Creative Class

Here’s one hot off the press.

A new paper with Jason Rentfrow and Charlotta Mellander looks at the role of post-industrial structures – that is, the creative class and human capital as well as values toward openness and tolerance – on the happiness of  nations.  Our main hypothesis is that  these structures and values shape happiness in ways that go beyond the previously examined effects of income. Here’s more from the abstract:

Drawing from previous theory and research, we measured post-industrial structures in terms of higher-level education and the share of the workforce engaged in knowledge-based/creative work. Post-industrial values were measured in terms of acceptance of racial and ethnic minorities and of gays and lesbians. Our measure of happiness is derived from a large-scale global survey of life satisfaction conducted by the Gallup Organization. We controlled for income in our analyses and divided our sample into high- and low-income countries to explore whether income has different effects on countries at different stages of economic development.

Our results indicate that post-industrial structures and values have a stronger effect on happiness in higher-income countries where the standard of living has surpassed a certain level. Income, on the other hand, has a stronger impact on happiness in low-income countries. Thus, we propose that when income rises beyond a certain level, a new system of post-industrial values centered on education, creativity, and openness become better predictors of happiness than income.

The full paper is here.

Just finished a new paper in what’s become an interesting – and fun – new area for me. Our research examines the factors that are associated with smoking and obesity – two significant health problems and contributors to leading causes of death.

There’s been a lot of research on smoking and obesity among individuals and some which looks at geographic patterns. Still, what we find is interesting. There is considerable variation in smoking and obesity across states. And smoking and obesity are both closely associated with post-industrial socioeconomis structures, that is high levels of knowledge; professional, creative work; and high levels of college-educated adults. The results holds even when we control for the level of economic output.

What this all seems to mean is that places that have transitioned to postindustrialism go beyond economics and innovation. In addition to generating better-paying jobs and having higher levels of income and innovation, these sorts of places appear to have better health outcomes as well, and they do so in ways that go beyond the effects of just higher levels of economic output. The effects of these structures work in addition to the effects of Gross State Product per capita. The full paper is here.

Americans following the Olympics at home have been almost as pumped as their athletes are about their record haul of medals. “I have looked (at the medal count),” Viktoria Rebensburg told USA Today, after picking up a gold medal in the women’s giant slalom, “But I didn’t expect I could give a medal to this thing. I never thought that would happen, so it’s cool. And maybe we will win this.”

The United States hasn’t dominated a Winter Olympics since 1932. With 32 medals earned thus far, statistics guru Nate Silver predicts the U.S. will end the games with 34, ahead of Germany with 30, my adopted home-base of Canada with 26, and Norway with 23.

But wait a minute. The USA is a much bigger country than any of these. With 300 million-plus people it’s nearly four times the size of Germany, 10 times bigger than Canada, and 60-plus times bigger than Norway.

So with the help of my statistically minded colleagues at the University of Toronto’s Martin Prosperity Institute, I decided to take a different kind of look. We rated and ranked medal performance by the size of each country’s population. We’ve dubbed this new ranking system the Winter Olympic Medals Per Capita Metric, WMPC for short, where we rank medals per one million people.

Now the results get interesting.

The U.S. ends up in 19th place, with roughly one medal per one million people, less than Australia and about the same as Poland. Germany ends up 14th and Canada ranks 10th with five times the take as the USA. The top finisher is tiny Norway with four-plus medals per one million of its people.

If Silver’s projections hold, the U.S. will end up in 21st place by the end of the games. Norway will top the list with five medals per one million people, followed by Austria in a distant second place with 1.9. Slovenia will come in third with 1.4, then Switzerland (1.3), Sweden (1.1), Latvia (1), Finland (.9), and Canada (.8).

