With remote work becoming more common and cities competing for businesses it’s become easier than ever before for educated Americans to relocate, leaving cities more vulnerable than they’ve ever been. In their new book, Survival of the City: Living and Thriving in an Age of Isolation, economists David Cutler and Ed Glaeser examine the factors that will allow some cities to succeed despite these challenges, while others fail.
They joined Tyler for a special joint episode to discuss why healthcare outcomes are so correlated with education, whether the health value of Google is positive or negative, why hospital price transparency is so difficult to achieve, how insurance coding systems reimburse sickness over health improvement, why the U.S. quit smoking before Europe, the best place in America to get sick, the risks that come from over-treatment, the possible upsides of more businesses moving out of cities, whether productivity gains from remote work will remain high, why the older parts of cities always seem to be more beautiful, whether urban schools will ever improve, why we shouldn’t view Rio de Janeiro’s favelas as a failure, how 19th century fights to deal with contagious diseases became a turning point for governance, Miami’s prospects as the next tech hub, what David and Ed disagree on, and more.
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Recorded August 31st, 2021
You can also watch a video of the conversation here.
Read the full transcript
TYLER COWEN: Hello, everyone, and welcome back to Conversations with Tyler. Today I am here with two Harvard economists who have a new book out, co-authored. The two economists are David Cutler and Ed Glaeser. The new book is called Survival of the City: Living and Thriving in an Age of Isolation. It’s about urbanism. It’s about the pandemic. It’s about healthcare economics and much more.
First, I will be starting with David Cutler, who is professor of economics at Harvard. David is well known as simply being one of the very best healthcare economists ever. David, welcome.
DAVID CUTLER: Thank you very much for having me. It’s a pleasure to be able to see and speak with you.
COWEN: Here are all the questions I want to ask you about your work. To start, why does education predict health above and beyond its ability to predict health behaviors and to predict income?
CUTLER: One of the great — I was going to say great mysteries, but one of the most important things that we’ve observed about the world is that people who are better educated are in better health. That’s true virtually systematically, and it’s increasingly so over time. That is, the gap between people with a college degree and people without a college degree is growing over time, even as other gaps, for example, between whites and Blacks, are shrinking over time.
There are a few different things that are going on at the instrumental level in the sense of what that affects health is happening. Health behaviors are a part of it — things like smoking and obesity. So are things like environmental exposure, so exposure to pollution is lower for higher-SES [socioeconomic status] people, both by where they live in the country, and even within a city by where they live.
Stress levels seem to generally be lower for higher-SES people relative to lower-SES people, and chronic stress has a variety of adverse health impacts. Access to medical care is better for people in higher socioeconomic groups relative to lower socioeconomic groups. All of those contribute.
If you step back even before those, it’s, I think, a setting where society has really made it much easier for high-income, high-SES people to be able to engage in the types of things and buy the types of things that are associated with improved health.
The nature of life, the nature of where people live, the nature of education, the nature of everything is such that it’s easier for higher-income people, higher-SES people to do well, and that, as I said, unfortunately, is increasingly so.
COWEN: But even if we adjust for that, education seems to matter a lot. It’s also puzzling to me — in your own work, it matters more at younger ages. You would think the returns are cumulative: it would really pay off when you’re 67 because you’ve invested in a stock portfolio for decades, but it matters most when you’re young. What’s your best micro account of that?
CUTLER: One of the things that’s super interesting is that, for example, people who live in cities — where there are more better-educated people — smoke less, even conditional on your own education. The same thing is true about age and so on.
I think it’s partly that cities and areas are run by upper-middle-class folks often. For example, the environment is set up in a way that’s more conducive to health when you have more upper-middle-income people. It’s much more difficult to smoke. There are healthier behaviors in general. There are parks and things like that. I think part of it is just that society is shaped by higher-income, higher-SES people, and that can be good for everyone who lives around those areas.
COWEN: To the extent education makes you healthier by lowering your stress and raising your relative status — which is a possible hypothesis — what are the policy implications of that? What should we do?
CUTLER: Part of what we’re learning over time is that social insurance programs are actually having a bigger and more sustained effect on health than we had thought they did. For example, we’ve always thought of Medicare and Medicaid as being the primary social insurance programs that affect health, but then there’s research that the WIC program — Women, Infants, and Children — affects health, that food stamp programs affect health, that TANF benefits affect health, that housing policies can affect health.
COWEN: And you think that’s through lowering stress as one mechanism?
CUTLER: As one mechanism, I think it’s through lowering stress. There are many other mechanisms as well. What we’ve seen when we’ve looked more carefully at long-run data is that many programs really seem like they have a big impact over the course of the life cycle on people’s health. So I’m a big believer that one way to improve health is to help make sure that social insurance programs are reaching everyone they ought to and are doing it in the best way.
COWEN: What do you think is the health value of Google, either positive or negative? It’s the busiest doctor in our country, right? How do we assess that?
CUTLER: Oh, absolutely. Information technology is dramatically changing how people interact with the medical-care system. I haven’t seen a formal study on this, but my sense is that Dr. Google has actually been pretty good for health because now you can find out things about where can I go to get a COVID test, or what about flu shots, and so on. For many people who have difficulty finding a doctor and interacting with the medical system, that is very helpful.
I will say, though, for example, if you look at — let’s just take the anti-vax community. You say, “Well, maybe if the anti-vax community spent more time googling the CDC website, they would not be anti-vaxxers.” That actually turns out to be incorrect. The vast bulk of people who are prolific in the anti-vax community know exactly what the CDC says. They just don’t believe it. It’s not that Dr. Google will solve all the problems, but for some people, it can be quite helpful.
COWEN: Does that positive side show up in the numbers anywhere?
CUTLER: I haven’t seen a really good study that’s looked at access to the internet and health. But one particularly good thing that’s come out of the COVID pandemic is that now telemedicine seems firmly implanted, and that’s really a result of improvements in IT and stuff. Your ability to see your doctor online has really been a blessing to a lot of people. It’s not exactly Google, but it’s of the same spirit.
COWEN: If you could have new data to study one question in healthcare that so far has been hard to study, what would that be?
CUTLER: I think you hit on the big issue at the start, which is, how do you take people who have difficulty interacting with the medical system and for whom society has been somewhat unfair and at least try and improve some aspects — their health, their economic circumstances, but we’ll stick here with the health component. How do you reach people for whom society’s opportunities have not extended as much and do what you can to make their health be better?
COWEN: What do you make of the Latino life expectancy paradox? Latino immigrants come to the US, often not speaking English, not well connected at all. They often outlive people who are born here, but their descendants do less well. You’re presupposing that it’s about the people not being well equipped to handle ordinary America, but Latinos seem to show the opposite trend.
CUTLER: First off, there’s a little bit of selection in terms of the Latino immigrants, but in part, also they bring behaviors that are typically from the countries where they are from. Then second generation will be more like Americans and so on, in terms of smoking and obesity and a variety of adverse behaviors like that.
I think that the closer you get to native Americans, the more you look like native American health issues. Then there’s a mix, depending on the health behaviors that one brings from the country where you are from, some of which are favorable, some of which are less favorable.
COWEN: You’ve written some of the best-known papers on obesity and put forward the hypothesis that rising obesity is due, in part, to food preparation being quicker and easier. If that’s true, why don’t diets work better? Because food preparation lowers the relative price of eating, but if you just target the quantity directly by dieting, it seems that most people don’t lose weight by dieting. It would be odd for the price to matter but the quantity not to matter.
CUTLER: I have puzzled over this a lot. What I think is happening is that it plays into our inability to delay gratification for periods of time. What people say, including myself very frequently, is “I’m going to start dieting and exercising tomorrow or next week.” If I really am going to start dieting and exercising next week, then it really doesn’t matter what I eat this week because everything will be fine. The difficulty is that next week, I’ll say the same thing about the following week.
People have a very short-term horizon where they have difficulty understanding that if I don’t do it this week, I’m not going to do it next week, and then I’m not going to do it the following week. We could take all the time we’ve saved on food preparation and cleaning. We could devote some of that time to exercising. We could work off the additional calories and still have time left over. As a society, we could do that, but we don’t do that, I think, in part, because every week we say, “Yes, I’m going to start that next week.”
COWEN: Why is obesity such a big problem in rural Mexico, say, Chiapas? I mean, we know why — they drink too much Coca-Cola. But structurally, why is that the case in terms of relative prices?
CUTLER: What’s happened in a lot of countries is, as they get richer, they adopt more of a Western diet, particularly a US diet. You adopt a diet that’s high in corn syrup and fast food and salty foods and things like that. You observe this in parts of rural Mexico when there’s some income. You observe that a lot in islands in the Pacific that all of a sudden had mineral wealth, so people are endowed with a lot of money. Then one of the things that they do is, their diet changes to a Western diet.
