Density is a key factor in innovation and regional economic growth. Over the past couple of weeks, I’ve looked at density of human capital, the creative class, and high-tech innovation. Instead of measuring these factors on a per capita basis, we looked at them in terms of land area, or per square kilometer.

The first map below plots the top 10 metros on each of the basic density measures, charting human capital, creative class workers, artistic and cultural creatives, patented innovations, and high-tech workers per square kilometer.

The second map plots the top 10 metros on human capital density, creative class density, artistic and cultural density, high-tech and innovation density, all relative to their population densities.

The maps are striking. They show how spiky and bicoastal this geography is. The highest-density places are clustered in the East Coast Bos-Wash region and in the West Coast in the regions around Silicon Valley and Greater Los Angeles. Outside of these locations, only Chicago, Boulder, and Ann Arbor rank highly on multiple measures. It’s worth pointing out the prominence of Ann Arbor on the list, the home of the University of Michigan located just outside Detroit. Its relative concentrations of creative class density and human capital density rival the most innovative and propulsive regions of the country. Clearly, there are bright spots within the Rustbelt economy, even right next to some of its most intractable problems of economic collapse. Detroit does not rank better than 100 on any of the measures conducted.

This analysis is only a starting point. There is much more to do. Metropolitan areas – which span core cites and their suburbs – come in all shapes and sizes. Some are more concentrated at the core, others more sprawling. Our ongoing research at the MPI is developing new metrics and indicators of density within metropolitan areas – comparing central cities or urban centers to suburbs and probing the distribution of density across Census tracts and zip codes. Stay tuned for more.

My past several posts have looked at the density of key economic and demographic factors across America’s metropolitan regions. Today, I turn to the density of high-tech industry and of innovation. Long ago, the great economist Joseph Schumpeter highlighted the role of innovation in powering the rise of new industries, the creative destruction of existing ones, and the growth in prosperity of economies. Robert Solow won the Nobel prize for identifying the role of technology in economic growth and development. Paul Romer has shown how the accumulation of scientific and technical knowledge is the central force in endogenous economic growth. Michael Porter and AnnaLee Saxenian, among others, have shown how clusters of high-tech companies and other economic assets have propelled the rise of new firms like Intel in semiconductors, Apple in computing, Genetech in biotech, Google in search, and countless others that have introduced not just new innovations but whole new industries and epochs of regional growth.

Patents are the conventional measure of innovation. Despite their various weaknesses, patents represent a systematic, quantitative measure of innovation and are used by economists as the single dominant measure of innovation. But, as with other measures, economists tend to measure them on a per capita basis.

Innovation Density: Our measure of innovation density is patents per square kilometer. The map below shows the density of innovation based on this measure. The median density of innovation is .008 patents per square kilometer. The densest metros have more than .4 patents per square kilometer, while the least dense have fewer than .001.

The chart below shows the top 10 metros in terms of density of innovation. The density of innovation in these metros ranges from 25 to more than 100 times the national norm.

Source: USPTO 2008.

It’s not surprising that San Jose (Silicon Valley) tops the list with .831 patents per square kilometer or that nearby San Francisco is second with .446 patents per square kilometer. Los Angeles is third with .41 patents per square kilometer, followed by Trenton, Bridgeport-Stamford, Connecticut, Greater Boston, Boulder, Greater New York, Ann Arbor, and New Haven.

The density of patents is closely associated with key regional economic outcomes such as regional wages (.668), regional incomes (.588), and regional economic output (.459). (As usual, I point out that these correlations only suggestion associations between variables. They do not specify any causation or make any claims about the direction of causality. Other intervening variables may come into play).

The scattergraph above plots the relationship between innovation density and regional wages – a key indicator of regional wealth and productivity. The close adherence of the observations to the fitted line suggests a close association between the two. Anchorage, Washington, D.C., Boulder, Trenton, Fremont, Napa, and, of course, San Jose are all located above the line – showing even higher wages than their density of  innovations would predict. Most of these places are among the most innovative in the country.

