The economics of density: evidence from the Berlin Wall

From Ahfeldt, Redding, Sturm,and Wolf:

The Berlin Wall provides a unique natural experiment for identifying the key sources of urban development. This research, for which its authors have recently been awarded the prestigious Frisch Medal, shows how property prices and economic activity in the east side of West Berlin, close to the historic central business district in East Berlin, began to fall when the city was divided; then, during the 1990s, after reunification, the same area began to redevelop. Theory and empirical evidence confirm the positive relationship between urban density and productivity in a virtuous circle of ‘cumulative causation’.

Via the excellent Samir Varma.

Comments

Golly: economists argue that capitalism and markets work better than socialism. Did you ever?

Agglomeration, dispersion and locational fundamentals. That's what this study is about. You can make a city more productive by allowing greater density - and its environmentally better too.

At a certain population number, cities are diseconomies of scale.

Environmental problems don't disappear by stacking people vertically. People generate waste in whatever configuration they are living.

I've seen charts suggesting that overall energy use (a great proxy for environmental burden) scales as population density to the 0.6th power in urban environments. Reasonable sample size. Good fit.

That is, you can double the population supported for only 50% more environmental cost through higher density.

dearieme is right, this is a 'correlation is causation' argument. Surely the authors are tongue in cheek or are desperate for publication.

Bonus trivia: Santa Fe math modeler Geoffrey West found that doubling a city only increases the cost of servicing the city by 15% (economies of scale). For this reason, it pays to have a big city vs a small city. Hence, for those of you inside the Beltway, DC, the citizens should petition Fairfax county to eliminate Fairfax City (and other such small cities), as they are inefficient.

I'm pretty sure, as one of the published (and paid) reviewers of West's book, that he said doubling a city's size increased the productivity of the city by 115%, the extra 15% being a bonus from economies of scale. If that's the same as what you just said, I apologize, but your comment was a little hard to figure out.

(Wikipedia on Geoffrey West): Among other things his work states that with the doubling of a city's size, salaries per capita will generally increase by 15%.[2]

You can square the circle by assuming a city bureaucrat will cost 15% more even if their "domain" or "amount of work" or "city" doubles in size.

So we are in fact on the same page, just different words.

I'd really just want more housing built and the road infrastructure optimized for bicycles and public transportation

You forgot to metnion the fourth author Nikolaus Wolf

Reagan: "Tear down this wall."
Trump: "We need more walls."
Me: I can't even.

You can conflate. Don't be so hard on yourself.

Hadrian: "Finally a Wall!"

Qin Shi Huang: " Is this thing ever going to be finished?"

Peter Madsen: Wall? What Wall?
Ulysses of Ithaca: Walls LULZ.
Roger Waters: Just another brick
Jerusalem: Whaaaaaaaaaaaaaa!

There may be a difference between keeping your citizens in and keeping outsiders out.

You mean machine gun towers aren't a desirable urban amenity?

That depends on which direction they are pointed.

Oh, yes, the relationship between "property prices and economic activity". Who knew? Alert the Fed!

Pop! Goes the weasel.

Another reason why the abolition of property zoning should be issue number one for American economists and libertarians.

However, I predict much more blabber on the minimum-wage and global free-trade.

And a bit of the Wall was just discovered in an area that is not undergoing development - 'A forgotten, 20-metre long section of the Berlin Wall has been discovered by accident next to the headquarters of Germany’s intelligence services, authorities confirmed on Monday.

When Ephraim Gothe (SPD), a district councillor in Berlin-Mitte, set out in June for a walk-and-talk event with voters in his local area, little did he know that he was about to make quite a discovery.

Gothe’s remit includes building and development, so he is normally more concerned with finding space for new structures, rather than digging out old ones.

On this occasion, though, he and his fellow walkers stumbled across a section of one of Berlin’s most famous historical structures. Hidden among the bushes on the edge of the abandoned Südpanke-Park stood a forgotten section of the Berlin Wall.' https://www.thelocal.de/20180814/new-section-of-berlin-wall-discovered-by-accident-in-a-park

Given verified pieces of the wall sell for $$$ on the kilo, how much is this discovery worth?

I was in Berlin in 1990 and was able to pay a small fee to walk up to a section of the wall and hack off a piece, which I gave to my parents (who remembered well when it went up). Had graffiti on it and everything.

Can I get a paper published by saying that when you build a wall between a business district and where the customers with money are, business goes down, and when you tear down the wall business goes back up again? I wouldn't even have to collect any data.

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