A question about the economic benefits of universities

Ed Glaeser writes:

The late Senator Daniel Patrick Moynihan of New York is often credited with saying that the way to create a great city is to “create a great university and wait 200 years,” and the body of evidence on the role that universities play in generating urban growth continues to grow.

I’ve always thought this too, that it’s too bad that, given the total cost, a lot more cities would’ve benefited, over the years, by maintaining great universities rather than building expensive freeways, RenCens, and so forth.

But Joseph Delaney argues the opposite, considering the case of New Haven, home of what is arguably the second-best university in the country (I assume Glaeser would agree with me on this one):

According to wikipedia, the poverty rate in New Haven is 24%, which compares unfavorably with the rest of the United States where it is 14%. The poverty rate in New Haven, despite the presence of Yale, is nearly twice that of the United States as a whole.

Now, one might note that many of the poor residents of New Haven are likely to be students. This is true. But these students still use municipal services and thus require the local tax base to support them (in addition to the long term residents). They do not (after they graduate and make additional income) send money back to New Haven so, in a sense, New Haven is actually subsiding the urban communities that Yale graduates move to.

So, it is actually possible that a large university in a small community could be a drag on the economy due to the lower per capita tax base. Plus, you have a large segment of the population with only a short term interest in the community which may make long term planning more difficult. And New Haven, CT is not the only university town that I can think of with high levels of poverty.

Argument by anecdote is problematic, I know. But Delaney makes some compelling points that I’d think could generalize. (And his coblogger Mark Palko notes out that Detroit is another example of a declining city near a great university.)

On the other hand, I could imagine that Glaeser has a quantitative analysis in which New Haven and Detroit are two atypical special cases, I’d be interested in seeing more.

More general, I think a key step in statistics is making the connection between individual cases and overall patterns. It’s true that anecdotes can be misleading, but I also believe that a model is only believable to the extent that we can understand where the individual data points fit in.

P.S. More from Delaney here and here.

23 thoughts on “A question about the economic benefits of universities

  1. So, the poverty rate makes New Haven look worse off than the average U.S. city, and there is a just-so story about how poor students contribute to the city being badly off. Other than that, is there any evidence that New Haven would be better off without Yale around? Isn't it possible that if Yale were not in New Haven, then New Haven would have folded up long ago (or something close enough)?

    I guess I'm just not seeing how the causal question is being settled here.

  2. Jonathan:

    I certainly don't think the causal question is being settled here by anybody! I just thought the example of New Haven casts some doubt on the claim that "the way to create a great city is to 'create a great university and wait 200 years.'" And I thought Delaney gave a reasonable argument as to why one can't necessarily think that a university will necessarily be beneficial.

    Delaney's story made me curious about the big picture and how the special cases relate to the larger research that Glaeser refers to.

  3. Jane Jacobs has a pretty convincing argument in her book on cities that universities destroy areas by creating barriers that interrupt through traffic and therefore the commerce that gives life to neighborhoods.

  4. Ithaca isn't quite the dump that New Haven is, but it's not exactly a buzzing metropolis either. Although, to be fair, its 200 years aren't up until 2065…

  5. Over in the UK you can look at Cambridge or St Andrews. The city of Cambridge is hardly as great city in it's own right – about 130 000 people and nothing of international repute outside the university. St Andrews was founded in 1410 and has a good reputation. The town has population of about 16000 and has declined in importance since 1410. Nowadays it's probably best known for golf.

    On the other hand, Birmingham, Manchester, Liverpool, Bristol or Newcastle were already great cities when their universities were founded.

    Someone wanting to create a great city would probably found a university. Peter the Great did in St Petersburg. But IMHO the university on it's own isn't enough.

  6. Is there any useful way to talk about this other than anecdotes and just-so stories? There are only a few great universities, and probably the greatness of a city (whatever that is) is likely to be affected by a zillion (whatever that is) variables, most of which would fall into the category of virtually unmeasurable. It seems like it would be impossible to posit any relationship for which it would be very difficult to explain away all the exceptions. Not that I don't find this topic fun and interesting, but I feel like KP would be appalled.

  7. @ Jonathan: The original Glaeser quote that started this discussion:

    "But there was a crucial difference between Seattle and Detroit. Unlike Ford and General Motors, Boeing employed highly educated workers. Almost since its inception, Seattle has been committed to education and has benefited from the University of Washington, which is based there. Skills are the source of Seattle’s strength."


