Is Fun an Economic Development Strategy?

Posted by Carol Coletta on December 29, 2008

The things that make a city delightful -- like parks, historic sites, museums and beaches - disproportionally attracted highly educated individuals and experienced faster housing price appreciation, according to "City Beautiful," a paper published this month by Federal Reserve Bank of Philadelphia economists Gerald A. Carlino and Albert Saiz.

Does that suggest a different approach to stimulus spending?

The Boston Globe reported on the study today.  "Social scientists had long studied the growth of cities, but in the 1990s they started to notice something puzzling: Cities like Seattle and Austin were booming as new-economy hubs for no apparent reason other than the fact that the people responsible for the greatest innovations in high technology had chosen to live in places that were bike-friendly, had good music scenes, and allowed them to show up to business lunches in jeans," reported the Globe.  "Elsewhere, downtown enclaves in cities like Philadelphia and Providence had also begun to rebound, with new condominiums and coffee bars, even as the fundamentals of the local economies around them seemed to change little. What puzzled the experts was why, if the 'American central city generally did not 'come back' in the 1990s,' as Carlino and Saiz wrote in their paper, 'the 'beautiful city' within flourished.'"

The authors demonstrate that "investment by local governments in such 'recreational capital' - spending on parks, cultural institutions, sports facilities, and other public-private spaces - has succeeded in making cities like Charlotte and San Antonio more attractive to tourists. They compute that a 10 percent boost in such spending yields a 2.3 percent increase in leisure visits, and, if the correlation holds, will also increase growth."

Not surprisingly, the Globe sought out Joel Kotkin to argue the other side.  He still believes that low crime and good schools matter more than amenities.  I'd like to hear what others have to say on this.