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More on the economic benefits of universities

Last year my commenters and I discussed Ed Glaeser’s claim that the way to create a great city is to “create a great university and wait 200 years.”

I passed this on to urbanist Richard Florida and received the following response:

This is a tough one with lots of causality issues. Generally speaking universities make places stronger. But this is mainly the case for smaller, college towws. Boulder, Ann Arbor and so on, which also have very high human capital levels and high levels of creative, knowledge and professional workers.

For big cities the issue is mixed. Take Pittsburgh with CMU and Pitt or Baltimore with Hopkins, or St Louis. The list goes on and on.

Kevin Stolarick and I framed this very crudely as a transmitter reciever issue. The university in a city like this can generate a lot of signal, in terms of innovation or even human capital and the city may not receive it or push it away. A long ago paper by Mike Fogarty showed how innovations in Pittsburgh and Cleveland, by universities in these communities, tended to be picked up in Silicon Valley or even Tokyo.

I responded: Another factor in the interaction is: how good does the university have to be? Glaeser cited UW and Seattle, but that’s kind of a funny example, because I don’t think UW was such a great university 30 years ago. On the other hand, given the existence of Boeing and Microsoft, UW is good enough to do the job of providing a center for the creative class. Perhaps Ohio State (another good but not great university) has played a similar role in Columbus.

Florida replied:

Better is better. I think both are over threshold, but having taught at OSU at the very beginning of my career, it brings both plusses and minuses. It was an open admission school. The faculty was very, very mixed. And a huge football factory. Gates and Allen amongothers have pumped big wads of cash into UW, and it is good in computers and biosciences.

Both strike me as regional talent hubs, which probably trumps university quality.

Portland is another outlier with lots of talent/ human capital attraction and pretty crappy universities.

Florida also sent along this article and this blog.

Also, Hal Varian wrote:

There is a literature that attempts to assess the impact of university research on the local economy. One person I know well who works in this area is Marie Thursby. Click on her vitae to see the kind of work that has been done. This is pretty careful research, though of course it is hard to pin down causality…

P.S. Originally I wrote that UW is not such a great university, which may or may not be true but is sort of beside the point since the real issue is whether UW’s past greatness contributed to Seattle’s current prosperity. So I clarified that I’m really talking about UW thirty or so years ago.


  1. lylebot says:

    I guess I’ve so internalized the idea that UW is good for CS (easily a top 10 PhD program, maybe top 5) that I just assumed it’s good for everything. Kind of surprised to hear it’s not considered so good otherwise.

    • Andrew says:

      UW is great in statistics too! My real point was that it was not great 30 years ago, so it does not make sense to me to attribute Seattle’s economic success to UW being a great university.

      • Matt says:

        Is it true that there weren’t many good departments at UW 30 years ago? Honest question. Whether a campus is particularly selective (ie “good”) for undergrads, it seems at least plausible that some sizable percentage of the positive economic externalities of a university (ie, good science/tech research and human capital helping create high tech industry in such places as SD, Pittsburgh, and Seattle, though I’d guess UCSD and CMU are considered better undergrad institutions than UW) would come from faculty and graduate students, not undergrads, so perhaps a mediocrely considered undergrad university could still have significant regional economic benefits if the research and graduate students coming out of the university are good? Anyone ever tried to answer this particular question?

  2. I find this topic endlessly fascinating but hard to pin down! New Haven was discussed extensively in the last iteration of the question. Not sure whether or not there would be consensus on Philadelphia as a great city, but in that case I would have to say that though I think Penn’s a great university, it seems very unlikely that it has contributed in any really apt way to the ‘greatness’ of the city – West Philadelphia is much more along New Haven lines than not…

  3. So, just to add some additional fuel to the fire … Elizabeth Mack (at ASU) and I just finished revisions (hopefully final) on a paper that uses the founding of the 48 (continental) US land-grant universities to set up a quasi-experimental design where counties that were home to a land-grant are compared and tracked (starting in 1860/1890) with similarly-sized (at the founding) counties in the same states. Tracking them by population (not much else reliable useful data available staring in 1860), we find that it takes several decades before the two groups diverge significantly in population – land-grant counties do grow more. And, looking at the two groups today, those with the land-grant significantly out-perform the comparison group on a wide number of economic and demographic factors. We are extending this analysis in our next paper to look at all land-grants, including the HBCU and tribal institutions. And, we’ve been talking about “knowledge markets” (as opposed to “labor markets”) which would be the spatial area over which a university or college has impact (expecting variation in area by Carnegie type and other factors). But, by using the land-grants as a way to figure out what to look for, we hope to be able to more clearly isolate the spatial impacts of any university.

