Via the Urban Demographics blog, here's a short video of Dr Gabriel Ahlfeldt of the LSE discussing his analysis of a unique dataset of land values in Chicago over time. Apart from looking pretty, this kind of analysis is of great interest to urban economists since land values are both fundamental to understanding cities and very difficult to observe in practice, because the value of land is usually mixed in with the value of structures on it. The data Dr Ahlfeldt analyses manages to separate the two out, allowing us to see how much people are willing to pay for 'pure' location as distinct from whatever happens to be built there.
You can see from the video that land values are very high in Chicago's central business district but then drop off sharply as you move out, a sign that people will pay a very premium to locate their home or workplace (mostly the latter, in this case) in that spot. And as Dr Ahlfeldt says, that particular location has been far more valuable than any other in Chicago for the whole period covered by the data.
So even though vast numbers of boats carrying corn, lumber and pork no longer come and go via Chicago's small harbour on Lake Michigan, the legacy of that waterborne trade and the density of businesses and institutions that built up around it can still be seen in the pattern of industrial and commercial location today. This suggests a very important role for path dependency, history and perhaps chance in explaining urban form.
You can see the whole of Dr Ahlfeldt's lecture and many others at the Lincoln Land Institute here.
Showing posts with label geography. Show all posts
Showing posts with label geography. Show all posts
Friday, 31 August 2012
Tuesday, 3 May 2011
Spaces for cars, spaces for people
At some point early in the previous decade, Britain reached what I think should be considered a significant landmark. The number of licensed private cars in the country surpassed the number of dwellings for the first time: in 1961 there were three dwellings per car, in 1981 1.8, and by 2008 it was 0.98 (though showing signs of stabilising).
Obviously a car is a great thing to have for many people, if they can afford it, and as incomes have grown more people have found it a worthwhile investment. But a decent, affordable home is a good thing to have too, and I think it's interesting to contrast our enthusiasm as a society for allocating more and more space for cars with our hostility towards allocating more space for people to live in, as well as the very different government policies applied to each case.
Considering how expensive and cramped the housing in much of the country is, you might expect society in general and the various levels of government to be constantly striving to increase the housing stock. But what you actually see is amazingly energetic and committed grass-roots efforts to constrain the growth of the housing stock, which are then reflected in a very restrictive set of government policies. By contrast, people and government in most parts of the country seem united in their determination to increase the amount of car parking available. It's rational for every individual to want cheap parking for themselves, but the aggregate consequences are fairly perverse: you end up creating places like Hungerford and many similar towns around the country, where there are strict controls on using land for anything except car parking, so that car parking is made cheaper and everything else more expensive.
The growing number of cars is using up more of our time as well as more of our space. The more cars there are on the road, the more congestion there is and the more time each car spends sitting in traffic. And because both space and time are strictly finite resources, the opportunity cost of space and time given up to cars is only going to grow if incomes continue rising over time. We seem to be acting with a collective assumption that allocating more and more space to cars is a costless decision, but it really isn't. Over time we have turned many of our streets from places of movement into places for storing large metal boxes - just because the change has happened gradually doesn't mean it doesn't have very important consequences, many of them negative.
In short, I think the growth in the number of cars represents a significant resource problem for our society, one that seems to be receiving roughly zero strategic attention at the moment. What to do about it is an argument for another day: in general I think a combination of supply caps and market pricing would help a lot, but as we haven't even started having a debate about the issue yet any reasonable policies seem a long way off.
Sources for the graph: Private cars licensed from Department for Transport table VEH0103 here, number of dwellings from DCLG table 102 here.
Obviously a car is a great thing to have for many people, if they can afford it, and as incomes have grown more people have found it a worthwhile investment. But a decent, affordable home is a good thing to have too, and I think it's interesting to contrast our enthusiasm as a society for allocating more and more space for cars with our hostility towards allocating more space for people to live in, as well as the very different government policies applied to each case.
Considering how expensive and cramped the housing in much of the country is, you might expect society in general and the various levels of government to be constantly striving to increase the housing stock. But what you actually see is amazingly energetic and committed grass-roots efforts to constrain the growth of the housing stock, which are then reflected in a very restrictive set of government policies. By contrast, people and government in most parts of the country seem united in their determination to increase the amount of car parking available. It's rational for every individual to want cheap parking for themselves, but the aggregate consequences are fairly perverse: you end up creating places like Hungerford and many similar towns around the country, where there are strict controls on using land for anything except car parking, so that car parking is made cheaper and everything else more expensive.