You have in some of these islands 80 percent obesity rates and all the diabetes that comes along with that. Same thing in parts of Mexico, where again, the diet has changed very rapidly to a US-type diet and with it comes US-type health problems.
COWEN: What do you make of the data that suggests both pets and even lab animals are growing fatter?
CUTLER: Food is much cheaper, right? We can afford much more of it.
COWEN: But lab animals — we control what they eat, right? There’s some kind of regimen. And obesity seems to be rising in cases where relative prices facing humans are not obviously the culprit. Is it that people are buying more cat food, and labs are spending more for their rats? It seems odd.
CUTLER: Yes. I don’t know quite about the labs. I presume that they’re feeding them more since my guess is the exercise is controlled, and there wouldn’t have been genetic change that rapidly. It could be that components of the food are different as well. The first approximation what matters is total calories in, but they’re probably types of calories and combinations of calories that lead to more or less weight gain. It also depends on what time of day one eats and a variety of other things like that, too.
COWEN: What do you think of the — I call them the residual theories? That there’s something unknown in the environment. It could be a chemical, something in the way we live that’s causing obesity levels to increase, and we just haven’t identified it yet. Do you take this seriously? Or are they just made-up stuff?
CUTLER: I do take it seriously as a theory, absolutely. One of the things that I think the literature has not been as good at as it could be is the impact of the environment — not just environment in terms of green space and ability to walk on the streets, but the impact of the environment in terms of pollution and exposure to various substances and what that may then do to health.
Go back a ways. It took a long, long time to figure out what it was in tobacco that led to cancer and heart disease and so on because there are just so many things out there, and you don’t really know all the combinations and what’s being burnt. So, as theories, I absolutely think they’re important.
At the moment, I don’t know of enough evidence to say for certain, these are some of the things that we need to worry about. There’s been much more on the pollution end with respiratory disease, where there’s obviously a very good link, but also, there have been recent hints about dementia and Alzheimer’s disease in the elderly. I wouldn’t be surprised if some of these environmental factors turn out to be bigger than we had thought, but I don’t have anything yet that I look at and say, “Okay, this is obviously definitive on this point.”
COWEN: Why is hospital price transparency so hard to achieve? We’ve passed laws — good laws, in my opinion. The Trump people were for them and doubled down on the issue. When hospitals don’t do it, they get a slap on the wrist. Maybe they’re sent a letter in the mail. Voters seem to like the idea. Why has that been such a tough slog?
CUTLER: It was one of the very few things that the Trump administration did that I really enjoyed, and that I give them credit for, was their attempt to push this.
Everything that we know in healthcare is that people have difficulty choosing on the basis of price and quality. It goes back a little bit to some of the behavioral issues that we were talking about, but I think it’s slightly different. If you go to the doctor, and the doctor says you should take medication X, and you go to the pharmacy, and the pharmacy says that’ll be $30, a fair number of people will walk away and say, “I don’t have $30.”
What we would hope they would do is go to their doctor and say, “Doctor, is there any way that there could be a cheaper medicine that might work because $30 is hard for me this month?” In practice, people are extremely uncomfortable doing that. They really don’t like to go to their doctor and say, “Doctor, how do I trade off the money here versus the medicine?”
As a result, they wind up not taking the medicine, and then they avoid the doctor because they’re ashamed to admit to the doctor. People really don’t like the money being involved in the medical care part.
They’re also very afraid of the quality part, of having that quality discussion. For example, before you’d buy a TV, you’d look up and see what are the different characteristics and so on. Yet, before you do surgery, people rarely look up, how good is that surgeon? What’s that surgeon’s record? What questions should I ask of that surgeon?
They’ll ask it of the TV. They’ll ask it of the refrigerator, but they will not ask it of the surgeon, nor will they ask it of the referring doctor. They won’t say, “Doctor, are you sure this is the right person?” and so on. It’s almost like they don’t want to put that doubt. They don’t want to say, “Look, I’m not sure you’re the right person or this is the right thing for me.”
The net effect is that when these data are out there, they just don’t get widely used. Hospitals don’t want to put it out there because they don’t want to be compared. If the patients are not going to complain that much, they say, “Fine, I’ll just do the minimum possible. Sometimes I won’t even comply. There’s no burning need for me to put that information out there.”
COWEN: How do we explain the cross-sectional variation there? Because I agree with what you said, but if I look, say, today, at the vaccines, there are really quite a few Americans who obsess over Moderna versus Pfizer, this versus that. Maybe some of what they think is wrong, but they spend enormous amounts of time on social media consuming information about vaccines. They don’t seem to be put off by nervousness.
Yet, when it comes to the brain surgeon, there’s nothing, right? Very hard to find out anything, and that’s endogenous because, in part, the demand isn’t there. What accounts for that difference?
CUTLER: You can sometimes get people to do shopping. Where people have time and settings, and it’s a very clear choice, you can get them to do someshopping, particularly if there are not people involved. It helps if it’s a pill and not a person who you’re deciding between yes or no, and where you don’t feel like your doctor has a stake in it, something like that.
Ironically, on the vaccines, people mostly decided on their own, without a doctor’s recommendation, as to which one they wanted. Therefore, they would go online and decide which of the different vaccines do they want. Sometimes you can do that.
The other famous example of where you can do that is, for example, in vitro fertilization, where the records of the different centers do seem to matter. That is, people will go more to the centers that have a good record because families are thinking about which centers should I go to and stuff like that.
For other things, particularly when it’s a surgeon who you feel you might be offending, or it’s a conversation with your doctor that you don’t feel comfortable with, then people are extremely loath to do that. I would say that in some settings, you can make it happen, but oftentimes, you can’t.
COWEN: Why don’t we have more paying for healthcare outcomes? I give my doctor a bonus if I stay healthy, for instance. More complex ways of doing it, using intermediaries, collective contracts, but there’s very little. Why?
CUTLER: As you know, one of the books that I wrote really has a lot about pay for performance. First off, the past decade, particularly the past five years or so, there’s been enormous experimentation with it. There’s been quite a lot of paying for outcomes, not in massive ways but in reasonable ways.
For example, the accountable care organization movement that the federal government does for Medicare and that most private insurers do some of, and that many state Medicaid policies do. That is very much involved in paying for performance.
When people do bundled-care arrangements — like I’ll pay you a fixed amount for a knee replacement — they’ll always have quality indicators in there. For primary care doctors, contracts that are fixed contracts — we’ll give you a certain amount per patient per month — those often have quality indicators in there. They’re in there, but they haven’t dominated as extensively as people would like.
The evidence on them is that they are effective in that when you put them in, quality improves, costs stay the same or decline. As best we can tell, they’re very effective. They’ve not turned out to be absolute, total game-changers. We haven’t yet found the thing in healthcare where we say, “If you do this, you will save 15 percent on dollars and quality will go through the roof.”
COWEN: If you were to express that in terms of the model, what’s the limitation in economic terms? Something we can’t measure, something that’s not contractible, or what?
CUTLER: I think there are a couple of parts. One part is that every individual insurer has their own system, so the doctor finds it very difficult to customize what they’re doing to every single insurer. They get one set of incentives from Medicare, and another set of incentives from the Blue Cross policy, and another one from the United policy. Even within Blue Cross, it varies, depending on which plan you’re in. That’s one, is that it’s very difficult when it is so diffuse.
I think the second one is that many of these are also coupled with systems where you can make more by making sure your patient appears to be sick. Therefore, when they turn out okay, you get a lot of money. A lot more effort nowadays is put into making sure you’re coding appropriately so that you get all the reimbursement for the sickness of the patient, as opposed to saying, “Okay, the patient is what the patient is, and the way I make money is by making sure they’re healthier.”
In principle, you could have doctors do both of those — both worry about the coding and about the patient health. In practice, there’s much more effort put into the coding part, which has got a real easy return to it, than there is put into the health improvement part.
COWEN: If we think about very wealthy individuals who could afford any scheme and really care about being healthy, and they have some form of concierge medicine, and possibly even a buyer agent working for them, what do those incentives look like? Or what should they look like?
CUTLER: I think for everyone, there should be a fair component of performance-based payment. I think it would be better if we made it easier to judge them. For example, we use things from electronic medical records rather than doctors have to write everything down on pencil and paper and so on. I think we’d be better if there were more coordination amongst them so that everyone is, in essence, rowing the same way, or that everyone in the orchestra is playing the same music, as opposed to people playing different pieces of music and expecting to hear it go well.
What people want from the medical system is to be healthy. Anytime you’re not paying for what people really want, somehow you’re going to run into trouble.
COWEN: Let’s say you, David Cutler, have $100 billion, and you’ve hired a team of doctors to look after you. What kind of contract do you write with them? You’ve thought about this more and better than anyone. What would you do?
