Wharton real estate professor, Mariaflavia Harari, recently published a paper that looks at the relationship between urban geometry (specifically compactness) and inner city commuting efficiency across 450 cities in India.
Consistent with previous research done in this space, she finds that people generally prefer compact cities and that they are willing to pay a premium for it. It increases overall welfare. Here’s an excerpt from her paper:
“My findings are broadly consistent with compact city shape being a consumption
amenity. All else being equal, more compact cities grow faster. There is also evidence that
consumers are paying a premium for living in more compact cities, in terms of lower wages and,
possibly, higher housing rents.”
So her recommendations for the Indian cities she analyzed was that they should relax land use restrictions to allow for more vertical / compact development and that they should focus on improving urban transport in order to offset some of the negatives externalities associated with sprawl. This is no different than the approach that many cities in the developing world are adopting or looking to adopt.
One of things that really stood out for me in her paper though is the way people perceive commuting:
“The loss associated with non-compact
shape appears to be substantial: a one-standard deviation deterioration in city shape, corresponding
to a 720 meter increase in the average within-city round-trip, entails a welfare loss
equivalent to a 5% decrease in income. This is considerably larger than the direct monetary and
opportunity cost associated to lengthier commutes. Less compact cities also appear to attract
fewer low-income immigrants, as captured by the share of slum dwellers.”
What this is saying is that we tend to overvalue the negatives of commuting, beyond the direct costs of gas, insurance, car payments, our time, and so on. We hate it so much that we also want to be compensated for the mental anguish. Here is that same idea said differently:
The estimated welfare loss from longer commutes appears to be large, relative to the immediate
time and monetary costs of commuting. This is consistent with the interpretation that
commuting is perceived as a particularly burdensome activity. The behavioral literature has
come to similar conclusions, albeit in the context of developed countries. Stutzer and Frey
(2008) find a large and robust negative relation between commuting time and subjective wellbeing,
using German data. They estimate that individuals commuting 23 minutes one way
would have to earn 19 percent more per month, on average, in order to be fully compensated.
So I guess I’m not the only one who thinks commuting and driving sucks.
BRANDON DONNELLY 