The growing number of cars is using up more of our time as well as more of our space. The more cars there are on the road, the more congestion there is and the more time each car spends sitting in traffic. And because both space and time are strictly finite resources, the opportunity cost of space and time given up to cars is only going to grow if incomes continue rising over time. We seem to be acting with a collective assumption that allocating more and more space to cars is a costless decision, but it really isn't. Over time we have turned many of our streets from places of movement into places for storing large metal boxes - just because the change has happened gradually doesn't mean it doesn't have very important consequences, many of them negative.
In short, I think the growth in the number of cars represents a significant resource problem for our society, one that seems to be receiving roughly zero strategic attention at the moment. What to do about it is an argument for another day: in general I think a combination of supply caps and market pricing would help a lot, but as we haven't even started having a debate about the issue yet any reasonable policies seem a long way off.
Sources for the graph: Private cars licensed from Department for Transport table VEH0103 here, number of dwellings from DCLG table 102 here.
Sunday, 17 October 2010
Welfare localisation - A race to the bottom?
As I'm starting this blog a little later than I expected, some of the first posts might seem a bit prehistoric, concerning as they do stories that are up to several weeks old. Like this one from the Touchstone (TUC) blog, concerning a call from Richard Kemp of the Liverpool Liberal Democrats for the 'localisation' of control over welfare payments.
On the face of it, devolving full power over benefit levels to local councils makes some sense, as benefits set at the same level around the country may well be 'too high' in some areas, potentially harming work incentives, and too low in high cost areas, undermining the intended impact. And to the extent that councils have better knowledge of the problems in their areas and the right incentives to address them, devolving responsibility might make the overall system more effective at reducing poverty and helping people find employment.
But there are risks too. If the devolved budgets are not ring-fenced, meaning that money not spent on benefits can be spent elsewhere or used to reduce council tax, there may be a strong incentive for councils to lower benefit levels in an effort to push poorer households out of the area. Passing costs onto others where possible is often a sound business strategy, and if we want councils to act more like businesses in this respect we shouldn't be surprised if they start viewing households with high benefit levels as a much greater burden. Even if we assume genuine concern for poverty on the part of some local leaders, they may be reluctant to hold benefit levels above those of their neighbours for fear of attracting a greater influx of poor households than they feel their community can bear.
How likely is such a 'race to the bottom' in welfare expenditure? State and local governments in the US and some other countries have considerable influence over benefit levels, so that should give us a clue. Unfortunately, as with many such issues, drawing clear-cut conclusions is tricky due to problems isolating true causation. So, the results are ... inconclusive: make what you will of Brueckner, Volden and Berry et al.
Of course, the possibility of a race to the bottom in welfare depends on the exact policy being proposed. In more fiscally comfortable times, we might expect to see benefits tailored to local living costs but with ring-fenced budgets to avoid giving councils the wrong incentives. But as Richard Exell on the Touchstone blog points out, we do not live in such times, and that is reason to be wary of welfare localisation.
On the face of it, devolving full power over benefit levels to local councils makes some sense, as benefits set at the same level around the country may well be 'too high' in some areas, potentially harming work incentives, and too low in high cost areas, undermining the intended impact. And to the extent that councils have better knowledge of the problems in their areas and the right incentives to address them, devolving responsibility might make the overall system more effective at reducing poverty and helping people find employment.
But there are risks too. If the devolved budgets are not ring-fenced, meaning that money not spent on benefits can be spent elsewhere or used to reduce council tax, there may be a strong incentive for councils to lower benefit levels in an effort to push poorer households out of the area. Passing costs onto others where possible is often a sound business strategy, and if we want councils to act more like businesses in this respect we shouldn't be surprised if they start viewing households with high benefit levels as a much greater burden. Even if we assume genuine concern for poverty on the part of some local leaders, they may be reluctant to hold benefit levels above those of their neighbours for fear of attracting a greater influx of poor households than they feel their community can bear.
How likely is such a 'race to the bottom' in welfare expenditure? State and local governments in the US and some other countries have considerable influence over benefit levels, so that should give us a clue. Unfortunately, as with many such issues, drawing clear-cut conclusions is tricky due to problems isolating true causation. So, the results are ... inconclusive: make what you will of Brueckner, Volden and Berry et al.
Of course, the possibility of a race to the bottom in welfare depends on the exact policy being proposed. In more fiscally comfortable times, we might expect to see benefits tailored to local living costs but with ring-fenced budgets to avoid giving councils the wrong incentives. But as Richard Exell on the Touchstone blog points out, we do not live in such times, and that is reason to be wary of welfare localisation.
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