What happens when we track medals historically, going back to 1924? The United States comes in 14th, with slightly less than 0.8 medals per one million people. Norway is far and away the dominant Winter Games force, taking home a whopping 62 medals per one million people. Scandinavia, the Nordic countries, and the European alpine nations are also powerhouses, with Finland earning 29, Austria 23, Switzerland 16, and Sweden 13. Estonia and the Netherlands produce about five medals per one million. Canada produces four – still five times the American rate and eighth overall. (Excluded from our analysis are the Soviet Union and several other former Eastern bloc nations that were initially bigger countries that have subsequently broken into smaller parts.)

Looked at this way, the USA seems a lot less dominant than it first appears.

It’s been hard to justify high-speed rail (HSR) projects in terms of conventional cost-benefit analysis. But, it may be time to rethink – and broaden  - the way we think of the benefits of HSR. HSR’s benefits are usually thought of in terms of lowering transport costs by reducing problems like gridlock, pollution, and travel time. But the real benefit of HSR may turn on its ability to expand economic growth, according to a new analysis by my colleagues at the Martin Prosperity Institute.

There are three main mechanisms through which high-speed rail can help expand the economy, according to the MPI study. First, HSR expands the labor pool available to firms, bringing talented workers from nearby centers within commuting distance and thus expanding the quantity and quality of available employees. Second, HSR makes more jobs available to workers without making them have to relocate and move to a new home. Third, HSR extends the benefits of other expensive, productivity-enhancing infrastructure such as airports across broad regions. International airports, major research universities, and reference libraries are all more financially viable and internationally competitive when they serve a larger population. High-speed rail allows them to build the scale they need to achieve world-class excellence and also spreads their high costs across a wider population.

The MPI report is here.

Earlier this week, I discussed the new Gallup-Healthways Well-Being Index of happy cities. Today, with the help of my Martin Prosperity Institute colleague Charlotta Mellander, we take a look at some of the social, demographic, and economic factors that are associated with the happiness and well-being of cities.

There has been considerable debate on the factors that are associated with happiness and well-being at the national level. The well-known Easterlin Paradox suggested that happiness tends to level off after a certain income threshold. Psychologists, notably Edward Diener, have argued that factors such as health, challenging work, and close social relationships, among others, play a considerable role in happiness. Some have even made the case for instituting a new measure of gross national happiness to supplement conventional metrics like gross national product.

Recent studies by Princeton University’s Angus Deaton and Justin Wolfers and Betsy Stevenson of the University of Pennsylvania’s Wharton School question the Easterlin Paradox and indicate a closer link between happiness and income across nations. Carol Graham raises the enigma of the “happy peasant and the miserable millionaire” as a way to resolve this apparent paradox. Graham suggests that happiness is relative to one’s position in society. Take unemployment for example. Unemployment is crushing for previously employed people in places where gainful employment is the norm. But people in poor countries where unemployment is more the norm find other ways to be happy.

The Gallup-Healthways is the first comprehensive data set we know of that tracks happiness and well-being at the metropolitan level, providing data from a large-scale survey of individuals across 185 metro regions. We look at the associations between the Gallup-Healthways Metro happiness index and key social, demographic, and economic factors. Data-matching reduces the size of our sample to 170 metros – roughly half of all U.S. regions. As usual, we point out that our analysis points only to associations between variables. It does not specify causation or the causal direction of those associations which are questions for future research. Still, the results are interesting across several dimensions.

Income, Wages, and Output: So what is the relationship between metro-level happiness and income, wages, and output? The correlation analysis suggests a moderate relation between wages (.45), income (.4), and economic output per capita. The scatter-graphs below show the relationships are reasonably linear, though there is a better fit for wages and income than for output per capita.

Unemployment: Conventional wisdom and academic studies suggest that a rising unemployment rate would take a big toll on happiness. We find a moderate effect across U.S. metros. The correlation between happiness and the unemployment rate is -.34 and between it and the year-over-year (December 2008 to December 2009) change in unemployment is -.3.

