Update on the Blog
While I think any dedicated reader of this blog knows this isn’t the kind of blog that gets updated on a regular basis, it will soon be a year since I’ve published my last blog post. So, I wanted to reassure any reader that this blog is alive and I have many ideas, if not time, to keep it alive for the foreseeable future.
Those ideas, however, will not be exclusively statistical. The observant reader will notice that the past three published posts have all been book reviews and this one will continue that trend. That doesn’t mean I haven’t been working or thinking about statistical ideas. They just haven’t intersected enough with the built environment to merit a post here. For example, I recently completed some notes on Thomas Lumley’s book on design-based inference and related software. Even though I haven’t written about them in this context, these methods are still relevant for studying the built environment and are used implicitly in both the previous post and this one!
However, this post won’t be about design-based inference. Instead, to allow myself the freedom to write about those ideas more easily and connect the different places where I write, I’ve started a Substack, like all the cool kids, from which I’ll share a bite-size blurb from whatever I’ve written and any appropriate links. My hope is that this will provide a centralized location from which to receive my writing with a nicer subscription interface than this website currently offers. Be sure to subscribe!
The Review
I can’t remember exactly where I heard of Alain Bertraud’s book, Order Without Design: How Markets Shape Cities. I think I found it while looking through book recommendations on an urbanist website and kept finding references to it in subsequent forums or threads. The mentions are well deserved! Bertraud has an impressive resume spanning several large urban planning projects across the world, but he also recognizes his field’s limits. ## Two Visions of Cities: Markets and Plans Bertraud wrote this book to argue that the view urban planners bring to cities – one of planning, control, and regulatory requirements – needs to incorporate the view urban economists bring – how cities manifest and function primarily as labor markets. As Bertraud says,
“We are facing a strangely paradoxical situation in the way cities are managed: the professionals in charge of modifying market outcomes through regulations (planners) know very little about markets, and the professionals who understand markets (urban economists) are seldom involved in the design of regulations aimed at restraining these markets… My aim is not to develop a new urban theory but to introduce already existing urban economics knowledge into urban planning practices.” (p.1)
Bertraud considers both types of work important. As an urban planner himself, Bertraud recognizes the direct impact planners have on cities, but throughout his career, he also learned that ignoring the underlying forces that drive land values, city/metro population growth and more would lead to poor policies. Bertraud bore witness to some of the most dramatic instances of urban planning in the history of the world. From the so-called “command economies” of the former Soviet Union and Communist China to newly developed cities in Algeria during the 60’s, Bertraud saw how urban policies could not only be written with great force and impact but also with equally great ignorance of how those rules would hamper cities’ subsequent development.
In Order Without Design, Bertraud details these experiences and gives a crash course in urban economics. Working through the abstract principles that helped him understand what he observed directly in the cities he worked in, Bertraud affirms the importance of both skill sets in setting the foundation for a successful city.
In my brief review, I’ll recount one of Bertraud’s more influential personal experiences, and dive into one of the economics lessons he presents as a tool for urban planning. I’ll then finish with how this book is setting the stage for my own thinking on this topic and my writing moving forward.
The Power of Urban Policies
To demonstrate the power of urban policies, Bertraud recounts his experience working for the World Bank in 1983 as part of a team conducting preliminary work to determine whether or not they should give the city of Shanghai a loan. As a tangential part of his assignment, Bertraud had been asked to collect some rudimentary housing data to inform potential housing reform. At the time, China was starting to emerge from a communist command economy in which state-owned companies provided housing, food, clothing, and even vacations. Since there was no market system in play, prices were not available to signal relative scarcity or abundance of goods. It was only through norms set by government institutes like the Land and Planning Bureau that land use, for example, was allocated. As Bertraud shares,
“I had an occasion to discuss norms with my Chinese colleagues and they were curious to compare their norms with Western ones. I remember a discussion about the number and size of barbershops that should be planned per 1,000 people in residential neighborhoods. I had to use my favorite response of economists to answer the question from my Chinese counterpart on planning barber shops norms in the United States: ‘It all depends!’” (p.12)
Bertraud goes on to share his perspective that these norms and rules are often the bread and butter of planners. Deciding how to subdivide land parcels, set street widths, and so on according to some norm or technical regulation is where they thrive. Having a standard to help determine how much land should be allocated for commercial uses for a given population density should remind readers of Donald Elliot’s A Better Way to Zone and his discussion on how city zoning districts might be set. However, Bertraud argues that by not using prices to signal the value of land, Chinese and Russian cities under or emerging from communist rule were unable to make the best use of their resources. They were forced to continue building out from their city centers because their regulations had no room to allow for new growth in areas where the rules had already been set for one kind of use or some previously established building. Bertraud uses the example of China as it incorporated market economy tactics of how re-developing land where there is strong demand can help stimulate greater efficiencies. The China of today, replete with skyscrapers and dense urban centers, would not be the economic giant it is without harnessing these efficiencies.