High-Tech Density: I now turn to the density of high-tech employment. Our measure of high-tech density is the  number of high-tech workers per square kilometer.

The next map shows the density of high-tech employment for U.S. metros. The median density of high-tech employment across all U.S. metros is less than one (.901) high-tech worker per square kilometer. The densest metro has nearly 40 high-tech employees per square kilometer, while the least dense have fewer than .1 high-tech workers per square kilometer.

The next chart shows the top 10 metros in terms of density of high-tech workers. The density of high-tech workers in these metros ranges from 15 to 42 times the median for all metros.

Source: Bureau of Labor Statistics 2008.

Los Angeles tops the list with 39 high-tech workers per square kilometer. San Francisco is next with 30, followed by Trenton (29), San Jose (Silicon Valley) (24), New York (23), Bridgeport-Stamford (22), Greater Boston (21), Greater Washington, D.C. (19), Boulder (17), and New Haven (14).

The next map shows the density of high-tech employment compared to what we’d expect given their population density based on a residual analysis.

The  next chart shows the 10 metros which have the highest density of high-tech employment compared to what their population density would predict.

Source: Bureau of Labor Statistics 2008.

Now San Jose (Silicon Valley) tops the list, followed by Boulder – which BusinessWeek recently named the best place for high-tech startups – and Greater San Francisco. Trenton is fourth followed by Greater Washington, D.C.; Greater Boston; Los Angeles; Huntsville, Alabama; Bridgeport-Stamford; and Seattle.

High density is closely correlated with regional wages (.604), regional income (.509), and regional economic output (.372). (As usual, I point out that these correlations are only a sign of associations between variables. They do not necessarily mean there is causation and I do not make any claims about direction of causality. And, of course, other intervening variables may come into play).

The scattergraph below plots the relationship between high-tech density and wages. San Jose, Washington, D.C., and San Francisco are all well above the line.

My next post sums up the key findings of our density analysis.

My past several posts have looked at the density of key variables across America’s metropolitan regions. Today, I turn to the density of a subset of the creative class – the density of artists and cultural creatives. My own earlier research, which landed me on “The Colbert Report” of all places, showed that metros with higher proportions of employed artistic and cultural workers also have higher incomes, higher rates of innovation, and higher housing prices. The reason is not that artistic and cultural creatives are more likely to launch new businesses or invent new products, but that their location in an area signals that a community is open to diverse groups of people who are open to new ideas and self-expression. The concentration of artistic and cultural creatives in a place is a sign of a local ecosystem that is more conducive to generating new ideas and mobilizing resources around them.

Our measure for the density of artistic and cultural creatives is the number of artistic and cultural creative workers per square kilometer. The map below shows the density of artistic and cultural creatives across U.S. metro regions. The median density of artistic and cultural creatives across all U.S. metros is only .08 per square kilometer. The densest metros have more than four artistic and cultural creatives per square kilometer, while the average metro has less than a tenth of a cultural worker.

The chart below shows the 10 densest metros in terms of artistic and cultural creatives. The density of these metros ranges from 12 to almost 40 times the national norm.

Source: Bureau of Labor Statistics 2008.

Topping the list is Los Angeles with 4.7 artistic and cultural creatives per square kilometer, followed closely by New York with 4.4 per square kilometer. San Francisco (2.2), Bridgeport-Stamford (1.6), Greater Boston (1.5), Trenton (1.5), Greater Washington, D.C. (1.4), Honolulu (1.3), Milwaukee (1.2), and Chicago (1.2) round out the top 10.

The next map shows the density of artistic and cultural creatives compared to what their population density would predict based on a residual analysis.

The next chart lists the 10 metros which have the highest density of artistic and cultural creatives compared to what we’d expect based on their population density.

Source: Bureau of Labor Statistics 2008.

Los Angeles again tops the list, followed closely by greater New York. Greater Washington, D.C. is third, followed by San Francisco and Minneapolis. But now Santa Fe (a center for visual artists), Nashville (a center for music), Madison, and – surprisingly – Salt Lake City enter the top 10 alongside Greater Boston.

