Wendell Cox Strikes Out on Density

Wendell Cox says my New York Times piece gets it right on the virtues of relaxed regulation but wrong on the virtues of density. In particular:

The strikeout results from assumptions that are patently wrong. Cities (urban areas) do not get more dense as they add population.

Cox notes, quite rightly, that the population density of the New York metropolitan area has fallen over the past half century. And he warns that one should be cautious about the productivity-density nexus because many of the country’s productive places have been getting less dense.

The problem is that he’s using a statistic that’s not very informative. Simple population density measures the average density across a particular area. If you have a metro that covers a large area but which features a very dense core, however, you can easily have a situation in which the vast majority of the metro’s population lives at densities above the average population density. I think it’s more informative to focus on weighted-average population density. To do this, you compute the density of a metropolitan area by averaging across Census tracts (for instance; you could also use municipalities or some other subdivision), weighted by population. The resulting weighted-average density tells you the density level at which the average resident of a metropolitan area lives. The average resident of the New York metro area lives at a much higher density level than the simple population density for the metro area.

And of course, large portions of the United States — including economically critical areas — do get more dense as they add population. New York City didn’t get any bigger between 2000 and 2010, but it did add over 200,000 people. As a result, it got considerably denser. Had it been easier to build in New York City, the rising demand to live there would have translated into even more population growth in the core, and correspondingly less growth in housing costs. It’s funny that Cox understands that building regulations are a problem but doesn’t connect onerous restrictions in the core with growth on metropolitan peripheries.

Cox also misunderstands another critical point of the piece, and of the book from which it’s adapted. He implies that higher incomes in dense, productive areas don’t count because they’re cancelled out by higher living costs. That’s true; the point I’m making is that people are moving from more productive cities to less productive cities because of the impact of housing costs on real earnings. What Cox neglects is the importance of the fact that businesses in expensive cities are willing and able to pay high nominal incomes. Why would they do that if they didn’t have to? A tradable good or service produced in Silicon Valley will fetch the same price in an export market as a similar good or service produced in Houston. You don’t get to charge more for a widget just because you chose to make it in an expensive city. That’s a big reason why lots of employers choose not to locate their businesses in Silicon Valley, or indeed in the United States. But many of them do choose to locate in the expensive city and pay the high wage, and as I point out in my book, expensive places like Silicon Valley employ a larger share of American workers in high value, export industries than do cheap places like Houston.

They do this because it’s worth it to them to locate in the expensive city. Firms in Silicon Valley enjoy higher productivity levels and informational spillovers — facilitated by density — that simply can’t be duplicated in other, cheaper cities. If they could be, they would be, and the high cost Silicon Valley economy would quickly implode.

The dense, high-wage metro areas like Silicon Valley have a significant economic value to the national economy, and the tight limitations on new development in those places prevent us from taking full advantage of that value. A great deal of economic potential is being wasted. It’s more important to recognize that than to argue that you know best what kind of development Americans want. Make it easier to meet housing demand in cities; if Americans love McMansions and hate walkable density, then that’s what builders will provide. I just want to make sure we stop costing ourselves easy opportunities for growth.

Comments

  1. Mixner says:

    That’s true; the point I’m making is that people are moving from more productive cities to less productive cities because of the impact of housing costs on real earnings. What Cox neglects is the importance of the fact that businesses in expensive cities are willing and able to pay high nominal incomes. Why would they do that if they didn’t have to? A tradable good or service produced in Silicon Valley will fetch the same price in an export market as a similar good or service produced in Houston. You don’t get to charge more for a widget just because you chose to make it in an expensive city.

    But you haven’t shown that expensive cities are more productive for export goods. If workers in expensive cities are more productive, but all that additional productivity is eaten up by the higher cost of doing business in expensive cities, then they’re not any more productive for the goods they’re producing for the market.

