E Pluribus, Pauciores (Out of Many, Fewer): Diversity and Birth Rates

Abstract: In the United States, local measures of racial and ethnic diversity are robustly associated with lower birth rates. A one standard deviation decrease in racial concentration (having people of many different races nearby) or increase in racial isolation (being from a numerically smaller race in that area) is associated with 0.064 and 0.044 fewer children, respectively, after controlling for many other drivers of birth rates. Racial isolation effects hold within an area and year, suggesting that they are not just proxies for omitted local characteristics. This pattern holds across racial groups, is present in different vintages of the US census data (including before the Civil War), and holds internationally. Diversity is associated with lower marriage rates and marrying later. These patterns are related to homophily (the tendency to marry people of the same race), as the effects are stronger in races that intermarry less and vary with sex differences in intermarriage. The rise in racial diversity in the US since 1970 explains 44% of the decline in birth rates during that period, and 89% of the drop since 2006.

I asked demographer Lyman Stone if I should take this seriously. His characteristically firm reply is below:

It’s nonsense.

1) They’re explaining change in kids-in-the-house, NOT fertility. Kids-in-house is more similar to completed fertility and has declined like 40% less than total fertility.

2) They include adult children living at home in their kids-in-house measure, so if adult-kids-at-home has risen (it has), that biases their estimates.

3) Regardless, it seems notable in table 3 that the effect gets bigger the more narrowly you define the categories. Ancestry has the biggest effect, it’s 50% bigger than race. They don’t tell us the standard errors, but from the t stats it seems ancestry is highly significantly higher than just race. This I think matters for interpretation: if German-Americans are declining to marry Irish-Americans in 2010… are we actually measuring homophily or are we measuring the degree of segmentation in social life? You can imagine a situation with no homophilous preferences at all, but where individuals just have highly segregated social lives, and so the results are as we see. I’m kinda skeptical the ancestry results are consistent with the idea that this is preference based since the ancestry categories are kind of ludicrously specific, cross-ancestry marriages in ACS are like…. 60% of marriages I think? and many people don’t even know somebody’s ancestry apart from race. And, spoiler: ancestry HHI hasn’t changed at all.

4) One thing I do find interesting is the authors’ argument about self-ID. They suggest that it matters how we perceive ourselves: a huge share of increase in diversity is a shift in people who formerly would have been categorized as “black” or “white” now being coded as “multiracial.” I’m also concerned that they used inconsistent categories: the same population is more diverse using 2020 census form than using 2010 or using 2000 or 1960, etc.

5) They don’t show the first stage results or descriptives which is always a red flag to me.

6) They’re doing a weird thing with timing and fixed effects. Kids-in-house is a measure of completed fertility: those kids were born years or decades earlier. But they’re linking that completed fertility to diversity right now, not “diversity when the mother was 18” or whatever. They seem to think their huge array of fixed effects is addressing this issue, but it just seems totally wrong to me. They should be using diversity that obtained in mother’s state of birth over the course of the first 25 years of her life, not diversity right now after she had kids.

7) There’s a correlation of like 0.02 between any measure of diversity and any measure of fertility at the state level, in cross section or panel. For a variable that explains 90% of the decline, it’s amazing it has zero explanatory power in the descriptive data.

I appreciate that economists are willing to look into unpopular possibilities, such as diversity having downsides. And Lyman’s comments do not firmly establish that diversity has no effect on birthrates – merely that this research needs more work before we have to take it seriously.

The post Stone: Diversity didn’t cause the baby bust appeared first on Market Urbanism.

As proposed, Moreno’s 15-minute city has no chance of implementation, because economic and financial realities constrain the location of jobs, commerce, and community facilities. No planner can redesign a city by locating shops and jobs according to their own whims.

This article appeared originally in Caos Planejadoand is reprinted here with the publisher’s permission.