CUTLER: The kinds of contracts — based on the literature — I think are best, are you get paid a fixed amount for caring for the person. A per-member per-month fee for caring for the person. If you have an episode of care, there’s a fixed payment for the episode. That encourages coordination across the episode. There’s a lot of outcome measurement, so that you can say, “If you really do a good job caring for the patients or the patient, then you’re going to earn a lot extra.”
COWEN: You would hire a third party to assess how well your doctor had done? Because the literature is not mainly based on people with $100 billion, right? You’re designing something from scratch with extra resources.
CUTLER: Yes, although there are metrics out there that you can certainly use. Most conditions — there are reasonable metrics that if you put them together, the docs are generally happy with. They’re not perfect. I think one could do pretty well by that. If you captured a lot of the doc’s attention — for example, the way that you do better — if you look at organizations that do really well, the way the organization does it is, they go to the doctor and they say, “This is what we’re going to practice here. We’re going to do images in this circumstance. We’re not going to do them in this. We’re going to do this in this circumstance. We’re not going to do it here.”
Then, if the doctor says, “But that’s not the way I’ve been practicing,” you go to them, and you say, “Look, here’s the literature. Here’s the stack of articles that shows that this way is best. Now, go ahead and read through them. If you want to talk about them, and you don’t believe they’re right, let’s absolutely have that conversation. But until we agree that there’s something better, this is how we’re going to practice.”
It’s like the whole organization is invested in doing the right thing, and then it sets up its systems and processes so that it’s all geared towards the right thing.
COWEN: As you probably know, from 1950 to 1990, American youth suicide rates tripled. Why did that happen? And they’ve gone up since then at various times.
CUTLER: Suicide rates are an extremely unfortunate poor outcome, and they have also been going up recently, particularly more among middle-aged folks, but also among younger folks as well. As you’re alluding to, I’ve done some work on suicide. There is a confluence of different factors. On the demand side, there is pain of various forms, and there’s demand for pain relief. Pain can be physical pain. It can be mental health impairment. It can be despair. I’m putting those all together as being pain.
Then there’s, on the supply side, the ability to carry it out. In the case of suicides, it’s access to guns. Guns are typically, particularly for men, how men go about killing themselves. Ready access to methods of acting on pain very rapidly. In other cases, people will take opioids, or they will overdose on other drugs. Again, the more handy they are, the more of that that occurs.
Not all of those are rational decisions. Sometimes it’s just an intense response to pain and the need to self-medicate the pain that sometimes goes awry. Or sometimes it’s just, “I can’t handle it, and death looks good now.”
I think it’s both on the demand side and the supply side, and it varies for different types of things. My sense is, what’s true about kids is not necessarily true about people who are dying of opioid addiction, where I put a lot weight on the supply side and less on the demand side there.
COWEN: How strong do you think is the evidence for the Twenge hypothesis that right now iPhone addictions are causing isolation, anxiety, mental illness in young people? Is that just two time trends in tandem, or is there actual evidence that’s true?
CUTLER: It’s obviously time trends. The question is the evidence, and I haven’t been through the evidence thoroughly enough to have a firm view. I know there are people who believe that it’s causal, but I myself don’t have a strong view as to what extent it’s causal versus correlational.
COWEN: In 2006, you wrote a famous paper, “Why Americans Smoke Less.” You argue it’s because they better understand the health effects of smoking. Since 2006, anecdotally, I observe Western Europeans smoke much less than they used to. Is that because they’ve acquired a similar understanding? Or for other reasons?
CUTLER: You started this off in one of the most amazing places, which is that, 40 years after the US surgeon general conclusively demonstrated that smoking was bad for you, and 50 years after it really was known that smoking was bad for you, Americans had cut smoking in half, and people in Western European countries had not. How can that persist?
It’s not that in Germany they had no idea that smoking was bad for you, and so on, or in France or anything. But in part, it’s the social norms and the peer-type influences, and that shows up through public policy as well.
In the US, we have periodically raised taxes on cigarettes. We have put in restrictions where you cannot smoke inside buildings, you can’t smoke in public places. All of that discourages smoking a lot. Smoking is also a social activity, so if your friends are smoking, and you don’t have restrictions on where you can smoke, then people are more likely to start smoking and continue smoking.
Smoking, even though it’s a sort of individual act, it displays a lot of these external consequences, these external effects, and they hit very much sooner in the US than in other countries. That is, people in the US really responded quite rapidly, and it took people in other countries a longer period of time. For that matter, it also took, for example, youth in the US a longer period of time.
If you look, youth smoking was rising through the 1990s until the late 1990s, with the Master Settlement Agreement between the tobacco companies and the states. And all of a sudden all this information came out about how the tobacco companies were lying to people, and they were pretending that they didn’t know smoking was bad, even though they knew smoking was bad.
That just turned off so many people — particularly younger people — that youth smoking has begun a two- to three-decade decline since then. You can have the peer effects, if you will, writ large. Information can be ongoing and have huge impacts. And I think that’s what we’re picking up between the US and other countries.
COWEN: Turning to your book with Ed, which again, is Survival of the City, just coming out — putting aside anti-COVID measures, which we’re all familiar with, how can cities be made less contagious for disease in America?
CUTLER: We learned a couple of things about cities and contagiousness of disease. One is that poor health anywhere is poor health everywhere. I may be totally selfish. Go back to when you endowed me with a lot of income. I may care only about myself. Until a couple of years ago, that meant I didn’t have to care about the health of people in poorer parts of Boston.
Of course, I do care about them, but continuing the analogy, now I really have to care about them. I have to worry a lot, are people obese? Because obesity is associated with the spread of COVID-19. Are people smoking? Because smoking will predispose to other types of illnesses. Are people IV drug users? Because that’s going to spread HIV, and that’s going to mean that heroin is all over, and so my kids are going to be exposed to it in school, and so on. Are people using electronic cigarettes?
All of a sudden, I have to worry about all of that. I think that has enormous implications for public policy in terms of what public policy needs to think about. I also think that it changes the conversation from when we think of medical care as being, what’s my policy towards doctors, and what’s my policy towards hospitals, and so on. We need to reinvigorate more of the public health infrastructure.
What’s happened over time is that as infectious disease has declined, we’ve spent less and less money and less and less attention on the public health system until, basically, parts of it collapsed in COVID, and we realized, “Oh my God, it’s a bad idea to have a nonfunctioning public health system.” So we’re going to have to rebuild that, and that’s going to mean a lot more money, but that’s going to be essential in reducing the spread of infectious diseases.
COWEN: What’s wrong with, say, the CDC? Their budget in real terms has gone up quite a bit. This morning — the day we’re recording — they issued a warning to Americans not to travel to Canada, which is literally insane. It’s the Biden administration now for some time. I’m broadly libertarian, skeptical about government — even I was shocked when that happened. What’s the model that explains how something like that can come about?
CUTLER: There are two different types of things. Sometimes there’s just bad luck. For example, the CDC’s first tests for COVID got contaminated, and it took them a while to figure out what was the contamination, and stuff like that. There’s just bad luck. Then sometimes it’s systemic in that — an agency is falling apart, or it’s not sure about its mission or anything else, and then it’s a structural problem.
One of the things — and I’m sure the libertarian in you wants to go there as well — is, I think, in general, it’s a bad idea where all of the public health of the country hangs on one agency so that if that agency has bad luck or bad leadership or just whatever happens, the power goes out, then nothing can happen. It’d be as if there were one hospital in Boston that could do cardiac surgery, and if the doctor was sick that day, “I’m sorry, we just can’t do cardiac surgery and emergencies that day.”
I think in general, it’s just a bad idea when everything is stretched so thin that it’s hanging from a thread. I don’t know about how it’s functioning now. I haven’t done any looking or reading, but the agencies, all of the agencies of the public health system were so beaten down by the Trump administration that good people had left. It was difficult to do anything. They were just getting stigmatized, and they crawled into bunkers, and so on.
It takes an enormous amount of time to recover from that sort of thing, so that there can be enormous lasting harm from even a few years or a few months of just completely awful policy.
COWEN: Take a given family — they’re thinking about the health tradeoff of moving to the suburbs. What would you advise them? What’s the main cost? What’s the main benefit?
CUTLER: Moving out of a city and into a suburb —
COWEN: Moving out of a city, not Manhattan, but a large city.
CUTLER: — as opposed to moving from a rural area.
COWEN: Right. Moving from one of the top 10 cities to an upper-middle-class suburb. What’s the health tradeoff?
CUTLER: Probably not much in the sense that most of their behaviors will be the same. The exposure to infectious disease, in general, is higher within cities. If you look, this was not too early on in COVID-19, but it’s become more so, which is that increasingly urban areas are easier to spread infectious disease because there’s more close contact. You’re taking subways, things like that. I would say probably, on that count, there would be a little bit less exposure.