    It also seems strange to appeal to Silicon Valley as an example of the supposed benefits of density. Silicon Valley is not very dense. It only has about 6,000 people per square mile. A bit higher than the density of classic sprawl cities, but nowhere near the density of New York (27,000 people per square mile).

  2. Daniel says:

    I’ve also found it annoying that Cox insists on referring to all land use regulations as “smart growth,” when in reality almost all of them are intended to have the opposite effect, that is to limit density in existing communities.

    He knows better, so there’s obviously some sleight of hand going on here. He can tabulate the real costs incurred by all land use regulation, especially in terms of loss of affordability, then pin those costs onto the regulations he doesn’t like while turning the focus away from the regulations that further the interests of his funders.

  3. Luke says:

    I suspect that the required density for a field like finance is much higher than for technology. Most of the leading areas for technology are moderately dense suburban areas. I also haven’t seen the same tolerance for very high density among engineering and science PhDs as you get in finance and the arts. I suspect that if San Jose had to become much more dense, you would start losing some of the older PhD guys and gain more of the younger lower tech developers.

    You also really don’t want those PhDs to hang around the finance guys. They start comparing salaries and it becomes too easy for them to jump ship. You need to be able to tell them “Yes you could earn twice as as much as a quant, but are you really prepared to give up your suburban home with a yard for an apartment?”

  4. Omri says:

    Funny that Mixner should mention Silly Valley. Employees there are putting pressure on their companies to move into downtown San Francisco because they’re unsatisfied with the Silicon Valley lifestyle.

  5. sockpuppets suck says:

    Funny that Mixner, who is Wendell Cox, is replying as Mixner.

  6. Iceman says:

    A lot of the opposition to density is really from small numbers of preservationists and self-appointed “community groups” and is not shared by most urban residents. Most people who live in cities want more development and the benefits it brings – cheaper rents, better housing (new buildings instead of walk-ups, etc.), more choice of restaurants, stores, bars, etc. It’s usually a very small number of people who are trying to preserve old warehouses or who claim that any tall building would be out of character for the neighborhood. And a lot of the zoning boards and community boards pander to those tiny but vocal NIMBY groups.

  7. Waingro says:

    “Funny that Mixner, who is Wendell Cox, is replying as Mixner.”

    HIlarious. I had a sneaking suspicion that Cox/Mixner would appear in comments, but I was wagering that he would post under his real name.

  8. Mixner says:

    A lot of the opposition to density is really from small numbers of preservationists and self-appointed “community groups” and is not shared by most urban residents.

    If the majority wants higher density, why don’t we have higher density?

    And a lot of the zoning boards and community boards pander to those tiny but vocal NIMBY groups.

    Then why hasn’t the majority voted out those board members and voted in members who will support higher density? Your claims here just don’t make sense.

  9. Omri says:

    “If the majority wants higher density, why don’t we have higher density?

    If the majority wants something that takes years to make happen and that involves overcoming institutional inertia, why doesn’t happen? Well, gee, I wonder…

  10. Mixner says:

    The trend has been towards lower density for at least 50 years. There’s no evidence that the majority wants higher density.

  11. Omri says:

    “The trend has been towards lower density for at least 50 years. There’s no evidence that the majority wants higher density.”

    Except for vast empty exurbs all around the country, that is.

  12. I think it’s more informative to focus on weighted-average population density. To do this, you compute the density of a metropolitan area by averaging across Census tracts (for instance; you could also use municipalities or some other subdivision), weighted by population. The resulting weighted-average density tells you the density level at which the average resident of a metropolitan area lives. The average resident of the New York metro area lives at a much higher density level than the simple population density for the metro area.

    To explain what this is about, imagine a metro area that takes up only two square miles. One square mile has 10,000 people, and the other has 2,000 people, for a total of 12,000. Average population density of 6,000 people per square mile, right?

    Except that’s not what the people living there actually experience.