The 15-minute city is a concept first advocated by Carlos Moreno, the urban planning adviser to Paris mayor Anne Hidalgo. In any metropolis as congested as Paris or São Paulo, getting from one part of the city to another in less than fifteen minutes would be wonderful. Measured from east to west, São Paulo’s built-up area spans 85 kilometers (53 miles). Traveling this distance in fifteen minutes would require a vehicle to run at an average speed of 340 kmph (211 mph). Some public transport already attains these speeds. The Shanghai Maglev, the world’s fastest operational train, has an average speed of 244 kmph (152 mph) and a peak speed of 431 kmph (268 mph). So, commuting less than fifteen minutes between urban stations is not a technological impossibility, but it might not yet be a financially viable transport solution.

But introducing cutting-edge urban transport is not what Moreno had in mind when he called for redesigning Paris as a 15-minute city. On the contrary, he wishes Parisians to forsake the existing network of Metro trains and buses and limit their means of transportation to walking or bicycling. Moreno advocates subdividing cities into small, self-contained villages covering about 300 hectares (741 acres), corresponding to the area that a pedestrian can cover in fifteen minutes.

Moreno defines the 15-minute city in his video:

“The idea is to design or redesign cities so that in a maximum of fifteen minutes, on foot or by bicycle, city dwellers can enjoy most of what constitutes urban life: access to their jobs, their homes, food, health, education, culture, and recreation.”

Moreno further explains how to implement his idea:

“How can we accomplish this? Mayor Anne Hidalgo suggested a ‘big bang of proximity’ that includes, for example, massive decentralization, the development of new services for each borough.” 

He implies that clever urban planners could bring desirable jobs, grocery stores, health, education, and cultural facilities within a 15-minute walking radius of every home.

Strangely, mayors and the press have taken the possibility of creating 15-minute walking cities very seriously. It has become the declared vision of many cities and the topic of numerous articles in prestigious publications like New York Magazine, the Washington Post, the Guardian, and the Financial Times.

However, the concept of dividing metropolises into self-contained enclaves contradicts everything we know about the economy of large cities.

Economic data from cities worldwide demonstrate that large labor markets are more productive and innovative than smaller ones. Increased productivity and a wide choice of employment draw new people toward São Paulo despite high rents and long commutes. If São Paulo’s labor market were divided into self-sufficient boroughs limited to a 15-minute radius, the city’s productivity would rapidly drop, and people would soon leave the fragmented metropolis for a more productive city. 

As proposed, Moreno’s 15-minute city has no chance of implementation, because economic and financial realities constrain the location of jobs, commerce, and community facilities. No planner can redesign a city by locating shops and jobs according to their own whims.

Then why devote an article to the subject? Because this recent planning fad is a costly distraction from tackling the real transport problems confronting metropolises. If everybody should walk to work, then there is no need to make the significant investment required to improve the speed and efficiency of transport.

City leaders and their staff should instead promote a 30-minute city, where mechanized vehicles are so efficient that a worker can reach any job in a metropolitan area in less than thirty minutes from door to door. The objective is feasible as it doesn’t involve a complete “redesign” of the city, as Moreno proposes, but an improvement of public transport that is precisely the role of a municipalities.

The post The 15-Minute City Is a Distracting Utopia appeared first on Market Urbanism.

Promotors of recently developed cities ranging from Nusantara, the freshly built capital of Indonesia, to Neom, Saudi Arabia’s futurist urban paradise, advertise them as breakthroughs in urban living. But does the world need new cities?

This article appeared originally in Caos Planejadoand is reprinted here with the publisher’s permission.

Promotors of recently developed cities ranging from Nusantara, the freshly built capital of Indonesia, to Neom, Saudi Arabia’s futurist urban paradise, advertise them as breakthroughs in urban living. But does the world need new cities? Are new urban forms likely to be better than the old ones? And why, if they are so wonderful, have so few new cities succeeded in attracting a large population?

Does the world need new cities?

Over time, the evolution of villages into prosperous cities has primarily been driven by their proximity to trade. The profits from trade were invested in amenities like theaters, parks, universities, restaurants, cafés, and many other attractions that made these cities appealing beyond their trade advantage.