On the other hand, one of the things I’ve always found interesting is that people say they’ll be happier when they move to more space, but when you actually ask them before and after, they’re not much happier. The reason for that, at least in part, is that people get very stressed out by commutes. They don’t realize how much they’re going to be stressed out by that.
They think about, “I’ll have a nice lawn and a backyard and so on.” They don’t realize that five days a week, they’ll be spending a lot of time in a car commuting. I would think that that would be an issue for moving out to the suburbs, which is, is there going to be a lot of frustration and stress involved in some aspects of it that one hasn’t thought about?
COWEN: Within cities, are there high returns or low returns to making travel through the city easier? Basically, you would get people to the emergency ward faster if they had a gunshot wound or a heart attack. Does that matter much, or that’s seventh order?
CUTLER: No, that matters quite a lot. Having a well-functioning emergency system is extremely important. Just take one example. When the marathon bombings occurred in Boston a few years ago, the number of deaths was very small. I think it was two or three deaths. No one who made it to a hospital alive died. That was because the emergency system had practiced intensely, how do you handle a mass casualty situation? Where do you get people to? What do you do once they’re there?
There should have been way more deaths than there were, but it was because of the ability of the system to handle it that we wound up doing better. I think, for any city, figuring out how to get emergencies treated right away and to the right places, and then having those places do the right thing, is really important.
COWEN: If we put aside the fact that you likely have personal connections where you live right now, as many of us do, just in the abstract, as you grow older, where in this country would you most want to get sick?
CUTLER: Say I have to move from Boston. I can’t really know very much. The upper Midwest has very good healthcare if you think about the Minnesota-Wisconsin area. Extremely good healthcare pretty much across the board. The gradients there are not as big as you’ll see in other areas in terms of the care received. They don’t go wild on doing stuff. Life expectancy is high, not all because of the medical care system, but likely a little bit of it is because of the medical care system.
There’s more of a social ethic to the system in terms of we care about people and people as a whole, and stuff like that. I would say that’s probably where I would go if you forced me to move.
COWEN: What’s the risk that VIPs get worse care because they’re overtreated?
CUTLER: For some things, reasonably high.
COWEN: What would those things be?
CUTLER: Excessive testing is a big one. For example, excessive PSA testing for men potentially with prostate cancer. It’s not even recommended that you get tested any more. It’s just recommended that you talk to your doctor about testing. Or excessive biopsies in, let’s say, women, where you might suspect breast cancer. What you do after biopsy? It’s the cascade. People talk it about in terms of a cascade. The first thing is never that bad, but then it leads to the next thing and the next thing and so on.
If you look at people who go into a hospital — we were talking about Minnesota or Wisconsin or so on versus higher-spending areas. In the higher-spending areas, “Well, gee, we noticed this slight little thing on your CT scan. It’s not related to why you’re in here, but maybe we ought to bring in the specialists to look at it.” “Maybe we ought to take that out a little bit.” Or “maybe we ought to do this.”
You wind up with this whole cascade of things that are completely unrelated to what was going on — or only tangentially related — that cost a lot but bring anguish and sometimes worse health outcomes as a result.
COWEN: As you know, early in the 20th century, recent immigrant arrivals to the United States clustered together fairly tightly in terms of living in the same areas, often within cities. That trend then weakens throughout much of the 20th century, and in the last few decades, it’s been re-emerging. Why is it coming back?
CUTLER: There’s a line of work that, at least on the health end, comes from Anne Case and Angus Deaton. They and a colleague, Arthur Stone, wrote a Proceedings of the National Academy of Sciences paper last year, where they argued basically, my shorthand is that education is the new race, that we’re learning how to dismantle some of the barriers that have existed by race, certainly not all of them, but some of them. What’s coming up is that education is increasingly associated with where you live, what resources you have access to, and so on.
I think that maybe some of what’s going on — which is that society is bifurcating along the haves and the have-nots based on socioeconomic status as opposed to race — that the have-nots are really a large share of the population, and the have-nots can’t afford to live in Silicon Valley, and they can’t afford to live in the Boston metro area, and they can’t afford to live in New York.
If you look, mobility used to be everyone moved to the high-wage areas, but now the high-wage areas have such high house prices that nobody can afford to live there except if you’re extremely wealthy. If you want to move, you’re getting compressed into areas where there are more lower-income people as opposed to more high-wage stuff. I’m really quite worried that society is becoming a kind of insider’s game as opposed to a situation where outsiders get to play as well.
COWEN: We, alas, have time for only two more questions. Your book with Ed, Survival of the City — if you had to pick an area — it doesn’t have to be disagreement, though it could be, but simply something you and he see differently. What would that be, of the topics in the book? And where does that difference come from?
CUTLER: We had incredibly interesting discussions about if businesses left cities because workers decided to move to the suburbs, what would that mean for cities? Would that be like mass terrible? Would that be not so bad? I had originally thought, “Oh my gosh, it would be terrible for cities if all the jobs moved out.” And Ed convinced me that my views were certainly way overstated. Maybe there was not nothing to them, but certainly, they were way overstated.
To give one example, if you move 10 percent of businesses out of cities, a couple of things could happen. One is, that’s roughly two or three years of growth, typical growth by business. So within two or three years, you’re back to where you were.
Another thing that can happen is, you can turn commercial real estate into residential real estate. That’ll make cities cheaper for people who really want to live in cities — younger people, people who don’t need a lot of space, who don’t care about a lawn, and so on, but people who really want to live close by other people. That’s one situation where my view changed because of conversations that the two of us had, just fantastically interesting conversations.
COWEN: Last question. To improve the US healthcare system, if you could offer one nonobvious recommendation — not so much on political agendas right now — but something we could do that would just flat-out be better, what would that be?
CUTLER: There are so many things that one thinks about. I would say the be-all and end-all of healthcare is the money that’s spent. When you spend so much money, you can’t direct the system well. You can’t insure people. You can’t invest in the kinds of things you want. After COVID, I would focus, first order, on reducing spending, and there are two areas that I would address uppermost in my mind.
The first one is certain pharmaceuticals that are way overpriced relative to what they deliver because of whatever gaming and so on. The second one is the administrative costs of healthcare that are absolutely absurd, that drive up prices so people can’t afford it, that frustrate people and doctors, that make it be extremely difficult for people to get the care they need, and don’t do anything valuable.
Those are the two areas. I would show that, once I could save there, I could make the medical system be better and cheaper, and then that would start the ball rolling on everything else.
COWEN: A real pleasure. David Cutler, thank you very much. Again, David’s new book with Ed Glaeser is Survival of the City: Living and Thriving in an Age of Isolation.
CUTLER: It’s been a pleasure to be with you, thank you so much.
TYLER COWEN: Now we have Ed Glaeser. Ed is professor of economics at Harvard University, and most importantly, he is arguably the greatest urban economist ever to have lived. Ed, welcome.
EDWARD GLAESER: Thank you very much, Tyler. Thank you for that distinctly over-the-top introduction, but I’m very grateful.
COWEN: Let’s start with a simple question. All this enthusiasm about cities and agglomeration benefits — the pandemic comes along. A lot of people transition to work from a distance, and then we see big measured productivity gains. What has gone on there?
GLAESER: It reminds us that for many jobs, in a static sense, you can do this long-distance. You can make things work. I think many of us found this. We wrote this book in eight months over the pandemic year, distinctly away from each other, partially because there were no distractions, and all that was good.
However, you also need to recognize the limits of long-distance living. The most important of those limits is just it’s much less fun. It’s much less joyful, but while it seems as if it’s fine for static productivity, it seems distinctly more problematic for people learning and for onboarding new talent.
Let me just give you two types of studies, one of which is we have the call center studies. The father of that was the Nick Bloom paper, which was a randomized control trial in China. A more modern version is done by our students, Natalia Emanuel and Emma Harrington, which looks into American call centers.
Both of them find the same thing in terms of static productivity. If anything, it goes up, but the workers who go remote are much less likely to be promoted in both studies. One interpretation of this is that promotion in the call center work means that you actually are given the job of handling more difficult calls.
How would your boss know that you are good at handling difficult calls if they weren’t in the same room with you? How would you learn how to do those difficult calls if you weren’t around other people? So while the static productivity remains, you lose the dynamic benefits of being around other people.
Second piece of evidence it comes from Burning Glass Technologies and new hires. Even though Microsoft tells us that its programmers were just as productive, overall, new hires for programmers were down 42 percent between November 2019 and November 2020. Firms were clearly unwilling to take the same kind of risks of hiring new workers that they couldn’t inculcate in their corporate culture or screen them properly, or do any of those other things.
Even though measured productivity did well during the pandemic, there were still lots of disruptions. In particular, many younger workers who came of age really lost out as a result of this.
