The Density Fallacy

A decade or so ago, an Economist senior editor named Frances Cairncross wrote a book called The Death of Distance which argued that, thanks to declining transportation and telecommunications costs, distance really doesn’t matter anymore. So it is ironic that another Economist writer, Ryan Avent, has written a new book arguing that “Distance is not dead” and proximity to other people still matters.

The Antiplanner previously mentioned this book, The Gated City (available only from Amazon in Kindle format for $1.99), a couple of weeks ago, but now I’ve finished reading it and can write a more detailed review.

Ryan’s book makes the following argument:

1. Denser cities are more productive
2. Due to NIMBYs, denser cities also have higher housing costs
3. Get rid of the NIMBYs, and cities will become even denser and more productive

Each of these steps is either flawed or deserves closer scrutiny than given by Avent’s short book. In support of the first point, Avent cites research showing that denser American cities have higher labor productivity. For example, a 1996 study uses 1988 data to show a correlation between the urban densities and the wages and salaries earned in the various states such doubling job density raises incomes by 6 percent.

Six percent isn’t very much, and in order to reach even this conclusion, the authors of the study left out states that had lots of mining industries, which depend more on mineral density than population density. If they hadn’t left those states out, Alaska would have been the most-productive state. Even if some industries do benefit from density, not all do.

Avent cites several other studies, but does not mention this one, which compares density with technological innovation, a field that–unlike mining–strongly depends on the personal contacts that supposedly are gained from density. The study did find a correlation between density and innovation, but it also found an optimal density and an optimal city size. In other words, at some point, more density is no longer better. In particular, the optimal urban area size is about 750,000 people and the optimal density is about 2,000 jobs per square mile–roughly Baltimore or Philadelphia. Baltimore and Philadelphia are far from the nation’s densest urban areas, and in fact Houston is right between them.

Another problem with Avent’s first claim is that most of the studies he cites compare the relationship between density and productivity at a single point in time. But the whole point of The Death of Distance is that this relationship is getting weaker all the time. This study, for example, found that the correlation between density and productivity declined from 41 percent in 1940 to 7 percent in 1980. It seems likely that, by the time any city can do anything about its density, the benefit of being denser will be negligible.

Avent’s second step is to blame the high housing costs in more productive cities on NIMBYs. While that is a convenient excuse, he should have looked closer. Why are NIMBY’s more active in these cities than in places like Houston or Atlanta? Just what is the process that allows NIMBYs to play such a strong role in these cities?

Avent’s examples focus on Boston, New York, the San Francisco Bay Area, and Washington. These are slow-growth regions characterized by having a lot of small jurisdictions most of which have zoned for low densities. The result is that high-density portions of these regions–inner Boston, Manhattan, San Francisco, the District–are hemmed in by cities and towns hostile to growth. This is very different from smart growth, which seeks to increase densities. Yet, ironically, the densities of these areas are all fairly high.

All of Massachusetts is in a city or town; there are no unincorporated lands and counties play no role in land-use planning. The San Francisco Bay Area has lots of unincorporated lands, but these have been placed outside of development by urban-growth boundaries. Washington is surrounded by Maryland and Virginia cities and counties, the county areas of which have limited development through large-lot zoning. Avent fails to recognize that these are three very different approaches that all happen to increase housing costs.

Perhaps the greatest flaw is in the third step of Avent’s reasoning. “I don’t wish to tell anyone where to live, and I certainly don’t want the government having its way in the matter,” says Avent. But if the NIMBYs and their urban-growth boundaries and large-lot zoning disappeared, these regions would all become less dense, not more dense. Housing costs would become more reasonable, and the areas might actually become more productive, but not because of density.

The trouble is that, although Avent doesn’t support coercive government policies, many other density advocates do. And Avent specifically cites transit-oriented developments as a way of increasing density without realizing the huge amount of coercion that is required for many of those developments, including prescriptive zoning, tax subsidies, and artificial restraints on low-density development so that some people will have little choice but to live in the higher densities.

Distance may not be dead yet (and Cairncross didn’t say that it was), but it is dying as a force in shaping modern urban areas. Anyone who plans a city based on Avent’s plea for density is relying on last-century’s economic models.


16 thoughts on “The Density Fallacy

  1. LazyReader

    Proximity is still important. No one uses a webcam to be with their drinking buddy. Denser cities have higher housing costs because of the augmented demand for attractive housing is limited in the city. All it takes is a small influx of new residents and housing prices increase by several percentage points. NIMBYism is just as ubiquitous in cities as in suburbs. San Francisco has fought attempts by developers to put anything new in the city. There has been immense debate as to the proposed Transbay Tower’s and transit station. Largely fighting attempts to demolish historic buildings or construct new ones particularly high rise buildings in active neighborhoods. Vancouver coined another term….. FRUIT is the acronym for Fear of Revitalization Urban-Infill and Towers. Cities really don’t need hyper saturated density; why are dense cities always put on the list of the most miserable places to live.

  2. transitboy

    Certainly if urban growth boundaries were abolished the region would become less dense, but at a loss of our precious remaining forest / agriculture land / whatever rural area is beyond the boundary. But I fail to see how allowing for smaller lot size – and therefore more dwelling units per acre – would cause an area to become less dense.