During the Industrial Revolution, the development of railways created new locations with advantageous accessibility to trade. For instance, Atlanta and Vancouver rose to prominence thanks to the trade potential of newly built railways. However, in the twenty-first century, existing cities already occupy nearly all the locations most favorable for trade.

There are a few new opportunities for creating cities in favorable locations. Global warming, by opening trade routes closer to the poles, could produce the potential for new cities. China’s Belt and Road might also create the right conditions for cities to develop by establishing rapid trade land routes across Central Asian countries.

Unfortunately, most people who promote new cities today are not motivated by trade opportunities, but by the imperfections of the cities in which they already live. Planners and architects are convinced that they could create the perfect city, where their innovative design would prevent congestion, crime, and pollution while providing well-paying jobs within walking distance of affordable homes. And, of course, all energy consumed would be carbon-free. After all, they reason, our experience with everyday objects, like cars and smartphones, confirms that trying to repair an old, obsolete one does not make much sense when compared to the ease of buying the latest model. Why shouldn’t it be the same for cities? Designing new cities have nothing to do with the dsign of cars or smartphones. Cities are built by the people and firms that decide to move into them. They have no objective functions like a smart phone. People move to cities because of the qualities of the people who are already there. Not because of their infrastructure  wonderful technology.

Are proposed new urban forms likely to be better than existing ones?

How do we measure whether a city is successful? We could rank cities by their capacity to attract the most visitors, their appeal to migrants, or, more abstractly, by their livability.

The five cities most frequented by international visitors are Bangkok, Paris, London, Dubai, and Singapore, while the cities with the largest populations are Tokyo, Delhi, Shanghai, São Paolo, and Mexico City. According to criteria selected by The Economist, the five most livable cities are Vienna, Copenhagen, Zurich, Calgary, and Vancouver. (It is interesting to note that the most livable cities do not attract the most migrants or visitors.) The fifteen cities on these lists have grown and thrived because of the accretion of voluntary migrants over a long time. Nobody designed them to be ideal cities from the start; they just adapted successfully to circumstances.

The only designed cities that have reached a significant population size are all new capital cities like Canberra, Brasilia, Islamabad, Chandigarh, and Abuja. Their apparent success is not surprising. There are two main challenges for anybody wanting to build a new city in an isolated location: first, how to attract the initial population, and second, how to finance the enormous costs of building a city’s infrastructure before a productive population can pay for it through taxes. The national governments building these capital cities responded readily to these challenges. Civil servants, who constituted the initial population, had no choice but to live where the government gave them a job and accommodation. When this initial population had settled, voluntary migrants followed to provide them with services. The second challenge, the long negative cash flow, was also easily solved. The government used taxpayer money to subsidize the whole, expensive enterprise.

The only truly successful new cities—excluding capital cities—were not really new. Instead, they were satellite towns of existing metropolises. For instance, this is the case for the five satellite towns—Bundang, Ilsan, Pyeongchon, Sanbon, and Joongdong—built around Seoul to tackle housing shortages, which are now thriving communities in their own right. Trying to structure expanding suburbs with satellite city centers is a worthy endeavor, but quite different from the self-sufficient cities built in the desert, which urban gurus usually advertise. Rather than the cities of the future, they are more likely to wind up as castles in the air.

The post Are New Cities Necessary? appeared first on Market Urbanism.

But Erdmann makes a stronger claim:

Supply has never and will never cause a collapse of prices and rents. It causes stability. 

Is that true? In a case like Austin or Phoenix, sure: prices are not too far above the cost of construction, and abundant supply cannot (durably) push the price of new housing below the cost of construction.

But YIMBY has more to offer to San Francisco, Auckland, or London. In those cases, prices are far above construction cost. That means that even when demand is relatively soft, there’s money to made in construction. As Erdmann allows:

After a decade of more active construction in Auckland, rents appear to be 10% to 15% below the pre-reform trend. That’s a big win. After a decade. That’s what success looks like.

That’s the promise – 5 to 15% relative rent declines, decade after decade. But there are several good reasons to believe this won’t happen in an even, steady pattern, at least not all the time. Hopefully by 2040 we’ll have data from several cases and be able to describe the dynamics of market restoration with much more confidence.