Post-Industrial Economic Structures: In ongoing research, we have been testing the notion that happiness and well-being may be more associated with key features of so-called post-industrial economic structures – namely the shift from physically oriented work to knowledge, professional, and creative occupations and industries – and from lower-skilled to more highly skilled and educated workforces. A large body of research has found a close association between human capital (measured as share of the population with a B.A. and above) and economic development across nations as well as regions; other research has found that human capital levels are becoming more divergent across regions over time. To get at this, we looked at the associations between happiness and human capital, as well as between it and creative-knowledge-professional occupations and blue-collar working class occupations.

Human Capital: Happiness at the city or metro-level is more closely associated with human capital with a correlation of .68 – the strongest correlation of any of the variables we looked at. The scatter-graph below shows a fairly linear relationship.

Creative Class: Happiness is also associated with the creative class, a correlation of .45. The scatter-graph below shows a fairly linear relationship.

High-Tech: Happiness is also associated with locations that have higher concentrations of high-tech industries. We find a correlation of .41 between it and the Milken Institute’s Tech-Pole measure.

Working Class: On the other hand, metro-level happiness is negatively associated with the working class, -.34, a finding which is similar to that for states.

Last week, I posted on the need to upgrade service class jobs. New research by the Martin Prosperity Institute finds that even though they compose 46 percent of the workforce, service workers take home just 35 percent of all wages in salaries in Canada. Creative class workers, in contrast, compose 29 percent of Canada’s workforce but take home 42 percent of wages and salaries. The working class makes up 22 percent of Canada’s workforce and takes home 20 percent of wages and salaries.

Digital technology from myspace.com to a recording studio on your laptop means that music can literally be made and distributed anytime, anyplace, and anywhere.  But it is also clear that a great deal of music continues to come out of particular cities and their music scenes.

The graph below, from a new study from my colleagues at the Martin Prosperity Institute ranks the major music locations in the U.S. and Canada. Even before I moved to Toronto I was aware of the musical talent that comes out of Canada: from classic rockers like Joni Mitchell and Neil Young to Rush’s brand of rock and pop stars like Nelly Furtado or indie darlings New Pornographers, Arcade Fire, and Feist. So our team at the Institute decided to see what the numbers might tell us about differences between the Canada and U.S. music industries.

The rankings are based on location quotients which gauge the relative concentration of music industry establishments, including record labels, distributors, recording studios, and music publishers.

Interestingly enough, half the top 15 cities are  Canadian. Still, the  United States is home to the two top-ranked cities – Nashville which is literally off-the-chart on this measure and Los Angeles, the center for global entertainment.  Toronto, Vancouver, and Montreal all out-rank New York on this score. Atlanta makes the top 15 as do college towns like Austin and Madison, Wisconsin. U.S. establishments are  considerably bigger than their Canadian counterparts, with average receipts of $4.1 million per establishment, nearly eight times the Canadian average of $540,000. But, Canada in fact has about five times the level of music establishments after controlling for population, 5.9 music establishments per $100,000 compared to 1.2 for the U.S.

The full report is here.

Here’s the abstract for a new paper on said with Charlotta Mellander and Kevin Stolarick.

Economists have argued that individuals choose locations that maximize their economic position and broad utility. Sociologists have found that social networks and social interactions shape our satisfaction with our communities. Research, across various social science fields, finds that beauty has a significant effect on various economic and social outcomes. Our research uses a large survey sample of individuals across US locations to examine the effects of beauty and aesthetics on community satisfaction. We test for these effects in light of other community-level factors such as economic security and employment opportunities; the supply of public goods; the ability for social exchange, that is to meet people and make friends; artistic and cultural opportunities, and outdoor recreation; as well as individual demographic characteristics such as gender, age, presence of children, length of residence, income and education levels, and housing values. The findings confirm that perceived beauty or aesthetic character of a location has a positive and significant effect on perceived community satisfaction. It is one of the most significant factors alongside economic security, good schools, and the perceived capacity for social interaction. We also find community-level factors to be significantly more important than individual demographic characteristics in explaining community satisfaction.