Figure 1: Image of Downtown Shanghai by Legolas1024 - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=86486380
Urban Econ 101
While harnessing land value to make more efficient use of land resources in cities was one lesson learned from his time abroad, Bertraud spends much of the book giving a basic crash course on the economics lessons he deems most impactful to urban planning practices. The first and foremost among them? Cities are what they are because they are labor markets. ### Cities as Labor Markets While I didn’t explicitly mention labor markets in the opening post for this blog, I did mention the economic efficiency of cities. It is that same economic efficiency, specifically in terms of offering a variety of labor demand, that Bertraud cites as the fundamental necessary condition for a city’s existence.
A city nucleus might have been created originally as a commercial post, a trading post, an administrative center, a military stronghold, or a centre of religious pilgrimage, but over the years the growth of a diversified labor force would be the only possible cause for the expansion of the original urban nucleus. (p.19)
In Bertraud’s view, since the labor market is the core reason for a cities’ existence, everything that supports or limits the labor market in turn supports or limits the city and its ability to grow or support its citizens. Bertraud gives several examples where urban planning strategies ignored the city’s underlying market economics—limiting a city’s growth potential or exacerbating the problems they were trying to solve from the start. These examples include government housing support in South Africa, rental support in New York City, and aesthetic-driven zoning ordinances in Paris. Bertraud walks through each of these efforts by their respective city (or country) government’s attempt, in turn, to shape the city environment through planning regulations. In each example, consequences that are unanticipated by the initial planning choices result from the underlying economic mechanisms driving market decisions in the city.
Bertraud’s argument with each of these examples is not to ignore design choices entirely but to incorporate and inform design with a more complete understanding of the urban economic principles that underlie each city’s housing, labor, or commuting markets.
How to use Urban Economics in Cities
After working through these various case studies and different economic principles, Bertraud finishes Order Without Design with a chapter that proposes how to operationalize these principles into the daily efforts of running a city. He proposes constructing a dashboard that monitors several dimensions of the city’s structural changes, mobility and affordability, each with various alerts or “blinking indicators” that signal the need for new policy or strategy. For example, by monitoring average commuting time, Bertraud argues that any meaningful increase should be met with a policy solution that, perhaps, more appropriately prices the scarcity of road supply so that alternative methods of transportation can be utilized more efficiently and congestion can be limited. This is the idea of a congestion or expressway tax, which Bertraud briefly discusses in the book as well.
Going further, Bertraud argues that monitoring these metrics could provide a measure of guiding project success and determining those projects with the greatest economic return on investment for the city. This effort must occur alongside a regular audit of the current planning regulations to assess if regulation changes are needed.
Philosophy of Design and More to Come
While I lack Bertraud’s experience in city planning, I share his general aspiration here. Incorporating sensible economic principles is a challenge in any political domain – see the failed efforts to introduce a carbon market in the U.S. – but that makes it no less worthy a goal. With that said, I have a few slight criticisms of the ideas put forth. First, I’d wager most cities are a little bit further along than he gives them credit for in trying to track down some of these data. I’ve been to city planning meetings and met with former mayor’s Chiefs of Staff, and I’ve seen them cite traffic data, census data, and more in their presentations as justification for change.
Second, in order to truly operationalize these data in the manner he suggests would require a non-trivial amount of work. Not only in terms of collecting, analyzing and applying the data appropriately but, most importantly, explaining to constituents how the data justifies various policy actions around the city. This is an area in which I do have some level of expertise. Working at Google has taught me something about what’s required to take a statistical idea and operationalize it. I can only imagine how much more difficult this job would be when one not only has to explain abstract ideas and mathematical models to technical stakeholders but to the lay public as well.
However, this isn’t to say that Bertraud is wrong. Whether we’re discussing the housing crisis or the rising number of traffic accidents, many of the largest problems the U.S. and other developed countries face arise from attempts to subvert or control market forces. The resulting shortages, inefficiencies, and misuse of resources lead to the problems we are challenged with as a public. It is because of this critical role that economics plays at the heart of these problems that I intend to take this blog in a more economic bent. This doesn’t mean topics will necessarily be any less statistical. After all, many of the economic metrics Bertraud cites above are estimated using methods like those I work through in these notes. Much like physics, economics needs statistical methods to provide empirical evidence to justify its theories.
So it will be both economic theory and statistics that I’ll turn my attention to for the near future. I’m currently working through MIT’s introductory class on Microeconomics and plan to read through O’Sullivan’s text on urban economics as well as Brueckner’s lectures. I’m planning my next series of blog posts to summarize my key learnings from these resources. Stay tuned for all this and more!
Acknowledgements
Thanks to Paul Haluszczak for reading and offering comments on this post.