The post Can YIMBY policies cause large price declines? appeared first on Market Urbanism.

But what’s important to recall – especially for those of us under, uh, 41 – is that pedestrianized streets aren’t a new concept coming into style, they’re an old one that’s been in a three-decade decline. Samantha Matuke, Stephan Schmidt, and Wenzheng Li tracked the rise and decline of the pedestrian mall up to the onset of the pandemic. Even in the urbanizing 2000s and 2010s, 14 pedestrian malls were “demalled” against 4 streets that were pedestrianized:

In a 1977 handbook promoting pedestrianization, Roberto Brambilla and Gianni Longo admit that some of the earliest “successes” had already failed:

In Pomona, California, the first year [1962] the mall received nationwide press coverage as a successful model of urban revitalization; there was a 40 percent increase in sales. But the mall was slowly abandoned by its patrons, and now, after fifteen years of operation, it is almost totally deserted.

A Handbook for Pedestrian Action, Roberto Brambilla and Gianni Longo, p. 25

One obvious reason for the failure of many other pedestrianized streets is that they were too little, too late. The pedestrian mall was one of several strategies against the overwhelming ebb tide of retail from downtowns in the postwar era. They weren’t seen as alternatives to driving, but destinations for drivers, who could park in the new, convenient downtown lots that replaced dangerous, defunct factories.

A minority of the postwar-era malls survived. The predictors of survival are sort of obvious in hindsight: tourism, sunny weather, and lots of college students, among other things.

Some of the streets which were “malled” and “demalled” have rebounded nicely in the 2000s. The slideshow below shows Sioux Falls’ Phillips Avenue in 1905, 1934, c. 1975, and 2015.

The saddest case might be Baltimore’s Old Town Mall, pedestrianized in 1968. Since it’s still legally closed to cars, it’s not reckoned among Matuke et al’s “failures”. As in many other failures, this commercial strip was already in bad shape in the 1960s. Subsidies and buzz around pedestrianization gave it a short-term fillip, but the downward trend took hold again quickly.

This time is different, maybe

Pedestrian mall advocacy today is somewhat different, although the death of retail everywhere today echoes the 1950s downtowns. Perhaps most obvious is the change in commercial uses: today’s pedestrian malls are anchored by the patios of eateries and drinkeries. Those seem a more natural pairing with outdoor space than shopping. (Even better are playgrounds, which are still absent from most pedestrian malls).

The valence of cars in cities has also flipped from asset to liability. If you’re aiming to reduce car space in cities anyway, busy social strips are obvious places to start.

What does “failure” mean?

A pedestrian mall with low traffic is considered a failure. But we don’t normally hold a road (or sidewalk) to that standard. And if stores or homes sit vacant on a normal street, we rarely blame the infrastructure. If you want, you can see this as a car-centric conspiracy. But I think it’s more reasonable to admit that pedestrian malls are pitched as commercial and social spaces, a potentially delightful blend of public and private space with benefits to all. When that fails, like any commercial concept, it needs to be rolled up.

But – like other commercial failures – this need not be a big deal. Restaurants fail without fail. Social commerce may be more fragile than other forms, because it can go into a downward spiral.

Why not leave a street pedestrianized even if it’s a commercial and social failure? In most cases, there are real costs to the closure, either to traffic circulation or accessibility and deliveries for whatever businesses (or homes) remain. In addition, abandoned pedestrian spaces frequently feel unsafe. Finally, there are cases – like Baltimore’s Old Town Mall – which can remain pedestrian-only even in failure, because there’s nothing better to do with the space.

Failure can be fine

The long, slow, recent death of the postwar pedestrian mall is a solid reason for city bureaucrats and merchants to be skeptical of eager proposals. For every photo of a vibrant throng on a pedestrian street, they can produce one of failed stores or empty pavement.

A notable improvement of the COVID-era street conversions over the 1960s and 70s pedestrian malls is their physical simplicity. Most use simple barriers and moveable street furniture, sometimes paint, to transform what is otherwise the same span of asphalt. This allows regular, small changes. If, like a restaurant, avenue du Mont-Royal fails in five or ten years, it will have been a success – and the barriers can come back down.