    I think distance is far from dying. Otherwise the home prices of areas in the Inland Empire of California (San Bernardino, Riverside, etc.) wouldn’t have declined far more than the home prices of areas near “where the action is”, Burbank, West L.A., etc. We’ve tried working from home before – and the bosses didn’t like it because they were paranoid their employees were goofing off. Why would they like it now?

    Overall, we can not be sure how dense regions and cities would become unless we removed all regulations – minimum lot size, minimum set back, minimum parking requirements, etc. Let’s pick an area and try it.

  3. Andrew

    100+ years of rural areas emptying out and connurbations building up, and 2000+ years of people not being tolerant of average commutes of over 30 minutes tell me distance is quite relevant.

    So do rising oil prices and the trend of housing prices as one approaches closer to major high-end employment destinations.

  4. Jardinero1

    “unless we removed all regulations – minimum lot size, minimum set back, minimum parking requirements, etc. Let’s pick an area and try it.”

    Houston/Galveston metro is as close as you will ever get in this world. It is a polyglot of edgecities.

  5. Dan

    Houston/Galveston metro is as close as you will ever get in this world.

    We’ve been over this a brazillion times here. Houston has de facto zoning. Developers couldn’t use “market” “forces” to densify in a residential neighborhood. That is not the model that transitboy asserted was needed.


  6. Jardinero1

    Dan, Just off the top of my head, I would point you to 77005, 77006, 77098, 77030, 77004, 77003, 77007, 77008, as locations where developers responding to pure market forces increased density. There is a very steady, market driven progression from single family to town house and multifamily/multiunit structures. It’s not all at once, it has taken decades and has happened a few lots at a time. The densification usually occurred in neighborhoods where deed restrictions had expired. You can check census records for the last three censuses to authenticate this.

  7. Jardinero1

    I would place special emphasis on 77006. This was an area where, land use wise, it was the wild west, absolutely no regulation whatsoever, and density increased dramatically between 1980 and 2010.

  8. Dan

    There are plenty of reasons, Jardinero, for the rampant sprawl, including de facto zoning such as setbacks and parking requirements and etc. Surely a top-ten topic on this board. There are indeed dense areas, which is not in question – but neither can developers develop willy-nilly.


  9. Rob Anderson

    Lazy Reader is simply wrong about San Francisco. In fact the Smart Growth, dense development thinking dominates our Planning Dept. and City Hall in general. Within the last several years, the city has okayed the Market and Octavia Plan (4440 new housing units and 10,000 people, 40-story residential highrises at Market and Van Ness), the Parkmerced Project (5,679 new housing units), and the Treasure Island project (19,000 people).

    The only thing that’s slowed down the dense development movement in SF has been the Great Recession, though our city is already the second most densely populated city in the country, after only New York City.

    The only thing

  10. Jardinero1

    Dan, I won’t argue all the reasons you stated for sprawl. I agree with you.

    I called attention to 77006 for the very reason that those conditions did not exist for the time period in question. There were no setbacks, zoning requirements, parking requirements or even deed restrictions for most of the zip code. The only constraint on development was sewer permits. Some blocks lacked adequate sewerage. The area densified quite nicely. Today it is considered one of Houston’s few dense walkable areas. It became that way willy nilly because of pure market forces.

  11. transitboy

    I don’t think Houston is as good examples as many say it is, because don’t a lot of the title deeds have restrictive covenants in them that function similarly to zoning? In fact, that’s worse than zoning because it’s a lot easier to change a zoning law than a covenant in a deed.

    Making urban areas walkable and transit-friendly doesn’t require the Manhattanization or San Franciscoazation of neighborhoods. Something as simple as having 2nd floor apartments over street level retail in suburban “downtowns” near rail stations will allow for choice and someplace to put grandma when she gets too old to drive while still allowing for the McMansions farther away.

  12. Jardinero1

    Transitboy makes a valid point about deed restrictions being an impediment to change. As I keep pointing out about zip code 77006, the deed restrictions expired in most subdivisions. In those neighborhoods where no deed restrictions exist you have a steady alteration from single dwelling to multi. Today there are 23000 persons in a 2.2 square mile area. In 1970 when most deed restrictions started to expire there were around 13000, mostly in single family dwellings. The zip code is a perfect case study for organic, market driven densification.

  13. Jardinero1

    In Texas, deed restriction run with the land for only forty to sixty years, depending on how they were written. Once they expire they have to be renewed by the property owners. In Houston, by the time they expire, many HOA’s are largely ineffectual about renewing them. Subsequently, the property can be developed withour regard to any deed restriction.

  14. Dan

    Jardinero, I agree. I think we are saying the same thing. To reiterate: I don’t care for Euclidean zoning. I also don’t care what happens to an area after restrictions are removed – because it will likely develop/redevelop in a way that is desirable to the majority of the population.

    Some design standards are OK – we drove thru Basalt yesterday afternoon to get to a conference and you could tell that they had design standards. And the new development looks great.

    Aside but kindasorta related, I’m here with a bunch of wildland fire people (among others). Randal would enjoy it.


Leave a Reply