The Economic Effects of Density: A Synthesis

100 Pages Posted: 16 Jan 2018

See all articles by Gabriel M. Ahlfeldt

Gabriel M. Ahlfeldt

London School of Economics & Political Science (LSE) - Department of Geography and Environment

Elisabetta Pietrostefani

London School of Economics & Political Science (LSE), Department of Geography and Environment; University College London - Institute for Global Prosperity

Multiple version iconThere are 2 versions of this paper

Date Written: November 21, 2017

Abstract

This paper synthesises the state of knowledge on the economic effects of density. We consider 15 outcome categories and 209 estimates of density elasticities from 103 studies. More than 50% of these estimates have not been previously published and have been provided by authors on request or inferred from published results in auxiliary analyses. We contribute own estimates of density elasticities of 16 distinct outcome variables that belong to categories where the evidence base is thin, inconsistent or non-existent. Along with a critical discussion of the quality and the quantity of the evidence base we present a set of recommended elasticities. Applying them to a scenario that roughly corresponds to an average high-income city, we find that a 1% increase in density implies positive per capita net present values of wage and rent effects of $280 and $485. The decrease in real wage net of taxes of $342 is partially compensated for by an aggregate amenity effect of $221 and there is a positive external welfare effect of $52. Density has important positive amenity and resource implications, but also appears to create a scarcity rent, which harms renters and first-time buyers.

Keywords: compact, city, density, meta-analysis, elasticity, net present value

JEL Classification: R380, R520, R580

Suggested Citation

Ahlfeldt, Gabriel M. and Pietrostefani, Elisabetta, The Economic Effects of Density: A Synthesis (November 21, 2017). CESifo Working Paper Series No. 6744, Available at SSRN: https://ssrn.com/abstract=3102361 or http://dx.doi.org/10.2139/ssrn.3102361

Gabriel M. Ahlfeldt (Contact Author)

London School of Economics & Political Science (LSE) - Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://personal.lse.ac.uk/ahlfeldg/

Elisabetta Pietrostefani

London School of Economics & Political Science (LSE), Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

University College London - Institute for Global Prosperity ( email )

London
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
246
Abstract Views
1,159
Rank
233,019
PlumX Metrics