The economic history of one NYC block

by on August 29, 2015 at 1:12 am in Economics, History, Law, Uncategorized | Permalink

Here is the academic paper, by William Easterly, and Laura Freschi, and Steven Pennings:

Economic development is usually analyzed at the national level, but the literature on creative destruction and misallocation suggests the importance of understanding what is happening at much smaller units. This paper does a development case study at an extreme micro level (one city block in New York City), but over a long period of time (four centuries). We find that (i) development involves many changes in production as comparative advantage evolves and (ii) most of these changes were unexpected (“surprises”). As one episode from the block’s history illustrates, it is difficult for prescriptive planners to anticipate changes in comparative advantage, and it is easy for regulations to stifle creative destruction and to create misallocation. If economic growth indeed has a large component for increases in productivity through reallocation and innovation, we argue that the micro-level is important for understanding development at the national level.

It is a block on Greene St., near NYU, and so a section of this paper focuses on whorehouses.  History made them do it.  Here is the interactive site.  I am in general a big believer in this kind of micro-history, which remains undervalued in the economics profession.

The pointer is from Kottke.

1 Lay Ropez August 29, 2015 at 1:38 am

Such coarse nomenclature.

2 E. Harding August 29, 2015 at 1:42 am

“As one episode from the block’s history illustrates, it is difficult for prescriptive planners to anticipate changes in comparative advantage”
-But it’s pretty easy for planners to change comparative advantage, as well as to post-ticipate changes in comparative advantage. North Korea has anticipated changes in its comparative advantage for years; the only reason its export industry doesn’t boom is because its government doesn’t really want it to.

3 E. Harding August 29, 2015 at 1:46 am

.nyc is a TLD? Also, couldn’t they have designed that site for easier and more intuitive navigation?

4 Urso. August 29, 2015 at 8:05 am

Economists can’t understand a single block, but we should trust them implicitly to decide the fate of nationstates.

5 Cassian August 29, 2015 at 9:51 am

If you ask a physicist to describe completely turbulence in the glass of water, it will be comparably hard. But engineers do what they do with physics and without much trouble.

6 The Engineer August 29, 2015 at 10:19 am

Economists ain’t engineers.

7 The Economist August 30, 2015 at 3:41 am

Engineers aren’t Economists

8 mikkos August 29, 2015 at 10:20 am

….are u some kind of anarchist?? ya can’t have people just doin’ whatever they want– ya need an elite class of PhD intellectuals to direct things. economists in particular have an astounding track record of impeccable forecasting and consistent, error free
economic guidance to the ignorant masses

9 celestus August 29, 2015 at 5:42 pm

Pretty sure Bill Easterly isn’t a big believer in trusting economists implicitly to decide the fate of nation states.

10 Ray Lopez August 29, 2015 at 1:27 pm

In NYC, the “regulations to stifle creative destruction” and “surprises” in the 20th century amounted to the whims of one man: Robert Moses, the city planner extraordinaire. I’m reading Robert Caro’s hatched job of a biography now, but reading between the lines Moses was quite a guy.

11 Los Ranchos August 29, 2015 at 1:39 pm

In physics quite different theories are useful at different scales. A very important question is bi-directional cause and effect between theory scales.

12 RJHJR August 29, 2015 at 1:58 pm

I love this type of economic history. I don’t care if it has any value to economics in general or not; I want to read more. I’d love to see someone do a similar study of a block of 14th street here in D.C. Or Martin Luther King Ave. Big chair?

On the other hand, the web site was irritating. I went through the introductory section and then downloaded the PDF. The PDF was just as “interactive” as the web site but a lot easier to navigate and read.

An “interactive” web site has value when you don’t know how individual readers want to aggregate their data. In that case, you put your data in a database and create web tools that allow the reader to specify which variables should form the axes of the charts, or tables, or however you are displaying data. Alternately, the data may be continuously updated, in which case having the web site build the data displays on the fly ensures that they always include the most recent updates.

In this case, the authors had a story that they wanted to tell, and they knew what information supported the story and how they wanted to display it. The data is not going to be continuously updated. There are no advantages to “interactivity.” The web site design they chose is harder to read and search than a continuous series of paragraphs interspersed with charts and maps.

The traditional academic paper schema was designed to solve readers’ navigation and search problems in printed media. With modifications, it’s still the best schema for presenting this type of data on computers. If anything, computers have made the academic paper schema even more successful by adding keyword search, which turns the paper into a searchable database and allows interactive, on-the-fly data search.

13 eric August 29, 2015 at 8:40 pm

An interesting fact I’ve observed in housing is that when areas become less wealthy in aggregate, as in Southern California, the high price of real estate actually increases. That is, the value of real estate rises when the basic wealth of the region falls.

South California does poorly on many scores, and the U-haul rates from and to there suggest it is generally poor in the US. Yet, housing prices remain strong, especially in good neighborhoods.

14 mulp August 29, 2015 at 8:41 pm

“The sky-high prices and luxury culture of Greene Street would come as a great surprise to urban planners who called the block defunct in the 1950s;…”

The intention of the urban planners was to increase the utility value of the block, so the only thing they might be surprised at is how high the imputed utility value of the block is today.

Note that the front runner for the Republican presidential nominee is a self proclaimed genius urban planner.

Perhaps the reason so many conservatives dislike Trump is they consider urban planners next to evil, and they understand that many voters will class Trump as an evil urban planner for personal profit in the billions.

15 Merijn Knibbe August 30, 2015 at 4:23 am

Yes!

Two other studies like this are the (very famous) “Industrialisierung und Volksleven” by Rudolf Braun (Industrialization and daily life), https://www.google.nl/search?q=Rudolf+Braun+volksleben&ie=utf-8&oe=utf-8&gws_rd=cr&ei=m7jiVeHcF8TW7AaqyLCAAQ which is as far as I know also translated into english:

Less well known but as good is “Leven in Maasland” (“living/life in Maasland”, a small more or less coastal village in the Netherlands) by D. Noordam, here a laudatory review: https://www.google.nl/search?q=Leven+in+Maasland&ie=utf-8&oe=utf-8&gws_rd=cr&ei=zrjiVcuCKoWb7AbgmKTAAg

I also mention ‘Voor een handvol stuivers. subtitle (translated) “working, earning and spending of farmers, labourers and the Mittelstand in the Groningen clay soil area, 1770-1860’ by Richard Paping which does the same thing using the system of national accounting on a regional scale. National accounts are of course a bottom up system which aggregates individual transactions and is, as such, contrary to DSGE models, truly micro founded. Which means that Paping had to go through, literally, thousands of deeds and accounts and whatever to be able to sketch the economic life of his area (clay soil area of Groningen, north of the Netherlands). I can assure you: this brings onei n close contact with the actual people (up to accounts of a widower which even included some expenses ‘pour faire l’amour’ – as I understood the entry was in French in the original Dutch source, for whateve reason). http://www.abebooks.co.uk/9789050280563/Voor-een-handvol-stuivers-Werken-9050280560/plp

16 Nikhil August 30, 2015 at 9:02 am

After moving to Philadelphia’s distinctive Midtown Village, I discovered a thesis paper of a UPenn grad student on the development of my neighborhood from red light district to upscale, restaurant-studded (and still undervalued) area:
http://repository.upenn.edu/cgi/viewcontent.cgi?article=1174&context=hp_theses

Much of the work was done by real estate developer Tony Goldman, a self-described “long-term investor in the revitalization of historic neighborhoods,” who also rebuilt neighborhoods in SoHo and Miami:
http://www.nytimes.com/2012/09/16/nyregion/tony-goldman-real-estate-visionary-dies-at-68.html

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