The Economic Effects of Density: A Synthesis

111 Pages Posted: 15 Jan 2019

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

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Date Written: January 2019

Abstract

This paper synthesises the state of knowledge on the economic effects of density. We consider 15 outcome categories and 347 estimates of density elasticities from 180 studies. More than 100 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 in per-capita present value terms (at a 5% discount rate), a 1%-increase in density implies an increase in wage and rent of $280 and $347. The decrease in real wage net of taxes of $156 is partially compensated for by an aggregate amenity effect of $100 and there is a positive external welfare effect of $60.

Keywords: city, Compact, density, Elasticity, meta-analysis, present value

JEL Classification: R38, R52, R58

Suggested Citation

Ahlfeldt, Gabriel M. and Pietrostefani, Elisabetta, The Economic Effects of Density: A Synthesis (January 2019). CEPR Discussion Paper No. DP13440, Available at SSRN: https://ssrn.com/abstract=3315371

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

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