    I am an enormous Seattle fan but I suspected that there was more to the story than this model would predict. Would Detroit revive if the big 3 car companies demanded more education of their workforce?

    In particular, with the University of Michigan so close and Wayne State University inside the city, it seemed like we needed more explanation as to the role of the University of Washington. So the example of Yale was intended as a counter-example for a strong University necessarily bringing prosperity. The United Kingdom examples by Nicolas are even better.

    What I really want Glaeser to articulate is what is the difference between how the University of Washington interact with Seattle as opposed to how Yale interacts with New Haven.

    Now, it is possible that, in the non-popular press, he would have given a more sophisticated model. Under that model it might well be that New Haven was doomed to extinction due to a series of massive disadvantages and having Yale present has enabled the city to survive. I don't know.

    Washington, DC, seemed an odd outlier as well as it isn't bristling with top rank Universities (outside of Georgetown) but has massive growth especially among educated workers. But, as the national capital, it is so clearly atypical that I want to think more about it.

    I do know that I like the idea of the link between Universities and prosperity. I think it would be an extremely important advance if we could show how this works. I think Stanford in San Francisco, UW in Seattle, Columbia in New York, Harvard in Boston and the University of California in general are successes that I want to better understand.

  8. My girlfriend goes to Cornell, it's been there for almost 150 years. There's nothing great about Ithaca.

    In fact, I can't think of a reason why universities would be good for developing cities. The quote is really about paying lip service to the idea of education, signalling that one holds long term – hence "wise" – views, cares for the young, etc.

  9. It seems to me like anecdotal evidence is a terrible way to look at this issue. Yale is very far from being your typical university in many ways, and it's not clear to me whether New Haven is being compared to a similar "typical" New England city without a University or what the basis is for saying that it has suffered.

  10. Lots of town-and-gown type examples where stellar academic institutions have not been able to save a city. Look at Cleveland (CWRU, University Hospitals, Cleveland Clinic), Baltimore (JHU, UMD), St. Louis (WashU), Pittsburgh (Pitt, UPMC). People come for undergrad/grad/medical training and then they leave.

  11. Opher:

    The point of the anecdotes is to illuminate the ideas underlying the theory. Also, each anecdote does represent a data point. My point here is not to challenge Glaser's claims but rather to push toward a deeper understanding of the body of research to which he refers.

  12. I can't believe Andrew's fallen for the "arguably second best university" argument (for Yale). It's horses for courses. I wouldn't recommend Yale for computer science to someone who could get into Carnegie Mellon. Maybe Princeton if they insisted on the Ivy League. On the other hand, I wouldn't recommend CMU's law or med schools (they don't have either).

    Ironically, the area around very good universities can be terrible. Ohio State, UPenn and USC come to mind.

    My experience in 8 years in Pittsburgh was that there was very little overlap between CMU and the larger community. When a colleague and I were leaving, he made the insightful comment that we were both moving to places that people moved to, not moved away from.

    I wouldn't say Ann Arbor's that close to Detroit. It's about as close, as say, Princeton is to NYC.

    One could argue that places like Boston and the Bay Area benefited during the tech boom due to universities. I think NYC is mainly about entertainment and Wall St, two areas that typically require no (formal) education and an undergrad degree, typically.

    Columbus is thriving as a city, but is that OSU-related? Columbus itself is surprisingly conservative for a college town, and not a place I'd like to live (despite having applied for jobs there twice).

    I know planes are more high tech than cars, but does Boeing really have much more educated employees, than, say, Ford? Both run giant assembly lines and both have engineers and execs with college degrees. I'm not sure where skilled trades fall on the "education" line (that is, workers with very specialized skills like electricians or robo-lathe operators). One of the major problems for the auto industry was that over the years, less and less unskilled human labor was required to build a car. I don't think planes are as automated on the construction front (judging only from photos of 747s under construction).

    Boeing's cutting education benefits — apparently it wasn't worth it to them:


    Another casualty of tuition vastly outpacing inflation?