So to what degree is the density of artistic and cultural creatives associated with key regional economic outcomes? Our correlation analysis suggests that the connection is strong. The density of artistic and cultural creatives is closely correlated with regional income (.614), wages (.622), output (.533), and innovation (.431). (As usual, I point out that these correlations point only to associations between variables. They do not specify any causation or make any claims about the direction of causality. And, of course, other intervening variables may come into play).

The scattergraph above plots the relationship between the density of artistic and cultural creatives and regional wages – a key indicator of regional wealth and productivity. The fitted line is reasonably steep and suggests a close association between the two. San Jose (Silicon Valley), San Francisco, Greater Washington, D.C., the Trenton area of Central New Jersey, Boulder, Ann Arbor, and L.A. all are located above the line – showing even higher wages than their high density of artistic and cultural creatives would predict.

In my next post, I turn my attention to the density of high-tech innovation.

In this, the third in my series of posts on density, I look at the density of the creative class. More than 35 million Americans are members of the creative class, making up roughly a third of the workforce. The creative class is a measure of human capital that looks at what occupations people work at rather than whether they earned a college degree. The creative class includes workers in science and technology, business and management, health care and law, and arts, culture, design, media, and entertainment.

The map below shows the density of the creative class across U.S. metros. The median density across all U.S. metros is roughly 8.4 creative class workers per square kilometer. The densest metros have more than 140 creative class workers per square kilometer, while the least dense have less than one.

The chart below shows the 10 metros with the highest densities of creative class. The creative class density of these metros ranges from eight to almost 20 times the national norm.

Source: Bureau of Labor Statistics 2008.

Topping the list is the greater Trenton area of central New Jersey (Princeton is within commuting distance to New York and Philadelphia) with 149 creative class workers per square kilometer. Greater New York is second with 147 creative class workers per square kilometer. Los Angeles (145), San Francisco (109), and Boston (100) each have 100 or more creative class workers per square kilometer. Bridgeport-Stamford (93), Greater Washington, D.C. (81), Honolulu (77), Philadelphia (75), and Chicago (74) round out the top 10.

The next map shows creative class density compared to what we’d expect based on population density. It’s based on a residual analysis which compares creative class density to population density.

The next chart shows the 10 metros with the highest creative class densities relative to their population density.

Source: Bureau of Labor Statistics 2008.

The Trenton area of Central New Jersey again tops the list, but now it is followed by New York, Los Angeles, Boston, Washington, D.C., San Jose (Silicon Valley), Boulder, San Francisco, Bridgeport-Stamford, Ann Arbor, Durham, and Minneapolis. This chart again shows the high ratio of creative class workers to population in leading college towns.

So to what degree is creative class density associated with key regional economic outcomes? Our correlation analysis suggests that creative class density is closely correlated with regional wages (.59), income (.57), economic output (.496), and innovation (.405). (As usual, I point out that these correlations point only to associations between variables. They do not specify any causation or make any claims about the direction of causality. Other intervening variables may come into play).

The scattergraph above plots the relationship between creative class density and regional wages – a key indicator of regional wealth and productivity. The fitted line is reasonably steep and suggests a close association between the two. San Jose (Silicon Valley), San Francisco, Greater Washington, D.C., Greater New York, Seattle, Boulder, Ann Arbor, Denver, and Durham all are located above the line – showing even higher wages than their creative class density would predict.

My next post turns to a subset of the creative class, examining the density of artistic and cultural creatives for U.S. metros.

It’s now well-accepted that the concentration of highly skilled people or of human capital is a key element of economic growth and development. Jane Jacobs argued that the clustering of talented and energetic people in cities is the fundamental driving force of economic development. The Nobel prize-winning University of Chicago economist Robert Lucas formalized Jacobs’ insights, showing that human capital externalities, or what have been called Jane Jacobs externalities, are indeed the key factor in economic growth and development.