The post Pedestrianized streets usually fail – and that’s OK appeared first on Market Urbanism.

In areas where there’s already some gentrification pressure, landlords face a timing problem: they can renovate (or sell to a developer) now, and cash out. Or they can hoard the property and wait until prices rise, supplying low-cost housing in the meantime.

Land value taxes are specifically designed to penalize the hoard-and-wait approach by raising the annual tax cost of sitting on valuable land. It is specifically designed to accelerate neighborhood change. That’s the point. That’s what it says on the tin.

Gentrification isn’t the only urban problem, and maybe it’s a small enough urban problem that a land value tax is a good idea anyway. But I think most of the benefits of Georgism can be unlocked with George-ish schemes (like renovation abatements or vacant land taxes) that are more narrowly designed.

The post Gentrification: An LVT Would Do That appeared first on Market Urbanism.

EDITED 3/3: I’ve edited the post to take into account pushback from the authors I’ve criticized. Edits are in boldface.

The touchstone of YIMBYism is the sensible idea that housing markets follow the normal patterns of supply and demand.

It’s true. But it’s a deuce to measure, because housing markets don’t have sharp boundaries – they bleed across distance, tenure, and unit type. Suppose 200 new one-bedroom apartments open up in Bushwick. Do those mostly steal business from similar buildings in their immediate neighborhood? Or do they compete with all types of housing throughout the tri-state area? Or something in between?

Further complicating the story, new investment in a neighborhood can have “amenity” effects (positive or negative). These don’t work like supply and demand, but in any specific case it’s hard to distinguish the amenity effect from the supply/demand effect.

Neighborhood effects

A few years ago, most economists and urbanists (myself included) believed

1. At the metro-area level, a broad increase in supply will lower rents.
2. At the neighborhood level, amenity effects dominate.

That is, we thought the [edited 3/20] West Palm Bushwick apartments had a mostly-regional supply effect but an entirely local amenity effect. The evidence for this included many gentrification anecdotes: new “luxury” apartment buildings were accompanied by rising rents.

Enter Xiaodi (and friends)

Around 2017, a few economists started testing these beliefs. Could there be local supply effects after all? And do new buildings accelerate or decelerate gentrification? To my surprise, Li and others found that yes, there do appear to be hyperlocal effects from supply and demand.

In Li’s case, identification is based on timing: tall New York buildings take several years to build, and the unpredictability of the end date allows us to treat the year when new condos become available as essentially random (whereas the application date is not random). Li finds that new housing lowers rent within a 500-foot radius, but doesn’t have a statistically detectable in the 500 to 1,000 foot “donut” beyond that.

What Li’s paper doesn’t ask or attempt to answer is a different, broader question, what is the citywide effect of new supply on rent?

Cards on the table, I remain skeptical that Li is interpreting her core finding correctly (she can’t fully rule out disamenities). But Holleran and Schragger aren’t expressing skepticism – they’re misinterpreting her answer to one question as the answer to a very different question.

Clearing up a little misunderstanding

I expect that randos on Twitter (don’t harass them) are going to misapply Li’s work, assuming that the hyperlocal effect – a 10 percent increase in housing supply within 500′ decrease rent by 1 percent – represents the entire supply effect. But when housing scholars are taking it out of context, we need a reminder.

Law professor Richard Schragger cites Li’s paper in footnote 177 here, using it as evidence that new housing supply has “very limited” effects on “overall rents” in “specific locations”:

Some studies indicate a decrease in overall rents from increased market-rate housing, [176] but there are others that indicate the opposite or very limited effects overall. [177]

Schragger, The Perils of Land Use Deregulation, U. Pa. L. Rev. (p. 164)

Sociologist Max Holleran misunderstands it in a slightly different way:

One New York City study showed that every 10 percent increase in market-rate housing in a given neighborhood would result in a 1-percent reduction in rental prices: a supply effect but notone that gives much optimism to public policy officials tasked with solving the affordability crisis.

