urban economics and more

Is there a revival of the large urban model?

2011-01-15T07:38:00.001+04:00

Every three weeks my workshop on urban complexity attracts more than twenty urban scholars and their PhD students from several universities in Israel. The workshop has been meeting for some 18 months now and each meeting is divided into two parts. The first part is devoted to a conference style lecture – albeit we devote to the lecture and to the discussion that follows 90 minutes. The next 90 minutes is devoted to the actual workshop at which we ponder questions raised by one of our participants.

This week we met at Tel Aviv University and we heard a lecture by a Hebrew University geographer on his Urban Sim modeling efforts. Urban Sim is a platform that permits interactions among several modules. If I understand it correctly a transportation model is at its heart and it plays a central role in the spatial allocation of activities be altering accessibility.

I remember that as a student I heard pronouncements concerning the death of the large urban models. The main criticism of these models was the inability to track the causes of various results generated by the models. The multiplicity of equations and variables made it impossible to identify which variable, at what value threshold and in which equation was responsible for a particular result.

The last few years seem to witness a revival of the large urban models. I am not sure what caused the revival. However, simulation is much easier with today’s computers. Furthermore, data is plentiful and available at a fine spatial resolution. There are 70 research groups around the world developing and refining Urban Sim based models alone. There is an entire community of such researchers sharing experiences, insights and knowledge gained.

And yet, some of the old criticisms of the large urban models can be leveled at the new models as well. During our discussion this weeks some people were concerned about the uneven sophistication of the various modules of the model. The transportation model is quite detailed and well calibrated. The model representing real-estate supply, mostly housing, is quite unsophisticated and there are no prices to speak of. The demand for housing is also modeling quite simply. Others were concerned that the results are not caused by the values of certain key variables, but that the results are predicated on the functional forms of certain non-linear equations.

This led us to an intense discussion of the role of fast and slow variables in generating cusps and the applicability of the concept of phase transitions to urban spatial phenomena. Since we did not come to a conclusion, we will continue our discussions next time.

Tenure-Track Positions in Urban and Regional Planning at the Technion

2011-01-09T10:54:00.002+04:00

We are looking for a few good persons...

The Graduate Program in Urban and Regional Planning at the Technion – Israel Institute of Technology is seeking to expand its program. Up to 3 tenure track faculty positions will be added in the coming academic year. The positions are open to junior as well as senior academics. The appointments may start as early as October 1, 2011. Salary and compensation are compatible with Israeli university standards.

Qualifications

The successful candidate will demonstrate exemplary scholarship and teaching record in his/her field compatible with their current rank. Applicants must hold a Ph.D. degree in urban planning or in a related field. Successful candidates will be expected to teach graduate-level planning courses, supervise Master’s theses and Ph.D. dissertations, conduct cutting-edge research, and participate in faculty and Technion activities. Rank will be determined in accordance with the candidate's record. Teaching may be conducted in English.

We are especially, but not exclusively, interested in candidates specializing in:

- Environmental policy and planning

- Social aspect of planning and housing

- Spatial statistics, quantitative and GIS methods (spatio-temporal problems and data-driven analyses of spatial planning decision-making)

- Planning in developing countries.

About the Technion and Program

The Technion is the leading university of science and engineering education in Israel. The Graduate Program in Urban and Regional Planning in the Faculty of Architecture and Town Planning was founded in 1969. This is the only program in Israel that has been accredited by the Council for Higher Education to grant M.Sc. and Ph.D. degrees in urban and regional planning. The program gained international recognition by the American Association of Collegiate Schools of Planning (ACSP) and the Association of European Schools of Planning (AESOP). At present there are 136 graduate students studying for the M.Sc. degree in the program and 27 students for Ph.D. degree.

The university is located on Mount Carmel in Haifa, a pleasant city in the Northern part of Israel with extensive high-tech industry and breathtaking views. The city offers excellent housing and quality of life as well as ample research opportunities.

For more information about graduate studies at the Technion, please see the web site at: http://www.graduate.technion.ac.il/eng/

Applicants should submit the following materials in both electronic and hard copy:

1. Letter of interest describing research, and teaching accomplishments and future interests.

2. Curriculum vitae.

3. Names and contact information of three references.

Review process will start as early as February 15, 2011 and will continue until the possessions are filled.