COWEN: If work from a distance goes fine in the short run, what’s the cross-sectional prediction about where it will persist in the future? Is it firms facing bankruptcy, firms with immediate projects now, possibly start-ups who will then later transition to all being together in one big happy family, but they’re afraid they’re going to fail before then? What should we expect?
GLAESER: I think we should expect young workers to be more likely to be brought together. Young firms, as well, because you’re very much at this learning, creative phase. I think the optimal work-from-home strategy is a couple of partners who are in an accounting practice and have decided they know each other perfectly well and are delighted to Zoom it in from wherever they are.
I think, unquestionably, working from home will remain a part of the economy. It may well be many workers end up spending 20 percent of their time working from home, even if they’re part of a generally full-time job. But for younger workers, for firms that are just getting started, I think being live is likely to continue being a major part of the work environment.
It also depends a lot on what your home environment is like. If you’re like us — if you are a middle-aged professor who’s likely to have a comfortable home office, and maybe even not having kids at home anymore, certainly not kids who are crying all the time at home anymore — working at home is a lot more pleasant than if you’re a 23-year-old and live in a studio apartment in Somerville or New York or London.
COWEN: So, which countries will benefit the most from this? If a Silicon Valley firm can now hire top talent from Mumbai or Delhi, and everyone’s used to the Zoom call, even if most of the people in the home office are back to being together, what’s that going to matter for geopolitically?
GLAESER: So, for sure, this is going to continue the rise of places like Bangalore. The ability to connect over long distances helps really educated people in India. It doesn’t necessarily help the bulk of 1.1 billion Indians who do not sit with computers on their desk and are not going to be natural software programmers. In general, you’d think educated areas will benefit from this more than less educated areas would.
There was a huge educational digital divide during the period of Zoom. In May 2020, 68.9 percent of Americans with advanced degrees were telecommuting; 5 percent of high school dropouts were telecommuting; 15 percent of people who just had high school degrees were telecommuting. The skill divide on this is enormous. We shouldn’t possibly think that in a world of universal telecommuting, that’s going to do anything for the bottom third of the American skill distribution.
We should expect, across cities, that cities that are attractive and are natural places where educated people want to locate, well, they may be in the US, or they may be elsewhere. I don’t think the model is that your Silicon Valley startup says, “Oh, just phone it in.” But I do think, you have eight people and you say, “Boy, we really love skiing. Why don’t we go to Vail?” Beaches? “Why don’t we go to Hawaii, or Bali for that matter?” I would expect a reallocation towards high-quality-of-life areas and high-quality-of-life countries.
COWEN: And this helps Britain and Ireland because of the English language? Or not? Cements English as a global language?
GLAESER: Absolutely. Once we get past the chaos related to Brexit, sure. Why not? Ireland is both a very attractive place to live, and it has lots of great English speakers and is very technologically savvy.
COWEN: Now, if I walk around Paris, London, New York, Dublin — almost any city you care to name — I see beautiful, older urban neighborhoods, not everywhere, but really quite a few of them if the city has not been bombed into oblivion. But I don’t see newly created, wonderful, beautiful urban neighborhoods really anywhere. Why is that?
GLAESER: I’m not sure that I agree with you. Certainly, the older cities of this country have regulated themselves into stasis. We don’t get beautiful new neighborhoods because historic preservation is a completely binding rule in London, in Paris, and in New York. It’s just very difficult to change the neighborhood in a way that works.
In terms of newer neighborhoods, more generally, part of the issue is that we always build our cities around the transportation technology that is dominant in the era in which it’s being created. For the past 80 years, the dominant technology has been the car, which means there are lots of nice places for you to drive around in America, but there aren’t that many new pedestrian neighborhoods for you to walk around.
COWEN: But there have been plenty of buildings, say, outside of the central core of Paris, sometimes even in the Paris region, but all sorts of other parts of France, and it’s never beautiful. The French have an incredible culture, an amazing eye, highly sophisticated, maybe willing to sacrifice cheapness for beauty. Yet, they seem incapable of building new, beautiful neighborhoods, whether they’re walkable. We have old people’s homes which are completely walkable. They’re never beautiful. Nothing’s beautiful.
GLAESER: My father was an architectural historian, Tyler. He was a curator of the Museum of Modern Art. So, I have a certain feeling that we as economists are not necessarily the best judges of the beautiful. What’s your view of the Centre Pompidou? Do you think beautiful or not beautiful? What’s your view on Renzo Piano?
COWEN: I think there are many excellent individual buildings. Bilbao Guggenheim. There’s a long list, but neighborhoods is where we’re falling short, not individual buildings. Renzo Piano — amazing. [Peter] Zumthor — go all the way down the list. But neighborhoods — I don’t see them.
GLAESER: How about Barcelona, the parts of Barcelona that were built after the Olympics? That’s a perfectly walkable neighborhood and not a terribly unpleasant place.
COWEN: “Great to live in, not terribly unpleasant” is a wonderful description of it. That’s the best we can do? We’re so much wealthier. It’s crazy. I don’t get it.
GLAESER: It’s an interesting question. What about areas in Asia? All of Seoul is new. There are no blocks in Seoul that you find inspiring?
COWEN: I like them. I enjoy Seoul, but the really beautiful parts of Seoul seem to be the older remnants, which are not many at this point.
GLAESER: I will say, one of my favorite architectural moments in Boston is where H.H. Richardson’s Trinity Church abuts against the Hancock Tower.
COWEN: Agree, I love it.
GLAESER: I actually think that that juxtaposition is stunning, and it’s exactly when you get this dialogue between an architect of the past and an architect of the present when really magical things happen.
COWEN: Which global city of any age is most underrated for its beauty?
GLAESER: For its beauty. Again, you want me to make beauty statements —
COWEN: Beauty statements.
GLAESER: — that are —
COWEN: This is a podcast.
GLAESER: If we want to talk about the most efficient, we can all agree on Singapore. Now, I don’t know how underrated it is, but the last place I saw you live is a particular favorite of mine, which is Edinburgh. I don’t know whether it’s underrated or not, but it’s certainly spectacular. I would say, actually, there are parts of Glasgow which are definitely underrated, but the physical bones of Glasgow are magnificent.
I would say, more generally, there are lots of American Rust Belt cities where the physical bones are fantastic. Part of the South Side of Chicago — not exactly Rust Belt — but the buildings along the lake — a little bit too monumental, not necessarily built on a human scale, but stunningly beautiful in the way that they work with the water.
Parts of Detroit — old buildings, meaning from before World War II, where it really works as space unbelievably well, even if the city is facing the woes that Detroit has faced for 70 years.
COWEN: Your father was an architectural historian. What did you learn from him about the economics of building that has fed into your work?
GLAESER: I learned nothing . . . Well, the only thing I remember about my father telling me was, he had a model of housing cycles, which was not particularly rational, but it was a model that said that you always started buildings during the boom, which means you always ended up completing them during the bust, which means you always ended up losing money on the buildings because you got the timing all wrong.
Now, I didn’t know at the time how to think about this. There’s some truth to this. It’s not totally wrong in terms of housing cycles. But my economics I learned from my mother, who got her MBA at Columbia and worked in capital markets for Mobil for many years. I still remember this epiphany when she explained to me . . . I still remember where it was — on 3rd Avenue between 63rd and 64th Streets, she explained Bertrand competition to me. It was the most magical thing in the world, this idea of these two shoemakers, as she told it, who are competing on price and somehow or other, you’re getting down to the actual cost.
COWEN: Can larger cities succeed over the longer term with dysfunctional public schools?
GLAESER: It is amazing how underperforming cities are for providing upward mobility for poor kids. It is the facts that came out of Raj Chetty and Nathan Hendren and John Friedman’s Opportunity Atlas. At the metropolitan area level, density and size are both negatively associated with performance. Within metropolitan areas, density and proximity to a city center are both negatively correlated with upward mobility.
There’s a huge cliff right at the edge of the central city’s school district, where if you’re out of the central city school district, you do much better economically and you’re much less likely to be incarcerated as an adult. It’s the modern version of Lincoln Steffens’s The Shame of the Cities, the fact that we have had this problem for decades and have been unable to fix it.
Yes, our cities manage to succeed despite that, but it is, I would say, in terms of our new book, the part I feel least hopeful about is the school problem. In some sense, one of the stories that we tell is that every city is going to be — every place is more vulnerable to natural disaster if its existing social institutions are weaker.
COWEN: What’s your political economy model of the persistence of that problem? Why doesn’t the median voter in the city just fix that? We all want better schools.
GLAESER: I think it’s very hard to change things because there are very powerful entrenched interests in schools and because schools are somewhat complicated. Unlike policing, principals cannot immediately tell teachers how to change their behavior, whereas police chiefs can actually change what their officers do on a dime. It’s very, very hard to get teachers to change. Consequently, working change in the schools is incredibly hard.
