Economist Says Quality of Life Makes Cities Thrive

The future lies with those cities that can attract, keep, and develop highly skilled people, Matthew Kahn, an urban economist and professor at the University of California–Los Angeles, said at a recent event at the Federal Reserve Bank of Atlanta.

Speaking at a Public Affairs Forum at the Bank headquarters on October 22, Kahn examined the ingredients of sustainable economic development at the metropolitan level. At the urging of Atlanta Fed President Dennis Lockhart and others, several audience members who are experts in various fields chimed in on conditions in Atlanta.

The discussion centered on Atlanta's strengths and challenges as metro areas compete for highly mobile people and companies. A professor in UCLA's Institute of the Environment and the departments of economics and public policy, Kahn noted that Atlanta's strengths include pleasant weather, a major airport with direct flights to cities the world over, a reasonable cost of living, big-city culture, nature, and southern hospitality.

Among the concerns facing Atlanta that Kahn raised:

  • How will it, along with other southeastern cities, adapt to more intense heat and storms likely to come as a result of climate change?
  • Will crime continue to decline in the city center?
  • Can the city reduce a poverty rate that as of 2010 was 41 percent higher than that of the entire state of Georgia?
  • According to studies, Atlanta offers less upward mobility than many other major U.S. metro areas.

Investment in future human capital is critical
These concerns, Kahn said, suggest that Atlanta can do better if it increases investment in "the next generation's human capital," such as early childhood education and development. He noted, for instance, that unlike some states Georgia has no publicly funded prekindergarten programs for three-year-olds.

Kahn believes cities that thrive will be those that offer the best quality of life. The keys are job opportunities in growing, healthy industries; good education for children; and mobility and health care for senior citizens, Kahn said.

"Where do people vote with their feet to move to?" Kahn asked during an interview with Atlanta Fed Senior Economist and Vice President Paula Tkac. "And it's a good sign in Atlanta that talented, footloose people continue to come here."

Transit, defunct land uses, big data key for cities
To help ensure a continued in-migration, metro areas can focus on three particular ways, among many, to boost quality of life, Kahn said. One is transit-oriented real estate development. Certain people who don't want to drive frequently will embrace easy access to transit, he said.

"This sets off another virtuous cycle of restaurants, and upscale retail, and job centers agglomerating near the transit, and this not being about cars," Kahn added.

Second, a key role for the public sector in improving a city's attractiveness is identifying what Kahn calls "defunct land uses." Cities can clean up, for example, sites of shuttered steel mills or power plants, and then sell the properties for redevelopment. Finally, cities can use "big data" to, for instance, track high crime areas and use that information to better deploy scarce public safety resources.