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WSJ: Suburbs a Mile Too Far for Some Demographic Changes, High Gasoline Prices May Hasten Demand for Urban Living Messrs. Boseman and Wells embody trends that are dovetailing to potentially reshape a half-century-long pattern of how and where Americans live: The drivable suburb — that bedrock of post-World War II society — is for many a mile too far. In recent years, a generation of young people, called the millennials, born between the late 1970s and mid-1990s, has combined with baby boomers to rekindle demand for urban living. Today, the subprime-mortgage crisis and $4-a-gallon gasoline are delivering further gut punches by blighting remote subdivisions nationwide and rendering long commutes untenable for middle-class Americans. Peter Gordon contends that urbanism correlate less with gas prices than crime rates: Harry Richardson and Soojung Kim and I presented a conference paper earlier this year where we looked at the cycles of suburbanization-exurbanization since 1969. Our Figures 2a-2g and Tables 3-4 and 3-5 show the “rural renaissance” of the early 70s and how that reversed as the price of gasoline spiked in the early 1980s. But the following cycles of reversal of reversal and so forth did not track gasoline prices. The largest metros came back again in the late 1990s when gas prices were very low. The suburbanization-exurbanization-ruralization cycles that we found tracked the ebb and flow of crime rates better than gasoline prices. It makes sense to me. Those who prefer urban living had possibly been discouraged by higher urban crime rates of the past. Nonetheless, gas prices will have some long-term effect on where rational people choose to live. If crime continues to subside, could this be the perfect storm? Demographics + higher transportation costs + low crime –> high degrees of urbanization over the next decade. Let’s hope cities welcome the […]
The economics blog, Knowledge Problem on how prices effect individuals incentive to conserve: Conservation of resources: Prices change everything Steven Stoft, at the EU Energy Policy Blog, observes that market driven conservation is a slow process: Conservation is the main way consumers respond to high market prices. When price goes up, consumption comes down–but it takes a while for the full price effect to play out. The market eventually shifts demand in the long run, as individuals adjust their behaviors in reaction to higher prices. To what extent will sustained high gas prices cause people to shift their location preferences towards a less gas-dependent urban lifestyle? (assuming high prices are here to stay) How long will it take for us to see a difference in where people prefer to live? Graph from the NY Times