Now, we could move much more radically to vouchers to add competition. I think, in many cases, that would be a great thing to do, but it’s been very hard to move that politically, partially because of the strong opposition of the teachers’ unions. One of the things that we push in our book is something that feels more like wraparound, after-school, summertime vocational training, competitively sourced, pay-for-performance because you know, when someone’s a plumber, whether they’ve learned how to do this or not. You allow a full degree of competition, and you can do it in a way that completely bypasses the unions.
I’ve been on the edges of this reform movement for 20 years now, and it’s hard to be very hopeful about it, in part because the political economy is just difficult because there are teachers who vote who are very anxious not to see change, even as they are often doing heroic work in the classroom themselves.
COWEN: Are cities, as a result, just population sinks? If you think of population shrinkage as a major problem in parts of the developed world — obviously Japan, Italy, Singapore, South Korea, maybe the United States — and fertility in cities is below replacement level. Aren’t cities a big problem, and our founding fathers were right? We should be suspicious of cities? They can’t fix their own schools. Education is super important. They’re taking away people, which is also a fiscal problem.
GLAESER: Unlike many of our colleagues, Tyler, I think I am actually with you in that. I’m, in my heart, a natalist, just to be entirely clear. It’s part of believing in agglomeration economies that I just like having more people. Even if I weren’t worried about Social Security paying for itself, I think each new human on this planet is a new source of creativity that can work some magic.
Now, it is absolutely true that suburban living has often been a complement to having kids, partially because the space is cheaper, and certainly, that’s always going to exist. But if you think about it, the part of the cities that are really detrimental to fertility — I think it’s got to be the schooling. It’s got to be the people living in cities don’t think they have access to great public schools, unlike people living in suburbs, which leads us back, yet again, to think that the most important thing going forward for this issue, as for so many others, is to improve the quality of urban schooling.
COWEN: Why does it seem that urban crime has moved upward again? And, at least possibly, this seems to predate the pandemic. What’s our best model of that?
GLAESER: Most of the changes in crime are very hard to explain with very much. I wrote a paper almost 30 years ago now, called “Crime and Social Interactions,” that goes back to observations that early 19th-century French social scientists made, basically that the existence of pure effects in crime means that you just get lots of variation that’s not very easy to explain.
I think we shouldn’t also, though, forget that it’s possible that some of this has to do with changes in policing practices. The evidence on policing practices leading to the reduction in crime is actually pretty thin. Most of the people who dabble in this area believe that there’s an elasticity of crime with respect to the quantity of cops that seems pretty strong. That comes from just various quasi-experiments, like throwing more cops at the neighborhood seems to reduce crime, but the styles making a difference is much harder to tell.
There’s a great paper by my colleagues, Roland Fryer and Tanaya Devi, that shows that after there were pattern-of-practice investigations of police forces that followed a viral incident of a police shooting, that crime rates spiked enormously, apparently, because police stopped going to high-crime areas when they came under investigation.
I think that’s the kind of thing that would make me very worried about things like defund the police. While I think it’s absolutely true that we should demand that police treat every citizen with respect, and we should have metrics that keep them under account, and we should have a system of incentives for police chiefs to require this, we certainly can’t defund the police.
In fact, in general, if we’re going to ask the police to both prevent crime and to behave more respectfully to everyone, that’s going to require more funding for the police, not less, because I don’t believe there’s a free lunch here, as I don’t believe there’s one anywhere else.
COWEN: Will NIMBY come to dominate the American Southeast? Is that the political equilibrium everywhere once you get enough development?
GLAESER: This is the worry, Tyler. The beauty of the Southeast has been, it has been the land of free development, where ordinary Americans can buy a home at a reasonable price because you haven’t fettered the developers. Yet, in place after place, in Austin, Texas, in central Atlanta, we’re seeing the NIMBY walls go up. We’re seeing more and more barriers to tearing down and rebuilding.
I’m worried about this. I hope the answer is no, but it certainly is something that would be very bad for America if we stopped having at least some parts of America that make it easy enough to build so that ordinary people could buy housing at a decent price.
COWEN: If cities can’t fix their schools, and can’t fix their NIMBY problems, and are super expensive, and don’t produce enough human beings, isn’t there a funny second-best defense of “let’s keep people out of the cities”? The NIMBY is okay, keeps them in the suburbs, better for them anyway. There’ll be a higher birth rate. You need to have someone keep those cities going, but write them off a bit. Maybe they’re just not fixable.
GLAESER: Remember, I’m an economist, which means that, like you, I believe that the real desiderate is choice. What we want is to make sure that people have options. And there are some Americans that want to live in cities, and some are going to want to live in suburbs, and some are going to want to live in low-density rural areas, and that’s just great. We don’t, in any sense, want to do away with any of that. I don’t want to give any sense in which that’s not at the heart of what I believe.
At the same time, I think that cities — lots of areas are doing a crappy thing by making it too difficult to build. I think there are social welfare benefits by freeing up developers.
I think, in general, it’s awful that cities aren’t doing a better job with their schools, and we should fight against those things. We’re not doing it just so that more people will come to cities, or that that would be the right result. We’re doing it primarily because the kids who are going into the schools are getting a raw deal, and we want them to get a better deal.
In general, one of the themes of the book is America has done an amazing job over the last 40 years of protecting its insiders at the expense of its outsiders. Schooling, NIMBYism are all examples of cases in which our cities have become — and our suburbs — machines for protecting entrenched interests of middle-aged, middle-class people, and making it difficult for the people who come and start with less to find a brighter future.
COWEN: What’s your underlying political model of why so many cities, especially coastal ones, have become so politically clustered along some particular dimensions. It didn’t use to be this way, right?
GLAESER: The model I have of this is “Strategic Extremism,” which I published in the Quarterly Journal of Economics in 2005. That model emphasizes communication. In that model, you had people clustering all along religion — as opposed to other cultural dimensions — on the right because there were people who were speaking to Republican voters who had religiously oriented microphones. By contrast, the left tended to be more dominated by economic issues because the left had the unions, and the unions were the primary communication device.
That’s a model that emphasizes communication as the ultimate determinant of the way that partisan divides happen.
COWEN: What do you predict is the final equilibrium? Is it self-reversing, or does it just keep on going and going? Which could give you another reason to be skeptical of cities.
GLAESER: I don’t think this is just cities. Were you asking a question — I missed you for a second — about partisan divides or about geographic divides in partisanship?
COWEN: Well, I think it’s better for states and cities if they have two political parties and the two parties compete no matter what your particular views may be. So if cities don’t give us this, isn’t that another problem with cities? And if they keep people out, maybe that’s not a terrible thing.
GLAESER: I believe very strongly that some form of competition — That’s a major theme in this book, that in fact, cities are more vulnerable than ever, even if face-to-face learning comes back. It’s never been easier for people to leave the city. Treating your rich, treating your businesses like they’re a piggy bank is a terrible mistake.
I’m a traditional East Coast Republican, all right, Tyler? I believe that there should be Republicans in cities, and in fact, I often have been one. I think this is a good thing to have, but I’ll settle for a robust pragmatic wing of the Democratic Party debating against a robust progressive wing of the Democratic Party.
That’s partially what the book is arguing for — that city governments really need to be pragmatic because cities are vulnerable. Unless they make sure that they’re actually providing decent schools and safe streets, and doing so in a reasonable, cost-effective way, people will just run away. And unlike you, I don’t believe that’s a good thing because I think that when our geographic movements are determined by political dysfunction instead of economic reality, that’s bad.
COWEN: Putting aside COVID policy, which of course is important, what else can we do to make our cities healthier?
GLAESER: In terms of the things that we talked about primarily in the book, around housing and policing and schools, which we have already discussed — we do not do a lot in the book on transportation, but I certainly join the crowd of economists who have argued that congestion pricing is the best way to deal with urban traffic jams. There’s no reason not to charge people for the social cost of their actions on that. And giving away street space for free is just crazy, especially since we now have technologies that can handle this.
And if we introduce autonomous vehicles without congestion pricing, you have just lowered the cost of sitting in traffic, which means the first-order behavioral response is that more people will sit in traffic, and our congestion will get even worse unless we introduce this from the beginning. So I think pricing is really good.
I think it’s also key that we start thinking about — we have new transportation technologies in a way that we haven’t in a long time. We have new autonomous vehicles, and it seems to me very odd that we’re still thinking that the right technology for connecting cities is the 19th-century technology of trains. Envision single, dedicated lanes for autonomous buses that go 150 miles an hour. This is going to be more flexible. It’s going to be cheaper. It’s a 21st-century technology as opposed to a 19th-century technology.
