The long-run effects of cholera on an urban landscape

How do geographically concentrated income shocks influence the long-run spatial distribution of poverty within a city? We examine the impact on housing prices of a cholera epidemic in one neighborhood of nineteenth century London. Ten years after the epidemic, housing prices are significantly lower just inside the catchment area of the water pump that transmitted the disease. Moreover, differences in housing prices persist over the following 160 years. We make sense of these patterns by building a model of a rental market with frictions in which poor tenants exert a negative externality on their neighbors. This showcases how a locally concentrated income shock can persistently change the tenant composition of a block.

Here is the new AER piece by Attila Ambrus, Erica Field, and Robert Gonzalez.  What might be the modern applications of this insight?

Comments

Everybody exerts externalities of one kind or another on all those one comes into contact with. If one can't see or taste or smell the externalities, they are nothing more than measures of our ignorance.

Put polemically, externalities are the last resort of a scoundrel. :-)

So, Dismalist... are you for or against travel bans preventing people from Wuhan with a fever from coming to the US? After all, you can't see or hear a virus.

Might be useful to consider this shock with Schelling's segregation model and apply to other situations where you have a shock that is spatial and what the long term sorting effects might be. Could be used to look at positive shocks as well as negative eg establishment of a university, a firm that is an industry leader, and then there is looking at zoning law changes etc

Right, the zoning analogy dovetails seamlessly with the post about zoning affecting housing supply the other day...the heavy hand of history as French historian F. Braudel wrote. Another example of the heavy hand (initial conditions being important) is that childhood poverty persists around the Potosi, Bolivia silver mines, long after slavery has been abolished, though my pet theory is that Pb, which is found near Ag, is perhaps retarding the children.

Bonus trivia: given that long term deflation seems to be the historical trend (see the speculative BofEng paper last month), might Au/Ag be good long term trades? Or even BTC? (gasp)

There's a modern application for penny pinching consumers: It's better to buy your home in a cheaper neighbourhood. The downside it may have had 200 years ago may still baselessly be priced in. Now the knowledge is out there, though, that may not be true any more. On the other hand, remember to take the study with a grain of salt as they only had n=1, that one fountain.

Five million people left Wuhan after the outbreak and before the quarantine. Where did they go, and will they return? This diary from Wuhan has been linked in a number of journal web sites: https://www.theguardian.com/world/2020/jan/31/the-city-is-suffocating-diary-of-the-wuhan-coronavirus-lockdown

An unintended consequence of the Fukushima nuclear power plant disaster in 2011 is that Japan is now rapidly building 22 coal-burning power plants to replace all its nuclear power plants: https://www.nytimes.com/2020/02/03/climate/japan-coal-fukushima.html

An effective, Machiavellian strategy for coal execs would be to astro-turf anti-nuke green lobbies with envelopes of cash.

The incentives are so obvious, I'm certain it's common. Decades from now, when historic meta-location data from today is hacked, there will be an avalanche of papers on 'strange bedfellows from the past.'

There are numerous reports of Russian Astro-turfing support for anti-fracking groups, particularly in Europe.

As China has now become the #1 oil importer, 13 million barrels per day, their geo-political footprints to ensure a reliable supply should become more obvious.

Well, Nigeria is certainly more in play than it was a month ago. Those devious Chinese might start doing more than just handing envelopes of cash to smooth oil shipments. Such as all expense paid trips to the Middle Kingdom for deserving Nigerians, along with a pain free introduction to the Chinese banking system, shielded as it is from prying Western anti-corruption eyes.

Hello, I am a Chinese princeling. I am presently in distress and under house arrest while my father is undergoing trial in Chongqing for corruption. The government has frozen all the family account and all our properties. To save the family from total bankruptcy I have managed to ship abroad the sum of US$7,000,000. I want you to receive the money and pay into your account for the family safely. I am offering you 30% for assisting me secure this money.

We do not need nuclear power. It is dangerous, umreliable and, after our safety and disposal procedures are accounted for, too expensive. We have oil, coal, hydropower and solar power, and they are, according to experts, enough to power the economy. We are tired of greedy tycoons trying to destroy our communities and the environment just to make another (billion) bucks. It is time for action!!

Thiago is just lazy now

"What might be the modern applications of this insight?" The insight is surely just a retread of Steve Sailer's point that a large part of the cost of being poor is that you have to live among poor people.

IOW, as if being poor isn't bad enough, your neighbors suck.

Stop zoning now - spread the suckyness around!

The zoning plague: my sunbelt city historically did not have a comprehensive zoning ordinance. That meant different residential, commercial, and industrial improvements were built in close proximity, one of the things which gave the city its unique character. That changed after WWII, when rapid growth and the development of the suburbs coincided: people didn't want to live near non-residential properties or residential properties that were considered inferior (or had "inferior" residents). Of course, this patter repeated across the U.S. and contributed to segregation by income and wealth as well as by race, ethnicity, and culture. I suppose the "shock" was the relative (relative to the 1930s) economic prosperity that followed WWII. This pattern is shifting somewhat today, as millennials prefer to live in an urban setting, including in a "new city" like my sunbelt city, a shift that is being repeated across the U.S. I suppose the "shock" contributing to this shift back to the former development pattern is a break by this new generation from their parents and grandparents. What triggered the break?

Millennials move to the big cities because that's where the jobs are. As soon as they start having kids they will want to move out into the suburbs - a vastly superior form of community for raising children.

As a hiring manager of software engineers for a couple of decades I can tell NO person wants to give up their home and community to move to Silicon Valley. I have been involved in acquisitions where zero out of 30 engineers refused to relocate, basically destroying the value of the IP.

Do you have kids?

I do.

I have walked around that neighborhood a couple of times, and remarked at how run-down it felt compared to its immediate surroundings. Now I know why!

An income shock from Cholera? It would interesting to compare to the shocks of war (poor guys that become soldiers come from the same place), an earthquake, or a large company closing.

Jaques Barzun's epic "From Dawn to Decadence" mentions the book "King Cholera". I scanned it years ago. Frightful.

There's a book named King Cholera, The history of a disease, by Norman Longmate (1866), is this one?

"The long-run effects of cholera on an urban landscape":

was this pun intentional or accidental? Clever, in either case.

As Artemidorus notes in his Oneirokritikon: "to be defiled with human manure that is flowing upon oneself from somewhere is inauspicious."

Affordable housing advocates have contended for some time that building more market-rate housing increases property values ("gentrification"). The YIMBY movement argues that increased supply must also lower prices. Empirical evidence is mixed.
This work helps to explain why the observations of the affordable housing advocates do not match the Econ 101 S/D argument.

'What might be the modern applications of this insight?' Redlining and restrictive covenants.
But the-good-and-the-bad-of-it is that the lower pricing attributable to social stigma is a benefit to those of lesser means, ie the stigma provides more affordable prices to those who are not bothered by this drawback.

It's hard to know which way causation runs. One would expect a poor neighborhood at that time to be more prone to cholera than an affluent one. What were the relative housing prices before the epidemic?

Comments for this post are closed