    So, although not “200 years” – it does take a while for university to significantly impact its region.

  4. John Mashey says:

    I’m from Pittsburgh, used to work vacations at the US Bureau of Mines on Forbes Ave, adjacent to CMU. After it closed, CMU bought the site. I used to run computer programs at CMU and Pitt.
    CMU was certainly and early leader in computing and still is very good.

    1) Silicon Valley is an outlier. AnnaLee Saxenian describes how SV rose in prominence, in Regional Advantage: Culture and Competition in Silicon Valley and Route 128.

    2) A somewhat different, but related analysis is given by Steve Blank, Secret History of Silicon Valley, including Fredreick Terman’s efforts to make Stanford not a backwater and build industry around.

    3) I lecture on this occasionally, and pick up on a few things they missed, like Fry’s Electronics.
    Both both of the above are well worth looking at (disclaimer: I know AnnaaLee and Steve is an old colleague).

    In various trips around the world, I’ve been asked many times how to replicate Silicon Valley, especially by folks who thought beefing up a university and building a business park was enough. IT isn’t. There is a myriad of factors needed. Two are:

    1) Geography matters. CMU suffers from lack of buildable space anywhere near it. Stanford set up the Stanford Business park, and SV had lots of orchards.

    2) Culture matters: SV is populated by risk-takers. The collapse of the steel industry in Pittsburgh traumatized financial institutions, which makes it really hard on startups.

  5. adam says:

    Here’s a good example (or counter-example, or something): UC San Diego. UC San Diego didn’t even exist prior to the 60s. Same with Salk, the various Scripps institutes, etc. But they built the university with a focus on science, and now San Diego is one of the biggest (the biggest? not sure) biotech clusters in the country.

  6. DK says:

    because UW is not such a great university

    In my field (biochemistry/biotech), UW-Seattle is a lot better than Columbia. I also believe that it is ahead of Columbia in roughly half of various university ranking lists. If UW-Seattle is not a great university, the list of great universities is going to be very short.

  7. Steve Sailer says:

    Conversely, a great city can, over enough time, make a university great. John Sexton, the president of New York University, realized that “New York University” was a better name for a college than a college, but that people outside of the New York area didn’t realize that. With enough spending, hoopla, and fundraising, the quality of the name and quality of the university could be set on a convergent path.

  8. Steve Sailer says:

    Over the last 30 years, Route 128 has fallen far behind Silicon Valley in the tech business. I don’t think this is the fault of Boston’s universities, which have only become more prestigious on average over that period. It has more to do with how industries tend to center in a single geographic hub, in a winner take all fashion.

  9. John Mashey says:

    Steve: I really recommend AnnaLee’s book, as the geographic network effect is strong, but in the minicomputer ear, Rt 128 was THE PLACE,
    but she discusses many other factors. At Stanford, Frederick Terman was irked that many of his best students felt they had to go back East, part of the reason he urged students to set up local businesses, like HP.

    • Tren Griffin says:

      At the time of statehood for Washington (1989), Seattle had the University of Washington, Olympia was given the capital, Walla Walla had the prison, and Pt. Townsend was closer to markets by sea. Tacoma was served by a railroad first. Bill Gates Senior left Bremerton for Seattle to attend the UW and never left. His son Bill Gates snuck into the UW to learn more about computers while in high school. Seattle “won” the economic development race because it had the UW. Full stop. If there is a better real world long term case study for the value of a university in economic development in a modern economy I’m not aware of it.

  10. Jeffrey says:

    Good discussion, and very relevant given the conversation around declining state funding for higher education in Washington State and measuring outcomes of higher education. I believe that higher education needs to be analyzed using model that recognizes that a university is a system – a collection of undergraduate colleges, graduate schools, research programs, student support mechanisms, and administration, all set in a particular ecosystem of local population and businesses, national businesses and non-profit foundations (e.g. Silicon Valley, Rt. 128). An institution can be mediocre in one element but great in others. For instance, the UW’s medicine school, with massive federal grants, has interacted with the region’s technology companies and non-profit sector (e.g. Fred Hutchinson Cancer Research Center) to produce a growing biotech industry. Anecdotally: as a University of Washington undergraduate 40 years ago, and graduate student 25 years ago, I’d tend to agree with Andrew: it was not particularly great institution. Good enough, but not stellar.