4 ms·

I don't have a theory fully worked out for this, but I'm half convinced that rents in HCOL coastal cities fit into this framework. Sure, it's nice living in San

by cjlars 8y ago

I don't have a theory fully worked out for this, but I'm half convinced that rents in HCOL coastal cities fit into this framework. Sure, it's nice living in San Francisco, but you can get the same or better weather in smaller coastal towns, get more space and live better on a cost of living adjusted basis in a whole lot of other places. But still people come to the big cities and struggle to make it financially. The good jobs and appreciating real estate, admittedly limit how well this theory fits together, but a big HCOL city is prestigious and exotic in large part because of, not despite, its price.

dpark 8y ago
A HCOL city brings a bunch of things together that you can't get all together elsewhere. Critically: 1. Jobs 2. People 3. Events/activities You can pay the San Francisco premium and have a massive job market, a million people to befriend/date/learn from/etc, and thousands of activities and experiences to engage in constantly. Or you can live in a small town with far fewer job opportunities, far fewer people, and far less to do. Small town life is not a bad choice if it's what you want. But if you want to live in a lively city, you're going to pay for it, because a lot of people want that life and you're competing with them for a space to do it. Now, if you're talking about Palo Alto, maybe.
- cjlars 8y ago
  That explains the draw of SF vs Monterey, but not necessarily SF vs Houston. Why do the most prestigious cities reliably stay the most prestigious cities, if not for the prestige itself being the draw? As I said, I'm grasping a bit because I'm not sure I fully grok it. But there is something that would be lost about Manhattan if it became cheap. I believe it's not just the three items you list, but also the concentration of people that not only want to, but crucially, can afford the price of entrance. Beverly Hills comes to mind as an example, why do the rich and famous want to live there if not to also be surrounded by other rich and famous? Perhaps that's closer to the common link you mention in Palo Alto.
  - dpark 8y ago
    Yes, clearly much of the appeal of Beverly Hills is the proximity to wealth. I don't think that's nearly as applicable to San Francisco, given that the proximity to wealth is countered by the proximity to homeless encampments. I will concede that for some portion of people, the prestige of living in San Francisco is a part of the draw. There are other factors that are probably more important for a lot of people, though. Comparing to Houston, San Francisco is literally 5 times as densely populated, which changes the feel of the city drastically. Houston is larger in terms of population, but it's also massively sprawled. That sprawl drives down the price of homes but also makes much of the city feel like the suburbs (probably; I have not visited). Houston also spends >100 days/year at >90F, which makes it not comparable to a coastal city for people who do highly value temperate weather.
  - dredmorbius 8y ago
    Path-dependency. Urban rankings are quite surprisingly durable, with the US being among the worse examples of this, given, say, the rise and fall of numerous formerly-great cities, say St. Louis or Detroit, or to a lesser extent Boston or Philadelphia. Globally, Rome, London, Paris, Tokyo, and other major metropolises have sustained themselves for centuries. In cases, millennia. The Bay Area's biggest risk is likely its high cost of living given induced housing constraints. If an alternative centre emergess, as Los Angeles did in the 11920s, following the 1906 fire and earthquake, plus San Francisco's transport and water limitations (neither the bridges nor Hetch Hetchy existed at the time), as well as LA as a resource hub (oil). That advantage remained until the 1990s defence contraction, which hammered Los Angeles. If you really want to see durability of prestige, though, look to universities. Virtually all the great mediaeval European universities remain notable, and several (Oxford, Cambridge, Paris, Leipzig) remain world-class. In the US, Harvard and Yale (among others) pre-date the country itself. Even in California's public university system, founding campuses Berkeley ("Cal") and UCLA, founded in 1868 and 1919, respectively, greatly out-rank subsequent expansion campuses. (UCSB, 1944, Riverside; 1954, Davis, 1959; San Diego, 1960; Irvine, 1965; Santa Cruz, 1965; Merced, 2005. UCSF medical school, 1873, is not a general-education campus.)
dredmorbius 8y ago
Not so much. These are rents goods. Veblen goods are an information adjunct to a complex state that the buyer wishes to communicate more clearly. In this, they're related to a broader Gresham's Law dynamic, where the complex state is a "good coin", and the Veblen good makes communicating the "coin's" value, and differentiating it in the marketplace, more effective. Though there may well be a rents dynamic to this as well. HCOL cities, where housing decisions and dynamics are driven by earning rather than signalling characteristics, are rents, but not information goods in the sense of Veblen. (A high-status, marquee, mansion or apartment more closely resembles a Veblen good, though for signalling purposes this cannot apply to an entire regional housing market.)