Holleran, Yes to the City (p. 13)

Both authors appear to clearly think that Li’s estimate is evidence about the overall effectiveness of housing supply in lowering rent. But that’s simply not the question she’s asking; her paper offers no evidence one way or the other on what the market-wide rent effect of a market-wide 10% increase in housing supply would be. Both authors identify Li’s study as a localized one, but then interpret her findings pessimistically. That’s the reverse: this study (along with those of Mast, Pennington, and others) made economists more optimistic about supply effects.

Li’s study doesn’t tell us what would happen if new buildings were simultaneously completed every 1,000 ft through New York City. It instead asks what happens when one – literally one – building is completed.

When Schragger returns to the question Li is actually answering
a few paragraphs later (“Places with a relatively low cost of living may lose that attribute once enough wealthier people move in”), he doesn’t cite her work.

The paper you’re looking for

What papers should they have cited? My go-to estimate is
Albouy, Ehrlich, and Liu‘s: a 3 percent increase in housing stock lowers rent by 2 percent. Older estimates were often in the 1:1 range, which is more optimistic about supply. I dug into this in a recent blog post here, highlighting that broad affordability and unit-specific affordability usually come from totally different channels:

I confronted the hard truth that supply changes need to be very large to make a real dent in prices. If, as Albouy, Ehrlich, and Liu estimate, it takes a 3 percent increase in the housing stock to bring prices down 2 percent, then a major metropolitan area needs a massive increase in housing to make a real dent in rent.

Can we get there faster with composition effects? Let’s do a quick back of the envelope. First, assume population and housing stock would grow 10% each at baseline, with no resulting change in price.

–> Supply only approach: we add 40% to the housing stock without changing the mix of housing types. Result: 20% affordability gains.

–> Composition-only approach: we add 10% to the housing stock, but with the average price just 50% as high as the norm. Result: 5% affordability gains from lowering average price.

–> Mixed approach: we add 25% to the housing stock, with the average prices 75% as high as the norm. Result: 15% affordability gain (10% from supply, 5% from lowering average price).

How realistic are any of these scenarios? I’m not sure. But my takeaway is that supply remains the primary avenue for broad-based affordability gains. But the “you get what you pay for” and “only pay for what you want” channels are far more important for the affordability of a particular new housing unit.

Salim Furth, Is affordability just, “You get what you pay for”? Market Urbanism

There are questions worth asking about the impact of broad-based housing supply, and unresolved questions in the hyperlocal housing supply literature, but they’re different questions with presumably different answers.

The post Xiaodi Li, Misunderstood appeared first on Market Urbanism.

Takoma Park is a great place to live. It’s also the only jurisdiction in the region that has rent control.

As a result, one building here sold cheap: a 12-unit multifamily building at went under contract in late July for $1,280,000. That’s just $130 per square foot, less than a third as much as the dilapidated (although heroically marketed) house next door.

Outside the City of Takoma Park, inferior multifamily real estate commands higher prices. On the unincorporated side of Flower Ave – where commutes are longer, perceived crime risk is higher, and students are assigned to less desirable schools – two small, unrenovated multifamily buildings sold this year for $258 and $191 per square foot, respectively.

Now, it’s of course possible that the cheap 12-unit building is so cheap due to major maintenance issues or higher taxes. But it’s no surprise to find that decades of strict rent control would massively depress multifamily building values.

The upshot is that there’s an investment opportunity here. For just $1.3 million, you can buy this 25,000 square foot lot, scrape it, split it into three lots, and build a McMansion on each. If the Big Macs cost half a million to build and sell for $1.25 million each – we’re being conservative here – you’re looking at a clean million dollars in profit.

As far as I know, no-one has done that with a Takoma Park rental building. But plenty have been converted to condos (“very cool, hip, and chic”, fellow kids). And no one has built new multifamily within the city limits since rent control was instituted in 1980. Rent control is how affluent people outbid their working class neighbors for valuable urban land.

The post Rent Control is How the Rich Outbid Less-Affluent People for Valuable Land appeared first on Market Urbanism.