Creative Class

"The bigger the house, the worse the CEO" - so says this column by Dan Gross based on research by David Yermack of NYU and Crocker Liu
of Arizona State University.

"Using
property records, public databases, and search engines, Yermack and Liu
were able to identify the primary residences of 488 of the 500 CEOs of
the S&P 500. These guys—and they’re almost all guys—are living
large. The mean residence of a CEO was anything but mean: 6,145 square
feet, 12 rooms, 5.37 acres of land, and a market value of $3.1 million.
For the 164 in the sample who bought new houses after being named CEO,
the mean house was even less mean: 6,635 square feet, 13.1 rooms, 6.13
acres, and a market value of $3.9 million. … Then
the professors examined the returns of the CEOs’ stocks, and discovered
that the bigger the home, the worse the stock performed. In 2005, the
stocks of companies whose CEOs lived in larger homes (i.e., above the
average for all CEOs) returned, on average, 3.35 percent less than
companies whose CEOs lived in below-average homes. And the CEOs who
lived in the biggest homes (at least 10,000 square feet or over 10
acres) underperformed their peers who inhabited more modest homes by
6.9 percent, on average. Next, they looked at stock returns for 164 companies whose CEOs bought new homes afterostensibly
to raise cash to buy a house—just before their stock goes south. "ostensibly to raise cash to buy a house—just before their stock goes south.
becoming CEO. Here, again, they found trouble, especially for CEOs who
bought mega-homes on mega-plots. They found "a significantly negative
stock performance following the acquisition of very large homes by
company CEOs," on the order of 1.25 percent performance lag per month.
… What’s more, when CEOs sold stock to
finance the purchase of a home—as was the case in 32 percent of the
instances—those stocks performed worse than companies where CEOs held
on to their stocks. …. The data seem to indicate that a good number of CEOs are selling shares –ostensibly to raise cash to buy a house—just before their stock goes south."

The whole story is here

It’s simple.Tolerant regions attract talent.  All kinds of talent: immigrant, African American, young, gay, female, etc. Talented and skilled regions move to the front, while others stay stagnant or fall behind.

For this week’s “By the Numbers,� we take a look at females and the creative class. This measure is strong on many levels. It measures half the labor force – female vs. male – and has an underlying assumption/ evaluation of tolerance. We would bet: regions with a higher percentage of female creative class members have a more tolerant environment than others.

What’s our data source?  Rather than utilizing the typical BLS occupational data, we used census occupational data from the American Community Survey.  Unfortunately, the Census didn’t create occupational estimates for all metros, but we have the rankings for the metros that were included. 

In addition to female creative class members, we also include the rankings – top and bottom metros – for female educational attainment (% of population).  Check the numbers out!

Download By The Numbers: Females and the Creative Class

posted by Steven

I don’t often write about, or link to posts on, intellectual work, but Greg Mankiw hits the nail on the proverbial head here on research collaboration.

"Many econ grad students at Harvard, maybe most, are stronger in math
than I am. In recent years, some of my coauthors (such as Ricardo Reis
and Matthew Weinzierl) have been Harvard students with strong technical
skills. My comparative advantage in the coauthorial quid pro quo is
based on experience, intuition, writing skills, and a pretty good nose
for interesting questions.One of the nice things about being a
professor is that you can specialize in those things you are best at,
and you can find collaborators that compensate for your weaknesses. In
other words, being a professor is a lot easier than being a student."

This just in from the BBC (hat tip: Kevin Stolarick).

"The US has lost its position as the world’s primary engine of
technology innovation, according to a report by the World Economic
Forum. The US is now ranked seventh in the body’s league table measuring the impact of technology on the development of nations. A deterioration of the political and regulatory environment in the US prompted the fall, the report said. The top spot went for the first time to Denmark, followed by Sweden.Countries were judged on the integration of technology in business, the
infrastructure available, government policy favourable for fostering a
culture of innovation and progress and leadership in promoting the
usage of the latest information technology tools."

The story is here.

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We could not be more excited with our work with El Paso and the fantastic New Texico group.  Check out this feature piece in the New York Times on joint economic development between El Paso and Juarez and our work to create a binational downtown revitalization effort linking the two communities.