The full paper is over at the MPI site, here.

Kevin Stolarick and our MPI team map Toronto’s personalities featured in this article from the Toronto Star. The patterns could not be more striking.

Thoughts, anyone?

The Wall Street Journal asked six experts to come up with lists of the “next youth magnet cities.” I was one of them. The top spot was a tie – D.C. and Seattle, followed by NYC, Portland (OR), Austin, San Jose, Denver, Raleigh-Durham, Dallas, Chicago, and Boston. You can see the list and read the full story here.

Below is what I sent to the Journal.

My Rankings
These are based on my own rankings of the best places for young, professional singles, aged 20-29 in Who’s Your City?, as well as other rankings and surveys and my reading of current trends. The data are from Kevin Stolarick, additional analysis by Charlotta Mellander, and research assistance by Patrick Adler, my colleagues at the Martin Prosperity Institute.

1) New York City
The country’s largest city was the top destination for recent graduates according to the career-cast survey noted below. The city’s size affords migrants an economic diversity that simply cannot exist in smaller places. It’s the place to be if you’re in finance, fashion, entertainment, publishing, or even indie music. Also unparalleled is the city’s mythic status, as a place to test one’s mettle against the best and the brightest. One of the top five on my own rankings of the best places for young, single, 20-29-year-olds.

2) Washington, D.C
The public sector is ascendant and, in the eyes of many, Barack Obama is America’s coolest boss. These factors will only bolster Washington, D.C., a city that is already a hotbed of young talent. 45.9 percent of Washington, D.C.’s workforce has a bachelor’s degree or more, and young people enjoy positions of influence on congressional staffs and at think tanks. And it is a center for media, journalism, and blogging as well as high-tech. D.C. is the top city in my own rankings of best places for young singles aged 20-29. If I was 23 or 24 again, it’s where I’d head.

3) San Francisco/ Silicon Valley
Still the world’s high-tech hot spot. One of the top five on my own rankings. Great quality of life, a large stock of smart, driven young people, and fantastic restaurants and outdoor activities.

4) Chicago
If management or industry is your thing, Chicago is the place to be. It’s the talent magnet for the midwest and beyond, drawing driven young people by the droves. It has great amenities, great nightlife, a spectacular waterfront, great restaurants, and it’s affordable.

5) Boulder/ Denver
Yes, it’s smaller than the others, but it packs a real punch. Boulder ranked No. 1 among all U.S. destinations on my own rankings of the best places for young singles 20-29. Now add in Denver and it has the size and scale to be a great place for young professionals. It has thriving, high-tech industries about the best outdoor recreation – from skiing to cycling – to be had anywhere.

6) L.A.
If you want a career in film, entertainment, fashion, or music, it’s the place to be. Sure, it’s crowded, pricey, and the traffic is horrible, but it has abundant sunshine, great temperatures, unbelievable beaches, and fantastic restaurants.

7) Boston
It’s always been a great “stay-over” town for the thousands of regional college grads. This year, it surpassed NYC as the No. 1 destination for Harvard grads. It’s the world center for management consulting with strong finance and high-tech industries. Not to mention a great place to stick around, work for awhile, and go back to grad school.

Seattle
A high-tech and lifestyle mecca in its own right with Amazon, Microsoft, and more. It’s also a center for cutting-edge retail with Starbucks, Costco, and REI. Quality of place by the boatloads.

9) Austin
What can you say about a place whose motto is “Keep Austin Weird”? It remains a high-tech player, with great quality of life that’s affordable. It’s the indie music capital of the universe with SXSW and Austin City Limits and a great array of local venues. Plus, with residents like Lance Armstrong, it’s a cyclist and outdoor enthusiast’s paradise.