COWEN: I’ve seen the 1959 Brazilian movie, Black Orpheus, set in Rio de Janeiro, and the hills are empty and the city is beautiful. Now, if you fast-forward to Rio today, it’s a war zone, and it’s extremely densely populated. Is Brazil a good example of failed YIMBY policy?
GLAESER: No, no. I think that those favelas are providing upward mobility for millions and millions of Brazilians. The overall track record of cities as a tool for turning poor farmers into middle-class urbanites is phenomenal. The one failure of Brazil’s cities is that their police have failed, and that’s the one failure that I would say.
When you look at the failures of developing-world cities — and there are plenty — there are demons that come with density, as you pointed out. There’s crime; there’s contagious disease; there’s traffic congestion. But the right answer is not to look at those and say, “Oh, better you just stay on the farm.” There’s no future in rural poverty in these places. The right answer is to do battle against the demons that come with density.
COWEN: But think of your own earlier paper on “Urban Giants” from 1995. A major city can be too densely populated for rent-seeking reasons. Mexico City, arguably, is too large. You’d rather have more people in Monterrey and Guadalajara. Rio, arguably, is too large. Shouldn’t Brazil, many other countries, Austria, have a more even distribution of city sizes, more like Zipf’s law, which sometimes they don’t have?
GLAESER: I don’t think there’s anything normative about Zipf’s law. I think, in general, we should fight against the tendency to distribute extra rents to particular localities. That is certainly right. It was almost surely a good thing that Rio stopped being the capital of Brazil about 60 years ago, and that those rents went to Brasilia, which is now, currently, too large, relative to its economic functioning because it’s a political hub.
I don’t think that you can leap from saying, “Oh, we want to restrict Washington’s tendency to pour rents on Washington, DC” — you shouldn’t then move from there to saying, “Oh, I’m going to have a national spatial policy. New York, you’re slightly too big. Chicago, you could be 30 percent larger.” How are we going to know this? We don’t have any way, as social scientists, to actually know this exactly, and we should resist any urge to try and micromanage the locations of firms and individuals.
COWEN: If we think of the United States — as you know, in 1910, there’s a high degree of immigrant segregation. People from the same country living next to each other — lower East Side, wherever. That declines throughout most of the 20th century, and now it’s come back. Why is that? Why the change?
GLAESER: Immigration has come back . . .
COWEN: Even adjusting for numbers, it seems there’s more clustering.
GLAESER: How you adjust for numbers — it’s never entirely clear. Remember, David and I struggled with this in our 100 years of American segregation. It’s very hard to know exactly how to adjust for numbers.
It’s also a question of how linguistically distinct the immigrants are, how educationally distinct the immigrants are. Our view was that, in general, segregation is more harmful the less educated the group is. We should particularly worry about the segregation of those groups that have less skills, and maybe take policies to fight against it.
Although it’s not clear, apart from policies that ban outright housing discrimination — which, of course, has been illegal for 50 years — it’s not quite clear what strong policies we have for reducing levels of segregation within cities.
COWEN: How dense should Los Angeles become?
GLAESER: I don’t have a view about how dense it should be. I have a view about how regulated it should be, Tyler, and I think it should be less regulated.
COWEN: How dense would it then become? What would it look like? Would it all look like Culver City?
GLAESER: This is exactly the same point as Marty Feldstein made, starting in the 1970s, that for many public policy problems, you don’t need to know where you want things to end up because it’ll never end up close to where you want it to end up. All you need to know is the right direction. I feel entirely confident, given how much demand there is for Los Angeles, given how productive Los Angeles is, that we should have more homes in Los Angeles.
Whether or not that means ubiquitous skyscrapers everywhere or more duplexes, I don’t know. We’re only likely to get the increase in duplexes. For example, the California law that was put in, I guess, a week and a half ago — I don’t know if Gavin Newsom has signed it yet — that allows much easier permitting for two-unit projects. That’s hailed as a huge triumph because it makes it easier to build projects with exactly two units.
This is what we’re actually talking about. I feel confident that I’m in favor of two-unit projects. I think there are lots of core areas in downtown LA that would probably be well served by having some more high-rise condos than they currently have now.
COWEN: As you know, there are quantitative attempts to estimate the cost of NIMBY policies, most notably by Moretti among others, but those attempts don’t typically take into account the fact that the US is uniquely bad at building cheap infrastructure. If we made New York, San Francisco, LA, other cities much larger, we would have to expand infrastructure, but that’s one of the things we’re worst at. To what extent would the potential gains from YIMBY dwindle if we take costly infrastructure into account?
GLAESER: I agree with you in terms of the cost of American infrastructure. It’s a shocking thing how expensive it is to build. In some cases, for example, if you expand density in core areas of Manhattan, many of those people can commute to work by walking and the sidewalks are not overburdened.
Those are areas which do not require huge amounts of extra infrastructure to build. Often, if you think about the infrastructural requirements in the center and on the edge, it’s not totally obvious that it’s higher in the center than on the edge. In many cases, you can take into account existing economies of scale.
In cases like Los Angeles, where the gap between valuation and construction costs are so large, even if you say you’re going to spend on infrastructure twice as much as on physical cost, you’ve still got a lot of social value that you created by opening up a little bit.
COWEN: How much, right now, are we exporting American poverty to American suburbs? And are our suburbs capable of handling that?
GLAESER: That’s just not at all the way that I think.
COWEN: Say there’re some people who just aren’t that productive. They’re priced out of cities. They move to suburban or exurban areas. Social services are weaker, the bus network doesn’t work so well, there are problems getting your car fixed at an affordable price, and in some ways, their poverty problems become worse. Should we build suburbs to be better geared to handle people who will have low incomes?
GLAESER: Ideally, the answer is you want political or public policy-based reasons to relocate, but I don’t have a view beyond that in where I want poor people or rich people to locate. I think, in general, it’s a matter for their individual choice.
If you’re telling me that it’s much more expensive to deal with poor people in suburban areas — something which I’m not totally confident that it is, but certainly, I believe that access to public transit is one reason why poor people tend to live in cities, then maybe you want to lean slightly against suburbanization of poverty. But this is an area which I would have very little confidence in terms of applying on any public policy whatsoever.
It just doesn’t feel to me like I have a strong view on where people should live.
COWEN: Every day, I get a spammy phone call. Someone wants to buy my house. BlackRock, more seriously, is buying up a lot of housing. Is this a worry? Or is this just the market working?
GLAESER: It’s not something I worry about very much. I don’t necessarily see a market failure in here in any way or the other. What do you think BlackRock is going to do with your house? They’re going to rent it out, or they’re going to tear it down and build something even fancier than the Cowen homestead?
COWEN: If they’re allowed to, they would build a much nicer structure. I won’t do that because I have to worry about where do I put my things in the meantime, and I’m focused on the short run. I’m not worried about it. My worry is that no one wants to buy my house, right?
GLAESER: That seems right. No, I certainly don’t worry about someone wanting to buy your house, whether it’s a company or an individual. I just didn’t know if there was some externality in the back of your mind on this that I wasn’t aware of, but given that I’m not hearing any, I don’t know why I should worry about it.
COWEN: Parking minimums — how much do they matter?
GLAESER: Maybe BlackRock wanted to put lots of sewage treatment plants in your area that were going to spew particulate things on your neighbors, and maybe we might want to have a policy controlling that.
COWEN: Some people say it’ll be a new housing bubble. Some, if it’s like the Airbnb complaints, that you have buyers who then rent, and there’s a positive externality from homeowners. That’s possible. I don’t dismiss those arguments. I’m not personally worried, but you’re the urban economist. I’m asking you. Can I proceed in my blind state of unworry?
GLAESER: The area where you hear this most is when you get the absentee buyers in places like Vancouver. That’s when you hear that. “You build these fancy towers . . .” It’s often used as an argument against new construction. “We built this sparkling new tower in Vancouver or New York, and it’s just being owned by Russian oligarchs who aren’t even there.”
Now, I usually say in response to this, “If you tell me you’re selling a $50 million apartment to someone and they’re never there, and you’re unhappy about that, I’d tell you you’re not charging enough in property taxes.” Because by and large, you’ve just actually made a huge amount of money on property taxes and you’re not delivering any city services whatsoever.
So from the Tyler Cowen fear of extra infrastructure, it’s ideal because these guys don’t require anything because they’re never there. There’s an old joke, by the way, in the real estate circle that one of Donald Trump’s clever ideas when he was a real estate developer — and I have no idea if there’s any truth in this — was that he figured out you needed fewer elevators when your owners, when your residents were mostly absentee, so you can actually reduce the cost on elevators. Again, I have no idea if it’s true, but if so, it’s clever.
The one area which I do worry slightly about in the tall buildings that are unoccupied is — for someone who likes to make the case over and over again, the way to promote affordability is to allow more construction — an apartment building that has 10 apartments for oligarchs does nothing on that front. I still want it because I want to tax them. I want to use them to fund city services, but they’re not actually a solution for any affordability.