Application should submit to Prof. Amnon Frenkel, Program Chair amnonf@tx.technion.ac.il

Graduate Program for Urban and Regional Planning

Faculty of Architecture and Town Planning

Technion – Israel Institute of Technology

Haifa, Israel 32000

Walter Isard (1919-2010)

2011-01-09T07:19:00.001+04:00

Walter Isard (1919-2010) lived a long and very productive life. His interest in spatial phenomena started some 60 years ago. He started to use the term Regional Science quite early, during his early years at MIT and before he moved to Philadelphia and established there the Department of Regional Science.

There is no doubt that the modern interest in spatial economics owes much to Walter. At the last congress of the European Regional Science Association in August there were over 1,000 people. In Denver, at the North American conference in November there were some 900 people. The field is in bloom. And yet, Walter did not receive the Nobel Prize in economics. He should have.

While there is no doubt about his impact on the field, I suspect that Walter’s contribution was mainly to place a spot light on the field and to organize what today we call Regional Science International. He was stubborn and skilled at persuading people to join his causes.

I cannot be sure what persuaded me to study urban economics. I have no doubt that Walter had at least a small part in it from the time I was in high school and copied numbers for the Philadelphia I-O table.

New book and book series "Cities and Nature"

2011-01-05T07:50:00.003+04:00

Well, it has been a long time since I added to this blog.

Here is my belated, and now public, resolution for the New Year... since I signed to write a book and to edit a new book series with Springer, both entitled "Cities and Nature", I and my two co-authors [I. Benenson and D. Malkinson] will write our thoughts at least weekly. I hope that we will be able to do it over the weekends.

We will look forward to creative criticisms and to other reactions. We will start soon.

urban and peri-urban sustainability policies

2009-11-27T22:24:00.002+04:00

I find Kevin Kelly's writing a pleasure to read. Contrary to many who popularize science he has a deep understanding of current science thinking and an uncanny ability to extrapolate it and indentify questions that are yet to be addressed.

Recently, Andreas Lloyd has "remixed" Kelly's 1994 book entitled Learning from self-organizing systems in nature and technology. Lloyd has made Kelly's book much more accessible by removing, moving and editing the original. This has become a popular method in music. See for example my son's mixes on http://www.jujujordash.com/ . [My son is Jordash]. Lloyd has adopted the method to writing.

In the final chapter Kelly raises and answers a question that sums up much of current deep science thinking.

"So how do you make something from nothing? From the frontiers of computer science, and the edges of biological research, and the odd corners of interdisciplinary experimentation, I have compiled Nine Laws of God governing the incubation of something from nothing. These nine laws are the organizing principles that can be found operating in systems as diverse as biological evolution and SimCity. Of course I am not suggesting that they are the only laws needed to make something from nothing; but out of the many observations accumulating in the science of complexity, these principles are the broadest, crispest, and most representative generalities. I believe that one can go pretty far as a god while sticking to these nine rules:

§ Distribute being

§ Control from the bottom up

§ Cultivate increasing returns

§ Grow by chunking

§ Maximize the fringes

§ Honor your errors

§ Pursue no optima; have multiple goals

§ Seek persistent disequilibrium

§ Change changes itself.

You can download and read the entire book for free at http://eskar.dk/andreas/outofcontrol/. Once you read the book, ask yourself what policy and planning measures should be promoted to advance urban and peri-urban sustainability.

The Stan Czamanski prize for best paper by a young regional scientist

2009-11-26T01:05:00.004+04:00

I have been around Regional Science since my early high-school days in Philadelphia. Some kids of the Philadephia I-O table research team were employed during the summer vacation as "research assistants". We wore NASA name tags and felt proud that our salary was paid by NASA.

Many of the small group of people who called themselves regional scientists at the time are no longer with us. I find it rather sad. Walter Isard, the father of the field and Stan Czamanski are still around. Walter is a few month younger than Stan.

I was very sorry to hear that Walter did not attend the November meeting of the RSA. It was a first. The founding generation is no longer present at the conferences and soon their impact on the organization will be forgotten.

Stan just turned 91. I decided to mark the occasion by organizing a young scholar prize in honor of my father. The prize will be awarded during the annual meeting of the Israel RSA organization in January. So, if you are presenting a paper at that meeting and you are a young scholar who recently completed her PhD, please submit you paper for consideration to the organizing committee.

Entrepreneurship, innovation and more

2009-11-01T17:03:00.001+04:00

I just came across the following short video clip about the resilience and dynamism of the Israeli economy and the societal driving forces behind it:

http://www.cnbc.com/id/15840232?video=1311023934&play=1. The video is a promo for a book entitled Start-up Nation: The Story of Israel's Economic Miracle.

