Beauty premium

The city centre’s role has shifted over time and continues to do so. Go back a couple of hundred years and city centres were places to live. With the advent of passenger rail, the city centre’s purpose was shifted to commerce. Now, as the digital economy provides new vehicles and venues for retail and commerce, the role is shifting once again towards experience, leisure and consumption. In the wake of these changes, a recent paper by the Federal Reserve Bank of America and MIT explores how urban beauty / amenity and leisure variety contribute to the overall success of a city. Significantly, they found that lifestyle amenities were tied only with low taxes as a predictor of population and urban growth between 1990-2010. Cities with twice as many picturesque locations as others (proxied in the study by the number of leisure visits), benefited from an additional 10% growth over this period. Beautiful cities also disproportionately attracted highly skilled workers and benefited from greater house price appreciation (particularly in supply constrained markets). Finally, the study found that all of this is influenceable. Public spending on leisure amenities correlated with increased leisure visits and hence urban development. As we re-plan our cities in response to urban change drivers and obsolescence, introducing beautiful spaces becomes a logical move, rather than an opportunity cost. A great example of this I saw recently is TfL’s tiny parks. Take a look here.