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Green Economics

Urban economics: Superstar cities vs. 'mellow' cities

Do smaller urban centers promise a better life than a congested megalopolis?

By Matthew E. KahnGuest blogger / December 8, 2010

A man carts children down a street in the Dharavi slum area of Mumbai, India, in this file photo from July 2009. Of the 19 million people who reside in Mumbai and its suburbs, half live in slums. Will that make megacities less appealing to middle class families?

Prashanth Vishwanathan/Bloomberg via Getty Image

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The Wall Street Journal has provided Joel Kotkin with the space to sketch the tradeoffs of living in megacities (such as NYC or Tel-Aviv) vs. living in smaller cities such as Raleigh. His thesis boils down to "Smaller, more nimble urban regions promise a better life than the congested megalopolis." Is this correct? Will Don Trump and Derek Jeter read his column and move to Nashville? These immediate counter-examples highlight that we need to be a pinch nuanced here.

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To his credit, Kotkin later reveals that he is talking about the middle class and the urban poor. If this is really his focus, then why did the Wall Street Journal publish it? (that was a joke). Consider this quote from his piece;

"Consider Mumbai, with a population just under 20 million. Over the past 40 years, the proportion of its citizens living in slums has grown from one in six to more than half. Mumbai's brutal traffic stems from a population density of more than 64,000 per square mile, fourth-highest of any city in the world, according to the website Demographia."

Now, to a non-economist the first sentence appears to suggest that quality of life is growing worse in Mumbai for the urban squatter poor. The slums are growing more dense. But, if we take revealed preference seriously then the people who are moving into such slums must prefer it to the even poorer rural areas. So, the incumbent urban poor are made worse of as the urban slums grow (rents rise, density increases, urban wages fall) but the new migrants must prefer their new destination or they would not have made the costly move to the city. So, overall --- does Mumbai offer the urban poor a good "quality of life" or not?

Returning to the United States, Kotkin makes a very reasonable point about the fate of the middle class in the U.S Superstar cities;

"The largest American cities—notably New York, Los Angeles and Chicago—also show the most rapid decline in middle-class jobs and neighborhoods, with a growing bifurcation between the affluent and poor. In these megacities, high property prices tend to drive out employers and middle-income residents. By contrast, efficient cities are where most middle- and working-class Americans, and their counterparts around the world, will find the best places to achieve their aspirations."