It raises a vast number of hypotheses concerning entrepreneurship and innovation in Israel. While some of the assertions explaining the record breaking performance of Israel's economy seem correct, there is a need to perform an empirical analysis. In particular, cross-sectional data within Israel could provide counter-intuitive evidence.

I recommend the book.

Sprawl should be studied at various spatial resolutions

2009-10-27T22:59:00.001+04:00

Yesterday was the first meeting of our workshop on peri-urban dynamics at the Technion – Israel Institute of Technology. It was intellectually stimulating to spend several hours with colleagues from Haifa, Tel Aviv and Ben-Gurion universities and our past and present grad students. There were geographers, experts in geo-spatial modeling, ecologists, urban planners and of course an urban economist.

We discussed the edge dynamics of cities and considered what is known about sprawl. The consensus around the room was that most of the literature relied on low resolution spatial data to identify and characterize sprawl. At best, the results are uninformative. The required characterization of sprawl should be in terms of the dynamics of natural systems within and at the edge of cities. In other words, when we think of sprawl we should model the urban system from the perspective of the dynamics of natural systems. Various resolutions should be considered. For avian population dynamics 3D porosity of cities is of interest.

At the workshop I presented some of our recent survey: Czamanski, D., Benenson, I., Malkinson, d., Marinov, M., Roth, R., Wittenberg, L., "Urban Dynamics and Ecosystems" in International Review of Environmental and Resource Economics, 2, 2008, pp. 1-45.

I cannot wait unitl our next meeting in Tel Aviv in two weeks.

The Great Cities in History

2009-10-26T07:51:00.001+04:00

The Wall Street Journal published a brief review of John Julius Norwich's edited book that tries to identify cities that " played illustrious roles in the world's story". The title of the book is The Great Cities in History.

[http://online.wsj.com/article/SB10001424052748704500604574483701746375742.html].

"There are 68 cities here included (if we count ancient Constantinople and modern Istanbul as separate cities). Each is accorded a short chapter, written by contributors whose number includes Simon Schama (on Amsterdam and Washington), A.N. Wilson (on London) and Jan Morris (on New York). The cities under discussion range from the primordial Uruk to modern monsters like Sao Paulo, taking in, along the way, a host of conurbations from the ancient, the medieval and the early modern periods".

I always wondered what makes a city great. I will look forward to reading this book on my next trip.

urban porosity

2009-10-24T10:31:00.003+04:00

Urban sprawl has been around for ever. Reading recent contributions on measuring this phenomenon [e.g. Elena G. Irwin, Nancy E. Bockstael and Hyun Jin Cho, "Measuring and modeling urban sprawl: Data, scale and spatial dependencies" or Charles Jaret, Ravi Ghadge, Lesley Williams Reid and Robert M. Adelman, "The Measurement of Suburban Sprawl: An Evaluation".] I became interested in urban porosity. While sprawl is primarily a phenomenon of the urban edge, to describe it and to explain it, there is a need to understand the dynamics of cities as 3D physical objects.

As a preliminary step, there is a need for rules that will enable us to observe cities and to describe the extent and nature of porosity. I have been reading S.T. Hyde, S. Andersson, K. Larsson, Z. Blum, T. Landh, S. Lidin and B.W. Ninham, The Language of Shape, Elsevier, (1997) and Michael Burt's PERIODIC SPONGE SURFACES AND UNIFORM SPONGE POLYHEDRA IN NATURE AND IN THE REALM OF THE THEORETICALLY IMAGINABLE. I must admit that it is unclear to me where to go next. Any ideas?

At the same time, we are making a bit of progress in formulating the structural relationships that should be at the heart of the relevant modeling effort. See Czamanski, D., Roth, R., “Characteristic time, developers’ behavior and leapfrogging dynamics of high-rise buildings" forthcoming in Annals of Regional Science, 2009.

A new method for measuring and studying cities

2009-10-21T22:53:00.000+04:00

Hernan D. Rozenfeld, Diego Rybski, Jose S. Andrade Jr., Michael Batty, H. Eugene Stanley, and Hernan A. Makse are among the leading scholars of urban phenomena today. They just published an important paper entitled "Laws of Population Growth".

