef isn’t using to maintain a good-enough command of a broad range of dishes.
In the larger market, supporting multiple niche cuisines, the calculus is different. Because there may be multiple Vietnamese restaurants competing for patrons, mastery of that specific style is necessary to maintain an edge against the competition. This is particularly true as the concentration of Vietnamese restaurants is likely to attract devotees of the cuisine with a well-developed knowledge of and taste for it. Hence, the larger marketplace pushes for, rather than against, specialization.
Meanwhile, a worker hoping to make a living as a Vietnamese chef will have a much easier time of things in the larger city. Labor turnover may be greater — if there’s only one Vietnamese restaurant in a town, then head-chef spots may only rarely open up — and so the odds of finding employment are higher. The larger city also provides insurance against bad fortune. If you’re a Vietnamese chef working at the one Vietnamese restaurant in a town and the one Vietnamese restaurant goes bankrupt, then you’re obviously in a tough economic situation. You must either take another job for which you’re less qualified, which may mean a reduction in compensation, or move. In the larger city, by contrast, competing restaurants can absorb and reemploy the labor and resources of defunct competitors.
This insurance function is important. It reduces the risks associated with specialization and therefore encourages more of it. By allowing workers to focus on tasks at which they’re relatively better than others, specialization helps drive economic growth. It’s also an engine of innovation. As workers focus on a specific task, they may well find better ways to do it. They might better schedule their days or invent something entirely new — software code written to expedite repeated tasks, or a machine that automates portions of a task. Of course, existing companies can be resistant to innovation. Dense cities, by acting as a source of insurance, enable workers with good ideas to take risks and start new businesses. If these workers fail, they have a good chance of finding employment elsewhere in the city. And if they succeed, the task of staffing the company is made easier by the existing pool of talent, and odds are good that customers and suppliers are close to hand, as well. Big cities provide a climate in which innovation can flourish, and in which innovators have the resources they need to exploit new ideas.
This is kind of a rough and tumble list, but those are the basics. Higher densities in cities would make us healthier, wealthier, more productive, more likely to have a job that suits us, and better able to quit our jobs to start new ventures. Oh, and higher density also reduces our air pollution per-capita, as our car trips would be shorter and we'd be more likely to take trips via walking/biking/transiting. Density isn't a panacea for all social ills, but it does seem strange that current policy largely ignores its benefits.

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