Glaeser-ing over

I read the paper that David K. cited as touting the benefits of sprawl and while I was ready to write off Edward Glaeser after learning that he was the Director of the Taubman Center for State and Government Research which was named (and certainly funded) by a man who made his fortune building shopping malls.  But I was urged to keep a more open mind about Edward Glaeser, so I did.   I wonder if David K. made it through to the conclusion, which summed up in one sentence what I believe the report was about:

Edge cities were made possible by the automobile and as long as the car remains the dominant transport mode, sprawl is likely to remain the dominant urban form.

Which is something that I think Michael K. has been trying to articulate as well, as long as we don’t make investments around alternate transit options and the car is our only choice, that is the sort of development we can expect.  Interestingly enough, I also found this New York Magazine article about Edward Glaeser and who better to explain his findings than the man himself?  Highlights:

Glaeser is a creature of density. An economist at Harvard, he has spent almost his entire professional life walking around, and thinking about, cities — seeking explanations why some metropolitan areas thrive and some suffer and what factors make some places pricey and some cheap.

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[A]fter sorting through a mountain of data, Glaeser decided that the housing crisis was man-made. The region’s zoning regulations — which were enacted by locales in the first half of the 20th century to separate residential land from commercial and industrial land and which generally promoted the orderly growth of suburbs — had become so various and complex in the second half of the 20th century that they were limiting growth…the zoning rules of the 1970′s and 1980′s were different in nature and effect. Regulations in Glaeser’s new hometown of Weston, for instance, made extremely large lot sizes mandatory in some neighborhoods and placed high environmental hurdles (some reasonable, others not, in Glaeser’s view) in front of developers. Other towns passed ordinances governing sidewalks, street widths, the shape of lots, septic lines and so on — all with the result, in Glaeser’s analysis, of curtailing the supply of housing. The same phenomenon, he says, has inflated prices in metro areas all along the East and West Coasts.

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[A]lmost all of Glaeser’s work is about social interaction and space, about seeing cities as places where all kinds of important transactions occur in “the union of everything.” It is not a coincidence that one of Glaeser’s great heroes is the writer Jane Jacobs, a keen, street-level observer of cities who celebrated the freedom and vitality of urban neighborhoods… In economic jargon, city living creates what Glaeser calls “spillovers.” Some urban spillovers are not so good, like the pollution and congestion from so many people and cars. But others are the very essence of civilized life — the decency of community, the spread of ideas, the possibility of sublime inspiration. If there is a common theme to his work, Glaeser says, it is that “people are changed by the people around them.” And it is the absence of physical distance, more than anything else, that makes that happen.

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Glaeser discovered that there can be more to urban success than cars and palm trees. For a city without warm weather and a car-friendly environment, skills are destiny. That is why New York and Minneapolis, with vast numbers of college graduates, have done so well. “Boston would be just another declining, cold, manufacturing city if it weren’t for its preponderance of human capital,” Glaeser says. And his studies suggest that the more skilled a city’s population, the more skilled it is becoming, as entrepreneurs attract skilled workers who in turn attract entrepreneurs. Americans, as a result, are sorting themselves through education and geography more and more with each passing year.

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Glaeser has come to believe that changes in zoning regulations may be the most important transformation in the American real-estate market since the mass acceptance of the automobile. In his view, these regulations have essentially created a “zoning tax” that has pushed prices far above construction costs. Very, very far above construction costs. It is not a perspective shared by all housing analysts; some economists have been far more inclined to blame high prices on high demand (spurred by low interest rates) or on rampant speculation… Still, among the half-dozen leading economists who study housing supply, there seems to be wide agreement that regulations have had a tremendous effect on prices. “I think the evidence is overwhelming,” says John Quigley, an urban economist at Berkeley who has looked specifically at the effects of regulation on the California market.

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In researching New York City’s housing prices, in fact, Glaeser and Gyourko discovered that over the past 30 years, the average height of new residential buildings in Manhattan decreased in size. “That’s crazy,” he insists, especially in light of how much the demand to live in New York has increased. “You know, if prices in Manhattan are skyrocketing, you should be building more and more at 50 stories, rather than at 30. Not the reverse.” So is it his contention that Manhattan could build far more than it has recently? “Oh, for sure,” he says. “Technologically? Certainly. No reason why you couldn’t.”

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“I’m pretty sure that Boston and California have gone too far to one extreme,” he says. “But I’m not sure that Texas hasn’t gone too far to the other extreme.” He says he tends to think that officials in the Boston and New York metro areas need to allow for more housing when the market gets tighter again. At the very least, he says, officials should discuss the long-term effects of restricting home building. And there is a bigger point here anyway, he says. Zoning and housing supply ultimately determine not only who lives in a city but also the very nature of these places. Boston, San Francisco and Manhattan are obviously becoming rarefied destinations, mostly for America’s elites (Glaeser calls the cities “luxury goods”), with housing floating beyond the reach of the young and the middle class. These cities’ economies are in the process of becoming boutique, too, accommodating only the most skilled and privileged. Their desire to limit construction and grow not in buildings and population but in prices has, in effect, begun to shape their destiny. “A healthy city is one that has a healthy mix of demographic groups,” Glaeser says. “Shutting out your 25-to-40 year-olds? That feels like a bad strategy for urban innovation.”