by cjlars 8y ago

dpark 8y ago

A HCOL city brings a bunch of things together that you can't get all together elsewhere. Critically: 1. Jobs 2. People 3. Events/activities You can pay the San Francisco premium and have a massive job market, a million people to befriend/date/learn from/etc, and thousands of activities and experiences to engage in constantly. Or you can live in a small town with far fewer job opportunities, far fewer people, and far less to do. Small town life is not a bad choice if it's what you want. But if you want to live in a lively city, you're going to pay for it, because a lot of people want that life and you're competing with them for a space to do it. Now, if you're talking about Palo Alto, maybe.

cjlars 8y ago
That explains the draw of SF vs Monterey, but not necessarily SF vs Houston. Why do the most prestigious cities reliably stay the most prestigious cities, if not for the prestige itself being the draw? As I said, I'm grasping a bit because I'm not sure I fully grok it. But there is something that would be lost about Manhattan if it became cheap. I believe it's not just the three items you list, but also the concentration of people that not only want to, but crucially, can afford the price of entrance. Beverly Hills comes to mind as an example, why do the rich and famous want to live there if not to also be surrounded by other rich and famous? Perhaps that's closer to the common link you mention in Palo Alto.
- dpark 8y ago
  Yes, clearly much of the appeal of Beverly Hills is the proximity to wealth. I don't think that's nearly as applicable to San Francisco, given that the proximity to wealth is countered by the proximity to homeless encampments. I will concede that for some portion of people, the prestige of living in San Francisco is a part of the draw. There are other factors that are probably more important for a lot of people, though. Comparing to Houston, San Francisco is literally 5 times as densely populated, which changes the feel of the city drastically. Houston is larger in terms of population, but it's also massively sprawled. That sprawl drives down the price of homes but also makes much of the city feel like the suburbs (probably; I have not visited). Houston also spends >100 days/year at >90F, which makes it not comparable to a coastal city for people who do highly value temperate weather.
- dredmorbius 8y ago
  Path-dependency. Urban rankings are quite surprisingly durable, with the US being among the worse examples of this, given, say, the rise and fall of numerous formerly-great cities, say St. Louis or Detroit, or to a lesser extent Boston or Philadelphia. Globally, Rome, London, Paris, Tokyo, and other major metropolises have sustained themselves for centuries. In cases, millennia. The Bay Area's biggest risk is likely its high cost of living given induced housing constraints. If an alternative centre emergess, as Los Angeles did in the 11920s, following the 1906 fire and earthquake, plus San Francisco's transport and water limitations (neither the bridges nor Hetch Hetchy existed at the time), as well as LA as a resource hub (oil). That advantage remained until the 1990s defence contraction, which hammered Los Angeles. If you really want to see durability of prestige, though, look to universities. Virtually all the great mediaeval European universities remain notable, and several (Oxford, Cambridge, Paris, Leipzig) remain world-class. In the US, Harvard and Yale (among others) pre-date the country itself. Even in California's public university system, founding campuses Berkeley ("Cal") and UCLA, founded in 1868 and 1919, respectively, greatly out-rank subsequent expansion campuses. (UCSB, 1944, Riverside; 1954, Davis, 1959; San Diego, 1960; Irvine, 1965; Santa Cruz, 1965; Merced, 2005. UCSF medical school, 1873, is not a general-education campus.)

dredmorbius 8y ago

Not so much. These are rents goods. Veblen goods are an information adjunct to a complex state that the buyer wishes to communicate more clearly. In this, they're related to a broader Gresham's Law dynamic, where the complex state is a "good coin", and the Veblen good makes communicating the "coin's" value, and differentiating it in the marketplace, more effective. Though there may well be a rents dynamic to this as well. HCOL cities, where housing decisions and dynamics are driven by earning rather than signalling characteristics, are rents, but not information goods in the sense of Veblen. (A high-status, marquee, mansion or apartment more closely resembles a Veblen good, though for signalling purposes this cannot apply to an entire regional housing market.)