Economic Progress

This is why attractive cities do better economically

A view of the New York skyline with buildings along Central Park South, as seen from the AeroBalloon ride flying above New York's Central Park on the opening day of rides open to the public, July 25, 2008. Picture taken July 25, 2008.    REUTERS/Mike Segar/File Photo - TM3EC7L15FK01

68% of the world’s population will live in cities by 2050, according to UN figures. Image: REUTERS/Mike Segar

Johnny Wood
Writer, Forum Agenda
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Economic Progress

Why do people choose to live in one city over another? According to new research, more attractive urban centres command a “beauty premium”, which helps entice new residents and create employment opportunities.

The idea of a beauty premium is not new. A causal link between a person’s perceived good looks and career success is long established, and a similar phenomenon could occur with attractive places.

Researchers Gerald A Carlino of the Federal Reserve Bank of Philadelphia and Albert Saiz of Massachusetts Institute of Technology looked at the relationship between a city’s beauty and key growth indicators.

The study built upon traditional measures of the importance of amenities for urban development, such as the prevalence of parks, restaurants and tourist attractions.


Picture perfect

Adopting a unique approach to measuring beauty, the researchers used records of tourist visits and photos of picturesque locations posted online to isolate each city’s perceived attractiveness. The results were compared with population growth figures, urban regeneration and levels of neighbourhood gentrification within city centres.

The results show that cities perceived as twice as attractive as others experienced more than 10% additional population growth and employment opportunities in the two decades leading to 2010.

Of those people drawn to picturesque urban centres, a higher proportion were college graduates, high-skilled workers and employers than in other cities. Urban beauty and lower taxes are the two most important predictors of overall growth in a city’s population.

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The study found the influx of new arrivals to beautiful cities pushes up property prices, particularly in areas with little scope for new housing to be built. Specific neighbourhoods can also benefit from localised urban beauty premiums, drawing affluent, educated people back to live in, and around, the central business districts (CBD) of cities.

The gentrification of these areas draws new residents – often displacing existing tenants who can no longer afford the high living costs – and can spill over into neighbouring industrial or logistics districts, where warehouses and factories are converted into high-end houses and amenities.

Image: UN via Mashable/Statista

An attractive investment

Carlino and Saiz describe a new type of neighbourhood that is emerging in cityscapes considered to be beautiful. Central recreational districts (CRD) offer affluent newcomers landmarks, historic sites, parks, entertainment and tourist attractions. The resurgence of industrial districts in New York, like Soho, is a good example of a CRD that attracts new residents, in contrast to the declining trend of many American city centres.

The research shows that all cities can make themselves more attractive. While it’s true some urban centres enjoy more rivers, mountains and appealing natural features than others, these features don’t necessarily make them inherently more appealing for people to live in.

New York’s High Line
Image: Reuters/Mike Sega


Investment in parks, museums, landmarks and historic spaces increases urban beautification, which draws in more affluent residents. Returning to New York as an example, Manhattan’s High Line project has turned a disused elevated train track, which was due for demolition, into a public park offering residents and visitors a combination of nature, art and design. Such investment decisions have raised the area’s profile and attracted a high volume of visitors and new residents.

According to UN figures, 68% of the world’s population will live in cities by 2050. A growing population combined with a migratory trend from rural to urban living could create 2.5 billion new city dwellers by mid-century. New investment in infrastructure and facilities will be required to accommodate these numbers.

While investment in urban beautification projects boosts regeneration and economic growth, it can also displace existing residents who are pushed out by rising living costs.

Policymakers have the option of providing affordable housing options and putting in place measures to reduce poverty inequality, to ensure the beauty premium works to the benefit of all.

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The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
Economic ProgressCities and Urbanization
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