People stuck in unhappy cities get compensated in the form of better housing, or so says a new study. Although considering that a large portion of New York housing is smaller than a typical Texas family room, it’s not clear what the compensation is for The Big, Unhappy Apple.
The paper — from Harvard professor Edward Glaeser, Vancouver School of Economics professor Joshua Gottlieb and Harvard doctoral student Oren Ziv — has not yet been peer reviewed, with all the caveats that includes. And measuring happiness, to put it mildly, isn’t an exact …
In the 1940s, residents of declining cities were receiving significantly higher incomes — a one standard deviation drop in population growth after 1950 was associated with $222 more in income, or $3,655 in current dollars — about 10% of average income. That, the authors point out, could be because industrial cities declined due to high labor costs.
Looking at the 2000 Census data, however, the authors find that’s no longer the case. Wages are basically uncorrelated — but house prices and rents are. “In 1940, the residents of unhappy, declining places seem to have been compensated with higher incomes. In 2000, the residents of those same cities seem to have been compensated with lower housing costs,” the authors say. An obvious example would be Detroit, which has one of the lowest salaries needed to afford a home.
There’s also evidence that residents of happy cities pay higher rents — good news, then, to residents of Silicon Valley.