But most economists measure human capital on the basis of population – the conventional measure being the percentage of adults with a bachelor’s degree or above. Our analysis here takes a different approach, getting at the density of human capital by looking at the number of adults with a bachelor’s degree per square kilometer.

The map below shows the human capital density of U.S. metros. The median human capital density across all U.S. metros is roughly 7.4 people per square kilometer. The densest metros have more than 100 degree holders per square kilometer, while the least dense have less than one.

The chart below shows the 10 densest metros in terms of human capital. The human capital density of these metros ranges from 10 to 20 times the national norm.

Source: U.S. Census Bureau 2008.

It’s not surprising that Greater New York tops the list with 156 college graduates per square kilometer. The figure is not just for Manhattan or New York City where such density would be expected, but for the entire metro area, including suburbs in Long Island and New Jersey. Los Angeles places second, surprisingly, with 123 college graduates per square kilometer. San Francisco is a close third with 122 college graduates per square kilometer. Two additional metros have 100 or more degree holders per square kilometer: Bridgeport-Stamford, Connecticut (104), and the Trenton area in central New Jersey (100), which is the state capital, includes Princeton and is approximately equidistant between the Philadelphia and New York-Northern New Jersey commuter sheds. Greater Boston (84), New Haven (75), Greater Washington, D.C. (74), Honolulu (73), and Chicago (69) round out the top 10.

The next map shows the human capital density of U.S. metros compared to what their population density would predict, based on a residual analysis.

The next chart shows the 10 metros with the highest residual value – that is, the highest human capital density compared to what we’d expect based on their population density.

Source: U.S. Census Bureau 2008.

Now San Francisco tops the list. Bridgeport-Stamford is second – a long-time upper-crust commuter suburb of New York, it now increasingly finds itself home to high-end financial operations. It’s followed by Greater Washington, D.C. and Greater Boston. Silicon Valley now makes the list – in seventh place. But New York falls from first to eighth. A number of college towns make the list – Boulder and Ann Arbor – as well as Barnstable (a community composed chiefly of highly educated retirees and commuters on Cape Cod) and the Trenton area of New Jersey.

So to what degree is human capital density associated with key regional economic outcomes? Our correlation analysis suggests that human capital density is closely correlated with regional income (.615), regional wages (.619), regional economic output (.475), and innovation (measured as patents, .464). (As usual, I point out that these correlations point only to associations between variables. They do not specify any causation or make any claims about the direction of causality. And, of course, other intervening variables may come into play).

The scattergraph above plots the relationship between human capital density and regional wages – a key indicator of regional wealth and productivity. The fitted line is reasonably steep and suggests a close association between the two. San Jose (Silicon Valley), San Francisco, Washington, D.C., Greater New York, Boulder, Ann Arbor, and Durham are all located above the line – showing even higher wages than their human capital density would predict.

In my next post, I turn to a related measure for human capital. But instead of measuring it based on educational attainment, we look at the work people actually do, examining the density of the creative class of people employed in science and technology, business and management, health care and law, and arts, culture, design, media, and entertainment.

Density is a key factor in innovation and economic growth. The dense geographic clustering of economic activities was true of the industrial behemoths of the past – steelmaking in Pittsburgh and automotive production in Detroit. And, despite advances in communications technology, it applies even more so today: from high-tech firms in Silicon Valley to film producers in Los Angeles and recording studios and record labels in Nashville. There’s no doubt: The geographic concentration of firms, industries, technologies, people, and other economic assets plays a powerful role in innovation and economic growth.

The great economist Alfred Marshall long ago outlined the dynamic of agglomeration – that is, the process by which co-location of related economic activities and assets shapes industries and economic development. Jane Jacobs showed us how the clustering of diverse groups of people, firms, and industries in cities provides the basic engine of innovation and new product development. Harvard’s Michael Porter has shown how clusters of related industries, customers, and suppliers power innovation and growth. Density makes it easier for people and firms to interact and connect with one another, and it reduces the effort, friction, and energy that’s used to make these connections. Density increases the speed at which new ideas are conceived and diffused across the economy, accelerating the speed with which new enterprises and new industries are created.