10) Raleigh-Durham-Chapel Hill
Another great high-tech, university, smart city, which boasts a mild climate, highly educated population, great outdoor activities, and a great music scene.

Runners-Up/Honorable Mention:

• Madison, Wisconsin, and Ann Arbor, Michigan – Both great stay-over college towns that rank very high on my own rankings. College towns in general perform well in this demographic; they’ve coped reasonably well with the recession and are good places to stay or head, at least for a while
• Atlanta and Minneapolis: Regional talent magnets for the southeast and Great Lakes/Plains respectively.
• Outside the U.S.: London, Toronto, Shanghai, Sydney-Melbourne-Brisbane.

Key factors affecting location of young, college-educated singles
Even with signs that the worst of the Great Recession is over, young people are understandably worried about their economic future. This past May, the Wall Street Journal reported that some of the past decade’s “youth magnet” locations are losing their appeal as economic opportunities whither in cities like Phoenix, Seattle, Atlanta, Charlotte, Dallas, Las Vegas, and others which led the nation in attracting young college grads from 2005 to 2007. So where are young, educated, single people heading?

A recent survey lists the best places for college grads to launch their careers. New York City topped the list – despite the financial crisis – with eight in 10 survey respondents listing it as one of their top destinations. Second-place Washington, D.C. was named by 63 percent. Los Angeles, Boston, San Francisco, Chicago, Denver, Seattle, and San Diego round out the top 10. And, remember, this is a list of the places that are best to find a job, not to have fun, go to great restaurants or clubs, make friends, or get lots of dates.

The list is heavy on big cities, and it’s remarkably similar to a comprehensive list my research team and I developed for my book Who’s Your City? of the best places for college-educated 20- to 29-year-olds. It also put big cities such as San Francisco, Washington, Boston, Los Angeles, and New York on top. (D.C. jumped to the top of the list when we factored affordability and cost into the mix.) College towns also did well, with Madison, WI, topping the list for medium-size regions, and Boulder, CO, taking first place for small regions. Raleigh, N.C.; Ann Arbor, MI; and New Haven, CT also score well. To get at the factors that attract and keep Gen Y in certain places, my colleague Charlotta Mellander and I analyzed the results of a Gallup survey of some 28,000 Americans.

First off, young, educated people are considerably less attached to where they live and considerably more mobile than other Americans. About a quarter (26.5 percent) of them said they were extremely satisfied with the place they currently live, compared with nearly half (47.4 percent) of all Americans. Twenty-somethings are, on average, three or four times more likely to move than 40- or 50-somethings.

Jobs are clearly important. Gen Y members ranked the availability of jobs second when asked what would keep them in their current location and fourth in terms of their overall satisfaction with their community. But it’s more than just a job. Young people today are faced with dwindling corporate commitment; job tenure has grown far shorter and people switch jobs with much greater frequency. That means picking a location which not only offers a great job but a thick labor market with abundant career opportunity, as a hedge against economic uncertainty and the risk of layoff.

But the highest-ranked factor is the ability to meet people and make friends. Young, educated people intuitively understand what economic sociologists have documented: Vibrant social networks are key to landing jobs, moving forward in your career, and one’s broader personal happiness. They not only desire a thick labor market but what I have come to call a thick mating market where they can meet new people, go out on dates, and eventually find a life partner. What do you think is more important to happiness: Finding a great job or finding the right life partner?

Where older Americans see high-quality schools and safe streets as key, Gen Y understandably ranks the availability of outstanding colleges and universities higher. Many are likely to go back to graduate school and having great programs nearby is a big plus. When it comes to their overall community satisfaction, access to open space, being in an aesthetically beautiful city, and having access to vibrant nightlife are also quite important. Affordable housing, air, and water quality, and availability of religious institutions matter too but slightly less so.

My own assessment is that finding the right place to live is among the three most important decisions of your life. Moving is an expensive and time-consuming proposition; mistakes can be costly to fix or undo.