“The two cities function symbiotically,� said Bob Cook, president of
the nonprofit economic development corporation. “And that is a
reflection of the two countries functioning symbiotically. In 2006, we
had $55 billion of U.S.-Mexico trade crossing through this border, 18
percent of all U.S.-Mexico trade. There are 267,000 people employed in
manufacturing in the El Paso- Juárez region.� Production sharing in the El Paso-Juárez region, while nothing new,
has become increasingly complex. High-tech parts are manufactured in
the United States and abroad, then shipped to Juárez for assembly and
trucked across the border to El Paso, which has 55 million square feet
of distribution space, before being dispersed throughout the United
States. Many international corporations — based in Europe, North America,
Japan and, increasingly, China and Taiwan — build their own plants. For
instance, Electrolux, a Swedish appliance manufacturer, is expanding
its Juárez campus by more than a million square feet to assemble
refrigerators. …“Juárez 30 years ago was 30,000 people,â€� said Sergio Bermudez,
president and chief executive of Bermudez International. “Now it’s a
million and a half. With El Paso, there are 2.4 million people. The
future growth of both the U.S. and Mexico is along the border.â€� …To further strengthen this connection, the cities of Juárez and El
Paso worked together to design a master plan for redeveloping both
downtowns, including an 11-block binational arts district connected by
the main bridge. The first major developers under this master plan are
expected to be announced within weeks."

Here’s a great piece on density, and how to measure it, by Terry Holzheimer,  Director of Economic Development for Arlington Virginia and a Ph.D from our program via Planetizen).

"Density is a complex concept that includes measured density,
perceived density and crowding of a given area. While the term is often
described as objective, it is also relative. What do measures of jobs
per acre, or population per acre, feel like to employees or residents
of a neighborhood? How do the places in which we live and work measure
up and compare? Can objective, numeric measures really reflect the
"urban-ness" of a place? If so, which is a better presentation of that
"urban-ness"? Numeric measures of density or relative perceptions of
low, medium and high densities?

In an attempt to help answer these questions and quantify urban
density and intensity, I have analyzed specific formulas of measurement
for the density of regional activity centers, along with growth
projection data, to better understand current and future trends about
urban development. While I have used date from my own area — Greater
Washington, D.C. and Northern Virginia — as an example, these
approaches can be applied to any major metro region.

The full story is here and a longer report is here.

The MacArthur Foundation has announced its support of a new research network on resilient regions. Click here for the website and here for a research report.

The Greater Washington Initiative has just released its major study of the region’s knowledge workers, talent-base and creative economy.  Driven by Steven Pedigo and involving detailed research on the region’s occupational mix, it is the first ever detailed looked into the talent base of a region. And they’re using it to change the way economic development is done - shifting the focus from tax cuts and incentives to leveraging talent and lifestyle to attract companies, generate jobs and deepen the region’s economy. The Washington Post writes:

"When it comes to its reputation as a major economic hub, Washington doesn’t get the respect it deserves.At
least, that’s what they say at the Greater Washington Initiative, an
affiliate of the Greater Washington Board of Trade that promotes local
business. Despite the region’s disproportionately high number of
educated workers, high-tech companies and financial institutions, they
say, too many people still view Washington as a government town. So
GWI researchers gathered labor statistics, singled out professions and
chose five other major metropolitan areas for comparison. What they say
they learned, and plan to release tomorrow in a study called "Human
Capital," is that compared with New York, Los Angeles, Boston, Chicago
and San Francisco-San Jose, Washington has the highest concentration of
so-called knowledge workers."

In fact, the paper devoted four separate stories to the study: here, here, here, and here. The Washington Post is hosting an on-line discussion with Pedigo today at 1PM. More on that is here.

Make Money Not Art has an interesting interview with Swedish designer and "fashion theorist" Otto von Busch,  who dubs "marginal actors in the fashion field “fashion renegadesâ€� since
their production process is "similar to hacking." They add onto things, borrow and tweak, deconstruct and remake key trends. He argues that:  "There has lately been a lot of talk about “creative industriesâ€� but it
will be a serious mistake to consider these activities as industries or
even production facilities. We instead tried to see them as co-creators. …We need to rethink our
economic operating system in many ways if we want this low-level to
blossom and be the ground for a “new economy�. The copyright and music
sharing debates we see now is only the tip of the iceberg."

Click here to read the interview.

I try not to comment on politics in my former home town. But I can’t let the recent editorial hit-job by the Post-Gazette on Councilman Bill Peduto’s decision to leave the race for mayor slide. I am proud to call Bill  my friend. But far beyond my personal feelings, he is far and away the finest policy thinker and political visionary in Pittsburgh I have come across. He has devoted his entire life to the community which he cares about deeply. He is a real force for change - a truly good man. I have not talked to him about his decision to leave the race, but I know how hard it must have been for him to give up his calling and dream. He has said he did not want to make the race go negative. I believe him. I am sure the political establishment was all over him to get out as well.  The facts will come out over time, and I trust Bill to be honest about his reasons. For the Post-Gazette to attack this ultimately personal decision using the words and tone it does is just unconscionable. It is a case of squelching of the highest magnitude - a nasty, negative, despicable journalistic mugging.  The paper’s leadership and editorial board should be ashamed of themselves. They owe Bill and the entire city of Pittsburgh an apology.

Click here for the editorial, or read it after the jump. John McIntire’s running commentary on the story is here.

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