The curious thing is that most of our key economic and innovation measures don’t take density explicitly into account. Economists, economic geographers, and other social scientists tend to normalize the numbers they’re interested in by population, representing the data on a per person or per capita basis. This approach has led to all sorts of important empirical insights and findings. But since density itself is an important factor in certain kinds of economic growth, it’s useful and important to develop indicators that take it explicitly into account. For that, we need to look at the distribution of activities and key variables across space. So instead of measuring them on a per capita basis, we can examine them on the basis of land area or per square kilometer.

A while back, I posted about this analysis by Rob Pitingolo (h/t: Don Peck) which looked at the density of human capital. Pitingolo developed an intriguing metric that he called “educational attainment density.” Instead of measuring human capital or college degree holders as a function of population, he measures it as a function of land area – that is, as college degree holders per square kilometer. He did this for the primary urban centers of metropolitan areas.

Inspired by this, I worked with my Martin Prosperity Institute colleague Charlotta Mellander to build indicators of density for a wider range of key economic and demographic variables. We conduct our analysis at the metropolitan level. It’s important to point out that there are limits to using the metropolitan area as a unit of analysis. Metropolitan areas combine core cities with their suburbs and come in all different shapes and sizes. Some are more concentrated at the core (like Portland), others more sprawling (like Phoenix). Examining the distribution of key economic, social, and demographic variables at the metro scale is admittedly crude. But it is also a useful and important starting point, since the metro level is by far the most common unit of analysis in studies of regional economic development. In our research on the subject, we’re interested in developing new, more precise metrics and indicators of density within metropolitan areas – comparing central cities or urban centers to suburbs and probing the distribution of density across Census tracts and zip codes, which I will report in future posts.

We also compare our density measures to population density, to see which metros over- and under-perform relative to their populations. To get at this, Mellander performed a residual analysis – a statistical procedure which systematically compares how metros perform on a given factor compared to what we’d expect based on their population density. We also look at the associations between our various density measures and key metrics for regional economic development – wages, incomes, innovations, and regional economic output. As usual, I’ll point out that these are preliminary, exploratory analyses that simply point to associations between variables. We don’t make any claims here about the direction of causality, and we acknowledge that intervening variables may come into play.

Over the next couple of weeks, I’ll report the key findings from our analysis. Later this week, I’ll look at density of human capital – based on the conventional measure of people with a bachelor’s degree and above. Then, I’ll turn to the density of the creative class – that is, of people employed in science and engineering, business and management, health care and law, and arts, culture, design, media, and entertainment. The fourth post in this series will look at the density of a subset of this group – artistic and cultural creatives. In the fifth post, I’ll share our findings on density of innovation and high-tech industry. And, in the final post in the series, I’ll bring it all together and sum it up with maps of these density measures.

Jane Jacobs long ago argued that cities are the cradles of civilization and of economic development and that density and human interaction hold the key to economic progress. The findings of a major new study published in Science finds that density is a key factor in the emergence of modern human behavior.

Increasing population density, rather than boosts in human brain power, appears to have catalysed the emergence of modern human behaviour, according to a new study by UCL (University College London) scientists published in the journal Science. High population density leads to greater exchange of ideas and skills and prevents the loss of new innovations. It is this skill maintenance, combined with a greater probability of useful innovations, that led to modern human behaviour appearing at different times in different parts of the world.

In the study, the UCL team found that complex skills learnt across generations can only be maintained when there is a critical level of interaction between people. Using computer simulations of social learning, they showed that high and low-skilled groups could coexist over long periods of time and that the degree of skill they maintained depended on local population density or the degree of migration between them. Using genetic estimates of population size in the past, the team went on to show that density was similar in sub-Saharan Africa, Europe and the Middle-East when modern behaviour first appeared in each of these regions. The paper also points to evidence that population density would have dropped for climatic reasons at the time when modern human behaviour temporarily disappeared in sub-Saharan Africa.