COWEN: Let’s say we abolished all parking minimums. How big would the gains be? Are there potential problems from parking overflow?
GLAESER: Not if you’re charging for the use of city streets, there isn’t. The problem is here, we’ve had some starting point, which we think people should have the right to park anywhere they want for no cost or for some severely subsidized amount.
In a world in which city space is scarce, you want to charge as much, if not more, for parking in a slot on the city streets as the person who has a structured parking lot charges for their space. I think once you charge people for their space, there’s no reason to impose extra regulations on free parking. The overall quantity of social benefit, you’ve got to ask the great Don Shoup for that. He’s the one who’s written the book on the high cost of free parking.
COWEN: Let’s say it’s a suburban development. It’s Tysons Corner. Someone wants to open some kind of big-box store, and you tell them, “You have to have X number of parking spaces because otherwise, people will park in front of homes.” Maybe there’s some abstract equilibrium where all parking is charged for, but practically speaking, that’s not going to happen, right?
GLAESER: I am not very worried. In fact, I don’t think big-box stores really need much of an incentive on this, as they seem to be pretty good at recognizing that their customers demand parking close by, and they seem to be pretty good at imposing it on their own.
Yes, if you are repeatedly relying upon an action which inconveniences the neighbor, you might lean slightly against that, but it doesn’t feel to me like a huge first-order issue. Certainly, in city streets, yes, we really can charge everywhere. There’s really no reason why there should be a single block in Manhattan in which it’s free to park. There’s no reason why you need that.
COWEN: Some of your best-known and most cited pieces — they’re from the 1990s, and they’re on institutions and legal origins. Since that time, how have you changed or developed your mind on those issues compared to what you thought back then?
GLAESER: I don’t know. That stuff is 1999, 2001. I don’t know if they’ve changed a huge amount. I thought more just about cities per se.
One of the mantras that I keep with me is, city government capacity is more important than policy. As academics, we’re very big on what’s the right policy, but in fact, if you’ve got a mayor who has, at most, two people who will do anything that the mayor tells them to do, it doesn’t make any difference what policy you tell him or her because she’s not going to be able to get it done. So understanding the institutional restraints that particular leaders have is a big deal.
I spent a lot of the past five years, at least pre-COVID, worrying about cities in the developing world. Their institutions are quite important. I certainly have the view that cities are one of the places in which we actually get better institutions.
One of the stories I tell in the new book is the urban fights of the 19th century to deal with contagious disease. This was a moment in which urban, upper-middle-class civic leaders came together to fight for sewers, to fight for aqueducts. In some sense, this is the moment in which governments stop, cease from being just an agent of death.
It’s a bit of an exaggeration to say governments pre-1800 were essentially only agents of death, but it’s only a small exaggeration to say that. Over the course of the 19th century, governments actually start doing some good, and most of it is involved in delivering sewers and fighting against contagious disease in cities, and developing the institutions that went along with that infrastructure was a big deal.
GLAESER: You bet.
COWEN: What is city success correlated with institutionally in Latin America?
GLAESER: I have rarely seen things that are good quantitative studies. I can tell you things that I’ve certainly seen in Monterrey. The Medellín story is amazing. If you think about Medellín going from the city of Pablo Escobar to today, a lot of it often has to do with relatively pragmatic business leaders who wanted a safe and competent public sector that could enable their business growth. I think that’s a lot of the Monterrey story.
Monterrey also has a very empowered university that’s highly competitive as well, that I think partially a force for good. There’s a story that I’ve heard that I’ve never been able to independently confirm, but the role of the business community coming together to fight crime in Monterrey, to fight the gangs, which if true, is an amazing tale. The business community played a role in terms of crime fighting in Colombia as well.
COWEN: Do you hold out any hope for charter cities like Próspera in Honduras? Can that work, or is it futile?
GLAESER: I think it’s very hard for governments to keep their hands off the golden egg. The beauty of Hong Kong was it had the British Navy protecting it for most of its history, so there was no way that China or anyone else was going to grab it.
But it’s very, very hard. I think that the story in Honduras shows that, that it’s very, very hard for a country to say, “Oh, we’re going to have this different jurisdiction run the city, and it’s going to be much more successful than the rest of the country, and we’re going to think that that’s okay.” It’s just very hard to see how the populist political dynamics don’t cause it to become unraveled.
COWEN: It worked for UAE. Dubai is massively successful. UAE allows it to continue. That’s all quite —
GLAESER: Yes, but the rest of UAE is incredibly rich, too. I don’t think generalizing from UAE is very easy, Tyler.
COWEN: It’s not wealthy only because of oil. It’s a banking center, service center. Someone let that happen. UAE could have gone much worse under our normal rent-seeking institutionalist story, and it didn’t. So, if there’s hope for UAE, is there hope for charter cities? Or is there some difference that makes one more plausible than the other?
GLAESER: There is always hope, but everything is easier if you have trillions and trillions of dollars in oil wealth.
COWEN: But it’s also harder, right? There’s a resource curse. If you’re not Norway, the resource curse seems like a negative.
GLAESER: My view is the resource curse tends to be in the intermediate levels, that once you have just an unbelievable amount of it, it tends to be much less of an actual resource curse.
COWEN: Will there be a new major American city started in this century?
GLAESER: Assuredly, but I have no idea where.
COWEN: Let’s say you’re investing. Where would you put your money?
GLAESER: I think there’s a lot to like in the highly educated pro-business cities of the South. Traditionally, this was Austin. Again, I worry about NIMBYists in Austin, but I think the place to combine education . . . Atlanta is about as well educated as Boston is, but on the other hand, they just have a very different atmosphere towards free enterprise than Boston does.
Those are the things that I think of as being really powerful. Because they’ve embraced a certain amount of economic freedom, they make it a lot easier for people to buy housing. I basically have a two-factor model of economic growth, Tyler. My model is always, it’s about education, and it’s about institutions that are relatively pro-free market, relatively pro-business.
COWEN: Can Miami become a tech hub? They have a bunch of schools; you might say none are quite top-notch. Sympathetic mayor, right?
GLAESER: Sure. It’s certainly possible. There appear to be certain weather issues with Miami, which I’m not going to have any strong views on…
COWEN: There are earthquakes in San Francisco. They’re surrounded by raging fires. They’re in a desert. The Colorado River is problematic. So why not be more bullish on Miami?
GLAESER: It’s not my business to predict the climate, but yes, there’s a lot to like about being this connected to all of Latin America.
COWEN: Of course, but you don’t sound onboard.
GLAESER: I don’t think at all it’s impossible. I’m just resisting the urge to be confident about this.
COWEN: Putting aside Boston and Cambridge, which are doing great, what can the rest of New England do to stay vibrant?
GLAESER: Same mantra as everyplace else. Attract and train smart people and get out of their way.
COWEN: Won’t they just leave for Boston and Cambridge?
GLAESER: No. Anyway, the pandemic has been good for low density in New England in terms of quality of life. You need a little bit less regulation and lots of spaces. You need to make it easier to make fun in these areas, to be an entrepreneur of entertainment, which means starting restaurants, bars, food trucks, et cetera. It’s hard, the further you get north. The climate is again holding detriment in parts of Maine or parts of northern New Hampshire, but I think most of New England is doing pretty well.
COWEN: Now we’re almost out of time, but two closing questions, and this one I asked David also. If you take your book with him, Survival of the City: Living and Thriving in an Age of Isolation, I’m not necessarily looking for a disagreement, though that would be okay, but an area where you and he still see things differently — in the book, from the book. What would that be?
GLAESER: He has still not convinced me on single payer healthcare. We do not say anything about that, deliberately, so that’s an area we certainly had not yet come eye to eye. I should say he’s a great expert on this, and I’m not, so I’m not trying to convince anyone that he’s wrong. I’m just saying that in 30 years of friendship, he has not yet persuaded me on this.
I don’t know if we actually differ on the weight that we would put on security versus respect of the policing. I’m not totally sure about that. I’m not sure that he’s onboard for a bit of my gung-ho “let’s permit every new business that we can.”
Let me take this — in our work on obesity and our work on opioids, I am still less comfortable with the view that you’re going to have paternalistic policies that really push people to be thinner than they currently are. I am never going to be as comfortable with that, despite the fact that I agree strongly that America and obesity is one of the health problems that made COVID so difficult here.
COWEN: Last question — what will you be doing next?
GLAESER: I am going to be serving as the chair of my department and enjoying all the fun of administrative meetings on end for the next three years.
COWEN: Ed Glaeser, thank you very much. Again, Ed’s book with David Cutler: Survival of the City: Living and Thriving in an Age of Isolation.
GLAESER: Thank you so much for doing this, Tyler. Very much appreciate it.
Photo credit: Briana Moore