The importance of the paper is in the effort of the authors to go beyond stylized facts and to introduce some precision into the measurement of urban phenomena. What we know about cities is very much influenced by the way we mark the boundaries of cities and the way that we collect data about cities. For the most part cities are defined as administrative and governmental units. In reality, cities extend beyond such boundaries. Often a city spans several municipal units.

To overcome the obvious problems of traditional data collection, the authors "introduce a new method to designate metropolitan areas, denoted “City Clustering Algorithm” (CCA). The CCA is based on spatial distributions of the population at a fine geographic scale, defining a city beyond the scope of its administrative boundaries".

By applying this measurement method they find scale-invariant properties which they "modelled using long-range spatial correlations between the population of cells". This leads to the implication that "strong development in an area attracts more development in its neighborhood and much beyond. A key finding is that small places exhibit larger fluctuations than large places. The implications for locating activity in different places are that there is a greater probability of larger growth in small places, but also a greater probability of larger decline".

You can find this paper at: Http://arXiv.org/abs/0808.2202v2

A Joint Workshop in Peri-Urban Spatial Dynamics

2009-10-17T10:43:00.002+04:00

During the academic year 2009-2010 Prof. I. Benenson (Tel-Aviv University), Prof. D. Czamanski (Technion - Israel Institute of Technology), Dr. D. Malkinson (University of Haifa) and Dr. Nurit Alfasi (Ben-Gurion University) will lead a year-long workshop that will explore the spatio-temporal interactions among urban, ecological and agricultural systems in the peri-urban zone.

The workshop will meet every two weeks, alternating between the Tel Aviv University and the Technion campuses. The meetings will take place on Mondays between 16:00 and 19:00. The first meeting is scheduled for the 26^th of October, 2009 at the Technion.

Participants in the workshop will include senior researchers, graduate students and post-docs.

We intend to use this blog to exchange ideas raised in the workshop.

You are invited to comment and participate in these discussions through this blog.

The 2010 Advanced Geographical Analysis and Modeling Workshop

2009-10-17T10:39:00.001+04:00

The increasing availability of geographic information and new spatial models originating in physics, economics and regional science, pose a challenge and present an opportunity for Geographic Information Science.

The Modeling Geographical System and the Geographic Information Science Commisions of the International Geographic Union would like to invite you to participate in a workshop that will be an exciting opportunity to explore with other scholars issues related to geospatial analysis and modeling. The workshop precedes IGU 2010 Regional Conference.

The workshop will take place on July 8th-10th, in Neve Ilan, located approximately 20km west of Jerusalem.

We look forward to seeing you at the workshop and encourage you to submit papers for presentation at the meeting.

Further details at: http://www.agam2010.tau.ac.il/

Regional Science and Complexity Sessions at ERSA 2010 Congress

2009-10-17T10:38:00.000+04:00

Following the complexity sessions in Liverpool in 2008 and in Lodz in 2009, the local organizing committee of 2010 ERSA Congress has given a green light to organize similar sessions in the coming meeting in Jönköping, Sweden (19-23 August 2010).

The Regional Science Association (RSA) is a natural venue to explore spatial phenomena by means of ideas from statistical mechanics concerning micro-behavior and macro-states. While such analyses have been around for some forty years now, dynamic simulation in Regional Science is relatively new. This is despite the obvious analogies of economies as self-organizing, emergent systems. Recently, research in the spirit of the New Economic Geography has illustrated the emergence of the urban patterns from some very basic economic principles. Heretofore a major obstacle to a fruitful dialogue among these disciplines has been the intention of regional scientists to reproduce reality and the aim of statistical physicists to capture the essence of phenomena, making the explanation "simple as possible, but not simpler". It is our presumption that there is a possible meeting point that can be identified and that lies at some mid-point between the real and the essential. Again at the 2010 European RSA we intend to explore the possibility of finding this meeting point among regional scientists and physicists. We think that the joint exploration of this topic by statistical mechanics and regional science can be interesting and fruitful.

By means of this letter I would like to invite you to participate in these sessions by contributing a paper. Come to explore with other scholars the growing dialogue among physicists, economists, geographers, planners and regional scientists concerning spatial phenomena. We are issuing this invitation almost a year before the meeting hoping that we can receive commitments early and so that we may be able to organize a book that will include the papers to be presented at the meeting. The deadline for the abstracts is 31 December 2009.

Please send your abstract as soon as possible to Danny Czamanski at danny@czamanski.com.