  13. @ Opher: I agree that anecdotes have limitations. But, in the case of New Haven the argument was "how do you explain this apparent outlier?" not an attempt to give a single story of where a theory failed. It is pretty clear that there are other examples (Johns Hopkins is in Baltimore — a place with poverty iconic enough that they set the series "The Wire" there).

    The truth is that I really support Glaeser's hypothesis that cities are a really good thing. And I want to know more about how to make cities successful. Why Seattle and Detroit switched places (in terms of affluence) between 1970 and today is a very interesting question. The answer given is:

    “Dense, smart cities like Seattle succeed by attracting smart people who educate and employ one another.”

    But how does one create the conditions for this sort of attraction in other urban areas? Glaeser used the University of Washington as an example but it seems to be something more than just having it present. What is that?

    Or, to put it another way, what destroyed the culture of innovation in Detroit?

    In his book (Triumph of the City), Glaeser has a deeper and veryu interesting discussion of this point. So I suspect if we ever lured him in he would have a very thoughtful response to the outliers.

  14. Could have conceivably picked a worse example than the University of Michigan to illustrate your point. Here are the unemployment rates for Michigan, The Ann Arbor metro area and The Detroit metro area.
    Michigan……………………………. 11.3
    Ann Arbor…………………………. 6.9
    Detroit-Warren-Livonia……………… 11.7

  15. Well, if we take Moynihan's claim literally, what we need are two lists: a list of "the great universities" as of year n, and a list of "the great cities" as of year n + 200. Of course we wouldn't want to top-of-the-head either of those lists, so as to avoid some kind of Clever Hans effect.

    I haven't looked for any list that anyone has put forward of "the great universities" as of any particular year, but it sounds like the sort of thing many historians would be fond of producing. And lots of people like to make lists of "the great cities." Once we have a list, however subjectively it was generated, we can look over the items, try to find quantifiable characteristics that most or all items on it share, and having found such characteristics we can refine the list by adding other items that share them or deleting items that don't share them. So we can try to work backward to foundations.

    As for Yale, I doubt very much that you could find any reasonable criterion by which it either was or had been a "great university" in 1811. Nowadays, sure, but in its first centuries it was a backwater. Would any American university have qualified as "great" in 1811? The faculty of the College of New Jersey, later renamed Princeton University, had been home to quite a few distinguished scholars from Edinburgh in the late eighteenth century, and Columbia had produced a lot of impressive alumni by 1811. Still, it would seem a bit much to call either of them a "great university" at that early date.

  16. Here is a good review of a book on new haven


    It turns out that a lot of mid-sized cities grew in the era where rail transport was cheap, but other types of transport were expensive. Cities allowed the workers to live in walking distance of a centralized business district. Cars and trucks allowed everything to spread out and destroyed the main benefits of these mid sized cities

  17. The president of NYU thinks causality runs in the opposite direction: that being in a great city makes it possible for an average university to become great. Thus, he's spent a lot of NYU's endowment as a gamble that the New York University brand name will prove a giant winner in the global era.

  18. Duke University in Durham seems to support the argument, too. I always heard that the area is much richer (in every way) thanks to the university.

  19. To add to the list of anecdotes, I would argue that Austin and Columbus are prime examples of cities that have been thriving as more and more alumni choose to stay in the city and establish both businesses and cultural opportunities for the cities.

  20. A tremendously interesting discussion. I'll add some of my own anecdotal data points supporting the notion that the University isn't enough.

    In my University town the political reality for a long time was focused on the University as the primary employer/business for the community and other large employers weren't really welcome. There were pro's (a Mayberry like lifestyle well into the 1990's) but it never became a great city.

    Another city in my same state appears to have welcomed diversity in their economic base years ago with a couple of businesses clearly tied to the existence of the university in their community.

    While neither is ever going to be a "great" city–far too rural–the other city has a much greater range of opportunities for its citizens.

    Although I sincerely believe that a great university is a necessary condition, it is clearly not sufficient.

  21. My understanding is that lots of Michigan graduates stay in Ann Arbor and the Detroit suburbs working in automotive R&D, including for Japanese carmakers that have no plants in Michigan. But that has nothing to do with Detroit manufacturing.

  22. New Haven is arguably better off than, say, Hartford, or Waterbury, or Bridgeport. Connecticut cities have had a rough most-of-a-century – it's really the north-east end of the rust belt.

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