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Homeowners, he points out, have a strong incentive to stop new development, both because it can be an inconvenience and also because, like any monopolist, stopping supply drives up the price of their own homes. “Lack of affordable housing isn’t a problem to homeowners,” Glaeser says; that’s exactly what they want. “The thing you want most is to make sure that your home is not affordable if you own it. And for that reason, there’s absolutely no reason to think that little suburban communities with no businesses that are run essentially by their homeowners will make the right decisions for the state as a whole, for the business in the area, for the country as a whole.”

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“The welfare of the world is shaped in part by our urban form, by the way that we live, the way our communities are constructed,” he says. “These things like growth controls have changed the way communities are developed.” Joseph Gyourko shares the view that where we live, and why we sort ourselves into those places, have profound effects on society, culture, politics and business. “It’s important,” he says of the sorting process. “It’s not an innocent thing.”

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His other project is both more ambitious and more difficult. He and Gyourko say they know that the country’s regulatory environment, and thus the supply of housing, began to change around 1975. But they don’t know why it changed. So along with a third researcher, Raven Saks, they have begun to track building permits from hundreds of cities around the country over the past four decades to investigate the nature of the evolution. Glaeser speculates that there may be a viral phenomenon whereby once housing prices reach a certain level, residents become aware of high home values and agitate for restrictions; another possibility is that judges have become much more sympathetic to blocking development for environmental reasons. Still another thought: that homeowners, utilizing skills learned during the civil rights movement and political protests of the 1960′s and 1970′s, became much more adept at organizing against developers. (There appears to be a reasonable correlation between liberal enclaves, zoning regulations and high housing prices.)

So while not a fan of sprawl he is characterized as a “defender of sprawl” but also “the explainer of human capital and the avenger of zoning regulations.”  I don’t think Glaeser would necessarily smile upon Measure A as it is a growth control measure that he frowns upon.  

Additionally, since we are on the topic of Glaeser, I think Mike Rich will find this opinion editorial written for the Boston Globe very interesting, it’s on the subject of toll roads and congestion pricing:

Historically, we’ve spent billions on roads and provided them for free. This approach has given us endless traffic jams, because as any former Soviet commissar can tell you, if prices are too low, endless queues follow. Our free roads end up being anything but free, as massive congestion causes us to pay with time instead of cash.

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The state can’t go on providing free roads forever…  At some point, we will have to charge drivers for their effect upon the transportation system.

While I definitely can’t agree with everything that Glaeser says, his theories are fascinating nonetheless.   But here it is,  from the Victoria Transport Policy Institute, an evaluation of the Glaeser and Kahn report, framed around the issue of Smart Growth:

Glaeser and Kahn (2003) use neoclassic urban economic analysis to argue that sprawl is economically efficient and beneficial, resulting from increased private wealth and associated increases in automobile travel. To support this argument they provide statistical evidence that sprawl is ubiquitous, that it reflects the technical superiority (increased travel speed) of automobile transport, and that the external costs of sprawl are minor compared with its social welfare benefits. They conclude that sprawl should be increased to allow more lower-income people to enjoy the benefits of dispersed land use and automobile dependency.

Although Glaeser and Kahn acknowledge that market distortions increase sprawl and automobile use, they assume that these impacts are minor overall, and so current land use and transport patterns are overall optimal. For example, they acknowledge that about a third of highway expenditures are subsidies (i.e., not user fees), but counter that this is small compared with the total automobile costs (they do not mention the much greater subsidy of driving from unpriced parking), and offset by transit subsidies. They ignore more general social traps, such as the economic and social problems that result when individual communities attempt to exclude “undesirable” residents.

Like other critics they use highly aggregate data to claim that there is plenty of land available for development (“Ninety-five percent of the land in this country remains undeveloped”) and so conclude urban expansion imposes no significant social or environmental costs. They acknowledge that sprawl may impose some externalities, including increased traffic congestion, excessive pollution and inefficient land use patterns (due to exclusionary zoning imposed by individual jurisdictions), and in response advocate various Smart Growth strategies such as road pricing and development policy reforms.

Glaeser and Kahn accept travel time benefits of automobile travel at face value and fail to consider the associated economic traps, that is, that the benefits of increased travel speeds may be offset by more dispersed destinations, higher travel times for non-drivers, and increases in other social costs such as pollution and accidents.

Although Glaeser and Kahn provide convincing evidence that some amount of automobile transport and urban expansion may be economically justified, they fail to prove that current land use and transport patterns are optimal or that Smart Growth is harmful. In fact, they support many Smart Growth strategies, such as road pricing (and assumedly parking pricing), more efficient pricing of public services, and reductions in exclusionary zoning. They do not examine the degree to which sprawl and automobile use would decline if these strategies were implemented, but as discussed earlier in this paper, available experience indicates that such strategies significantly change consumer behaviour (Litman, 2002). Thus, their research suggests that Smart Growth is justified on economic efficiency grounds, and that the resulting land use patterns would be significantly less sprawled and less automobile dependent than what currently exists.  [emphasis added]

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