    5/6 of them (10,000/12,000) experience a population density of 10,000 per square mile; the other 1/6 (2000/12,000) experience a 2,000/sq.mi. density. The weighted average of these densities is 10,000*(5/6) + 2000*(1/6) = 8,667 per square mile.

    And that’s the average of the density each person experiences.

  13. Mixner says:

    Except for vast empty exurbs all around the country, that is.

    No, not except that. The 2010 Census shows that the trend of suburbanization has continued over the past decade and that the outlying suburbs have grown at the fastest rate.

    Average population density of 6,000 people per square mile, right? Except that’s not what the people living there actually experience.

    In the case of Silicon Valley, yes it is what they actually experience. The population distribution is relatively flat, like in Los Angeles, not clustered into small areas of much higher density, like the population of the New York metro area. Silicon Valley is mile after mile of single family homes, low-rise apartments and condos, strip malls and highways. The workplaces of Apple, Google, Facebook, Yahoo, etc. are sprawling, campus-like office parks surrounded by acres of parking and located next to major highways. Almost everyone does almost all of their traveling by car. This is the urban environment that Ryan Avent is touting for its productivity.

  14. Omri says:

    “No, not except that. The 2010 Census shows that the trend of suburbanization has continued over the past decade and that the outlying suburbs have grown at the fastest rate.

    Only if you call places like Jersey City “suburbs.”

  15. Omri says:

    “The workplaces of Apple, Google, Facebook, Yahoo, etc. are sprawling, campus-like office parks surrounded by acres of parking and located next to major highways”

    And the employees hate it and are agitating for relocations into SF. Didn’t get the memo, Mixner?

  16. Mixner says:

    No, not “only if you call places like Jersey City ‘suburbs.’” The vast majority of suburbs are not like Jersey City.

    And no, Silicon Valley employees don’t “hate it.” If it made sense for Apple, Facebook, etc to locate their offices in SF, that’s where they would be. It isn’t.

  17. Omri says:

    “No, not “only if you call places like Jersey City ’suburbs.’” The vast majority of suburbs are not like Jersey City.

    Nope. In terms of acreage, the vast majority are suburbs that are struggling with the foreclosure waves. The ones that are increasing population, OTOH, are the ones that are having urban infill, for example Jersey City.

    “And no, Silicon Valley employees don’t “hate it.” If it made sense for Apple, Facebook, etc to locate their offices in SF, that’s where they would be. It isn’t.”

    You clearly don’t know anyone in Silicon Valley. The companies located there back when they were making their own hardware, and needed cheap factory space. Now that it’s a software business, the pressure is increasing on them to go to the city. Nobody in the industry likes the life there.

  18. Iceman says:

    “Then why hasn’t the majority voted out those board members and voted in members who will support higher density? Your claims here just don’t make sense.”

    In many cases those boards are appointed, not elected. And like with rent control, a vocal and organized minority focused on that one issue can often dominate over a largely passive and disorganized majority. And a lot of stakeholders don’t get to vote, like people who would prefer to live in San Francisco or New York if they could afford it, but currently can’t, or who are stuck in the suburbs unhappily because it is currently too expensive to raise kids in the city.

    And that doesn’t even count institutional barriers – restrictive zoning laws and excessive landmarking and historic districts that once on the books become very difficult to change. Take a survey of the general public on any New York street on whether people would prefer cheaper rents and more businesses and more jobs – or more preserved old buildings. There would be no doubt about the outcome.

  19. Iceman says:

    “And no, Silicon Valley employees don’t “hate it.” If it made sense for Apple, Facebook, etc to locate their offices in SF, that’s where they would be. It isn’t.”

    The investment bank UBS is based in Stamford, Connecticut, and plans to relocate to Manhattan, since they are finding that the employees they want to attract would rather live in the city than the suburbs. I’m sure there are many more similar examples.

