One conventional way to think about cities is that people migrate to urban areas in order to make more money. This remains true today and the data is pretty clear that, if you live in an urban area, you're likely to make more money than if you didn't -- even if you're just as educated. You're also likely to make even more money if the city is really big (there's a correlation between income and city size). And you probably also walk a little faster given that, you know, time equals money.

But there are other reasons for wanting to live in a city. And probably the biggest is that they can bring us pleasure. Back in 2001, Edward Glaeser, Jed Kook, and Albert Saiz published this paper called, "Consumer City", where they showed that high amenity cities have tended to grow faster than low amenity cities. They also went on to demonstrate that, in high amenity cities, urban rents have tended to increase faster than urban wages, suggesting that there are other reasons for wanting to live in a city beyond simply wage growth.

Fast forward to today and Ed Glaeser has a new opinion piece in the New York Times arguing the following:

New York is undergoing a metamorphosis from a city dedicated to productivity to one built around pleasure. . . The economic future of the city that never sleeps depends on embracing this shift from vocation to recreation and ensuring that New Yorkers with a wide range of talents want to spend their nights downtown, even if they are spending their days on Zoom. We are witnessing the dawn of a new kind of urban area: the Playground City.

I saw City Observatory comment that they thought it was odd Glaeser didn't mention his previous work on the Consumer City. But I wonder if this is him not wanting to suggest that this was a trend decades in the making. Maybe instead, he wanted to position it as a dramatic and profound shift brought about by a pandemic. But how can you not ask this question: Is the Playground City truly something novel, or are we just following a trend line?

In my view, they're not all that different. The basic idea is that people like cities that are cool and fun, and so they will pay a premium to be in those kinds of places. This was true in 2001 and it's still true in 2023. The only difference today is that we now believe we have too much office space in some markets, and so we're trying to recalibrate around work vs. pleasure. But even with this, the work component of our cities isn't going to zero.

Photo by Jan Folwarczny on Unsplash

Shown this way, gas prices don't seem as crazy. In fact, we're only now returning to where prices were back in 2008.

That said, these swings do impact things. And it is interesting to consider how these impacts might be felt differently across different cities.

So here is one more chart from City Observatory looking at the average number of miles driven per person prior to COVID:

One way to think about this chart is that it generally speaks to built form. Compact cities with higher densities and greater access to public transport, generally translates into people driving less.

The result is something that City Observatory refers to as a "green dividend." Less driving, means you save money on cars and gas. And so when gas prices go up, so does your green dividend.

Of course, if you were to get really serious about calculating your green dividend, you'd also want to look at your housing costs, as land prices tend to decline as you sprawl outward.

Ultimately, this is a trade off between housing costs and transportation costs (both direct and indirect, such as the cost of your time).

But I think that there should be another dimension to this green dividend and that is the environmental benefits of less vehicle miles travelled. That too, of course, can be measured.

One conventional way to think about cities is that people migrate to urban areas in order to make more money. This remains true today and the data is pretty clear that, if you live in an urban area, you're likely to make more money than if you didn't -- even if you're just as educated. You're also likely to make even more money if the city is really big (there's a correlation between income and city size). And you probably also walk a little faster given that, you know, time equals money.

But there are other reasons for wanting to live in a city. And probably the biggest is that they can bring us pleasure. Back in 2001, Edward Glaeser, Jed Kook, and Albert Saiz published this paper called, "Consumer City", where they showed that high amenity cities have tended to grow faster than low amenity cities. They also went on to demonstrate that, in high amenity cities, urban rents have tended to increase faster than urban wages, suggesting that there are other reasons for wanting to live in a city beyond simply wage growth.

Fast forward to today and Ed Glaeser has a new opinion piece in the New York Times arguing the following:

New York is undergoing a metamorphosis from a city dedicated to productivity to one built around pleasure. . . The economic future of the city that never sleeps depends on embracing this shift from vocation to recreation and ensuring that New Yorkers with a wide range of talents want to spend their nights downtown, even if they are spending their days on Zoom. We are witnessing the dawn of a new kind of urban area: the Playground City.

I saw City Observatory comment that they thought it was odd Glaeser didn't mention his previous work on the Consumer City. But I wonder if this is him not wanting to suggest that this was a trend decades in the making. Maybe instead, he wanted to position it as a dramatic and profound shift brought about by a pandemic. But how can you not ask this question: Is the Playground City truly something novel, or are we just following a trend line?

In my view, they're not all that different. The basic idea is that people like cities that are cool and fun, and so they will pay a premium to be in those kinds of places. This was true in 2001 and it's still true in 2023. The only difference today is that we now believe we have too much office space in some markets, and so we're trying to recalibrate around work vs. pleasure. But even with this, the work component of our cities isn't going to zero.

Photo by Jan Folwarczny on Unsplash

Shown this way, gas prices don't seem as crazy. In fact, we're only now returning to where prices were back in 2008.

That said, these swings do impact things. And it is interesting to consider how these impacts might be felt differently across different cities.

So here is one more chart from City Observatory looking at the average number of miles driven per person prior to COVID:

One way to think about this chart is that it generally speaks to built form. Compact cities with higher densities and greater access to public transport, generally translates into people driving less.

The result is something that City Observatory refers to as a "green dividend." Less driving, means you save money on cars and gas. And so when gas prices go up, so does your green dividend.

Of course, if you were to get really serious about calculating your green dividend, you'd also want to look at your housing costs, as land prices tend to decline as you sprawl outward.

Ultimately, this is a trade off between housing costs and transportation costs (both direct and indirect, such as the cost of your time).

But I think that there should be another dimension to this green dividend and that is the environmental benefits of less vehicle miles travelled. That too, of course, can be measured.

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