Monday, March 14, 2011

The paradox of New Haven

Mark has been discussing Edward Glaeser and his comments on how universities can create urban prosperity. Now, I am a big fan of universities and think that they serve an important role in global economic development. However, I am dubious that they make any particular community prosperous. Consider New Haven, CT -- the home of Yale University (recently ranked the #11 university in the world).

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.

Furthermore, if a strong local university (like the University of Washington) is a solution to urban poverty (as it was presented in the Detroit versus Seattle comparison of Edward Glaeser) then it is unclear why a stronger economy has not grown up around Yale which is a strong school by any measure.

This example highlights, I think, that predicting what factors create a prosperous community is a difficult question and not one that has easy answers.

Update: The discussion continues here and here.


  1. Glaeser actually manages to do something worse than arguing correlation implies causation; he argues that example implies causation even when there is no general correlation.

  2. A good university helps, but that won't keep the talent around. I went to UW and most of my friends stayed in the area after getting their degree. Its companies like Microsoft, Amazon, Boeing, and other high-end jobs that help that region.

    I'm from the Central Valley in California, and there are a number of schools there - UCs in Davis and Merced; CSUs in Sacramento, Stanislaus, Fresno, Bakersfield, etc. Most of these aren't at the level of Yale or UW, but they still produce Bachelors, Masters, and PhDs. The problem is that most of the students leave the area after getting their degree, going to places like the Bay Area of southern CA. The schools educate people, but there needs to be a reason to stick around. I don't know the east coast well, but I imagine its too easy for Yale grads to get jobs in places like DC, New York, or Boston.

  3. @Travis: I completely agree. The trick appears to be getting a stock of high-end jobs to locate within a city. It is this (different to predict) phenomenon that seems to matter for urban prosperity.

    But how do you get the next "Microsoft" or "Boeing" to set roots in your area?

  4. While the poverty rate in New Haven in alarming there are many signs of positive change due in no small part to the University's recent focus on improving New Haven outside its walls.

    The early stats show success in the worst national economy in decades.

    1) New Haven has the highest residential occupancy rate in the Country according to Bloomberg.

    2) New Haven grew jobs more than any other city in CT over the last year.

    3) New Haven's population grew faster than any other city in New England over 100,000 Pop. in the last decade surpassing Hartford for second most populous city in CT.