  20. Omri says:

    Iceman: Steve Jobs recently unveiled plans to renovate the main campus in CUpertino to make the area more of a business district and less of a campus. Google has been asking for changes in San Jose. Both say they’re doing this so they can attract employees better. In the meantime, software startups are increasingly starting up in San Francisco itself. Mixner is full of it as usual.

  21. Iceman says:

    “The trend has been towards lower density for at least 50 years. There’s no evidence that the majority wants higher density.”

    There was a massive trend towards suburbanization until about 1990, during a period in which urban areas were associated with crime, racial tensions, and failing schools. In recent years, cities have become much more desirable places to live by many measures, and sharply rising housing costs in cities like San Francisco, New York, Boston, and Washington, DC reflect that. Clearly walkable urbanism and mass transit and apartment living aren’t for everyone, and it’s fine if a large fraction of the population continues to prefer suburbs. But if there are many millions of people who would prefer urban living and are now priced out of it by bad policies that limit development and instead promote sprawl, that’s something that needs to change.

  22. Mixner says:

    Nope. In terms of acreage, the vast majority are suburbs that are struggling with the foreclosure waves. The ones that are increasing population, OTOH, are the ones that are having urban infill, for example Jersey City.

    As I said, the Census shows that suburbs have continued to grow faster than cities and that the outermost suburbs have been growing fastest of all.

    You clearly don’t know anyone in Silicon Valley. The companies located there back when they were making their own hardware, and needed cheap factory space.

    This is nonsense. Google and Facebook and Yahoo never made hardware. They are software companies.

    Now that it’s a software business, the pressure is increasing on them to go to the city. Nobody in the industry likes the life there.

    Yes, that must be why Facebook just signed a 15-year lease for a sprawling, 57-acre office campus in Menlo Park.

  23. Mixner says:

    In many cases those boards are appointed, not elected. And like with rent control, a vocal and organized minority focused on that one issue can often dominate over a largely passive and disorganized majority.

    If the boards are appointed, the voters can throw out the elected officials who appointed them.

    And that doesn’t even count institutional barriers – restrictive zoning laws and excessive landmarking and historic districts that once on the books become very difficult to change.

    Huh? Why are they very difficult to change? How do you know they’re very difficult to change? Your claim that a majority wants to get rid of these density-limiting regulations is not simply unsupported by evidence. It is contradicted by the evidence of political outcomes all over the country for the past 50 years.

    There was a massive trend towards suburbanization until about 1990,

    No, the 2000 and 2010 censuses show that the massive trend towards suburbanization has continued over the past two decades.

  24. Omri says:

    “As I said, the Census shows that suburbs have continued to grow faster than cities and that the outermost suburbs have been growing fastest of all.”

    And, as you said, what you said, is a crock of horse manure. Your analysis requires ignoring the communities that have not been functioning as suburbs but are now cities in their own right.

    “This is nonsense. Google and Facebook and Yahoo never made hardware. They are software companies.”

    They started out in the Silicon Valley milieu, which began its existence as a hardware oriented tech community. The hardware activities are gone. All that is left is a social scene that has been migrating out of the Valley and into San Francisco and Oakland.

    “Yes, that must be why Facebook just signed a 15-year lease for a sprawling, 57-acre office campus in Menlo Park.”

    A decision they are already beginning to rue. The unpleasant Silly Valley commutes cost these companies real money in terms of the sweeteners they have to offer to get employees to come.

  25. Omri says:

    “If the boards are appointed, the voters can throw out the elected officials who appointed them.”

    I voted for Obama because my mailman was rude to me once and the Bush administration did nothing about it.

    Oh, right, I didn’t. Because voting for an executive chief requires weighing more than one issue. Mixner, you really are full of shit.

  26. Mixner says:

    Your analysis requires ignoring the communities that have not been functioning as suburbs but are now cities in their own right.

    You simply don’t know what you’re talking about. The fastest growth has been in the outlying, lowest-density, most car-oriented suburbs. The population is continuing to disperse away from dense cities. This has nothing to do with Jersey City.

    They started out in the Silicon Valley milieu, which began its existence as a hardware oriented tech community.

    Google, Facebook and Yahoo are software companies. They bought sprawling office parks in sprawling Silicon Valley for their software engineers to work in because that is the best location for their business.

    A decision they are already beginning to rue.

    Hilarious. Do please show us your evidence that Facebook is “beginning to rue” its decision to locate its offices in Silicon Valley.

  27. Omri says:

    “Google, Facebook and Yahoo are software companies.”

    They are Silicon Valley companies. They started there because that was where engineers were living at the time. Engineers were living there because that was where Silicon Valley was. And that was because of the companies that preceded the current dotcom boom. Companies that used to do hardware.

    The hardware aspect withered away, and with every day that passed, every emplyee in Silicon Valley began to wonder “why the fuck am I paying through the nose for a house in an area with nothing to do, and driving 90 minutes a day to an office complex that is just as good if it were in the city?”

    Then Google set up a large office in Kendall Square in Massachusetts in order to be able to hire people who were categorically ruling out moving to Silly Valley. And Apple wants urban infill around their campus. And Google wants changes in the San Jose development plans. And the newer dotcoms are getting office space in San Francisco and Oakland.

    As for Facebook, I know people who work there. The Silly Valley way of life is a liability. All these companies have to offer their employees a premium to get them to continue it. And that costs real money.

  28. Omri says:

    “You simply don’t know what you’re talking about. The fastest growth has been in the outlying, lowest-density, most car-oriented suburbs.”

    The fastest growth in empty, gutted homes, that is.

    You know this. You are simply lying.

  29. Mixner says:

    The fastest growth in empty, gutted homes, that is.

    No, the fastest growth in population. Between 2000 and 2010, the outer suburbs grew 24.5%, more than twice as fast as cities and inner suburbs.

    Still waiting for that evidence that Facebook is “beginning to rue” its decision to locate its offices in Silicon Valley.

  30. Iceman says:

    That actually helps prove our point – many cities in which urban living is desirable (SF, Boston, NY, DC, etc.) aren’t allowing any significant number of new units to be built, so their populations can’t grow by much. Instead, you see rapidly rising housing costs due to much increased demand over a limited number of units.

    In sprawling, decentralized metro areas like Los Angeles, Houston, and Atlanta, it’s not surprising that the fastest growth is in outer suburbs. Most of the jobs and the growth in jobs are not in the city centers, but are in outlying areas, so an outer suburb doesn’t automatically mean a long commute the way it would for most New Yorkers. And few people want to live right in the middle of say, Houston or Atlanta, let alone Detroit or Cleveland – there are limited basic services and few of the positives of true urban living.

  31. Iceman says:

    “If the boards are appointed, the voters can throw out the elected officials who appointed them.’

    Like Omri said, there are a lot of issues in urban politics, so this one issue doesn’t drive elections, especially since most of the public doesn’t recognize the importance of it. Or politicians favor a small group of one-issue voters like the rent control lobby, rather than a much larger group of opponents for whom it is a minor concern that won’t change their vote. Most New Yorkers don’t connect their high rents with the city’s zoning and preservation and rent control policies, but if they did understand it, most of them would favor changing those policies.

  32. Mixner says:

    That actually helps prove our point – many cities in which urban living is desirable (SF, Boston, NY, DC, etc.) aren’t allowing any significant number of new units to be built, so their populations can’t grow by much.

    No, it contradicts your point. If people in SF, Boston, NY, etc. wanted higher density, they’d allow higher density. And if the people streaming into the outer suburbs wanted to live at high densities, they’d build at high densities. High density is what they’re escaping from. Over the past decade, New York City lost over a million domestic migrants to other parts of the country.

  33. sockpuppets suck says:

    Enjoying the light rail that now passes through your neighborhood, Mixner?