Kevin Kelly on cities and nature

2009-07-05T09:28:00.001+04:00

In his thoughtful and interesting blog "The Technium" Kevin Kelly addressed the question why people migrate to cities [see http://www.kk.org/thetechnium/index.php].

Kelly ponders, cities

"…seem like machines eating the wilderness, and many wonder if they are eating us as well. Is the recent large-scale relocation to cities a choice or a necessity? Are people pulled by the lure of opportunities, or are they pushed against their will by desperation? Why would anyone willingly choose to leave the balm of a village and squat in a smelly, leaky hut in a city slum unless they were forced to?"

One of the repercussions of the search for urban opportunities and rural quality of life is the formation of rural-like suburbs and the outward spread of cities. We wrote in the past about the leap-frogging spatial dynamics that results [Benguigui, L., Czamanski D. and Marinov, M., “City Growth as a Leap-Frogging Process: an Application to the Tel Aviv Metropolis” in Urban Studies, 38(10), 2001, pp. 1819 – 1839].

I am concerned that stylized facts and observation of cities at an inappropriate resolution leads to wrong conclusions concerning the impact of cities on nature. In fact we do not know enough about this interaction. In a recent paper we reviewed the little that is known [Czamanski, D., Benenson, I., Malkinson, d., Marinov, M., Roth, R., Wittenberg, L., "Urban Dynamics and Ecosystems" in International Review of Environmental and Resource Economics, 2, 2008, pp. 1-45]. A tentative conclusion from our review is that sprawl is a contributor to biodiversity and not destroyer of nature. Our research group is engaged in a multi-year empirical study of this phenomenon.

young and old cities

2009-07-04T22:15:00.002+04:00

Before long I will be teaching again my urban economics course. I started to re-read my lecture notes and the new papers that were published in the last 12 months.

I am deeply disappointed with the way my fellow professional urbanists view cities and the prescriptions that they conjure up to cure urban ills that may or may not exist. My disappointment stems from the clear dissonance between what continues to be published in the professional literature and evidence. Thus for example, cities are said to expand outwards like sea waves in all directions. They are not supposed to leave any un-built areas in their wake. Open spaces within and around urban areas are thought to be a relic of early urban evolution. The truth is quite different.

Like the proverbial seven blind men, we see cities partly and imprecisely. I would like to persuade my students to see cities from a non-traditional perspective. It is my intention to provide them with a distant, and yet close, perspective and to change the way they think about their home.

There are two fundamental problems with the way that professionals have been looking at cities. Their vision is obscured by the use of statistical data. The information they use is granular and their chunky data display only that which statistical units reveal. Census bureaus and other government producers of statistics view cities through a prism that "divided" cities into statistical areas and gather data accordingly. Statistical areas are relatively large. Within such relatively large area there are many buildings, activities and people. They display a great diversity of things. In official statistics, each statistical area provides a distorted, average, image of the activities within it and the city as a whole is seen as an average of these averages. The vast diversity that characterizes real cities at the very local neighborhood level is simply lost. Therefore, the stylized facts about cities do not reflect their reality.

The representation of a phenomenon by its average occurrence can be innocuous only under very special circumstances. The average can represent the population in cases that the number of extreme occurrences is very small relative to the average-size cases and that the number of extremely large and extremely small events is similar. Such populations are termed "normal", or Gaussian.

The world of cities is not Gaussian. It is characterized by fat tails. For example, in very few countries is the population of cities very large. The vast majority of cities have small populations. Very many other urban characteristics display the same fat tail distribution. Indeed, it is almost an universal characteristic of cities.

In the least, large and small cities do not represent the same phenomenon. It is as if we were to understand human physical activities by means of a typical individual. Abilities, performance and repercussions for kids, young people, middle-aged individuals and for old people would be seen as equivalent. Obviously, the stylized facts and reality would be disparate. So it is with cities. There young cities and old cities, etc. Cities possess characteristic times and we need to understand them in a dynamic context and not through still, Polaroid-like, photographs.

There are very many other implications of fat tail distribution of city sizes. Perhaps the greatest distortion that results from the use of such data is our understanding of sprawl and its repercussions. But, on this I will write later.

Earth's warming and evidence from Mars

2007-04-08T06:31:00.000+04:00

I just read (via Peter Gordon [http://www-rcf.usc.edu/~pgordon/blog/]) that yesterday's LA Times reported global warming on Mars. As Peter writes this is uncomfortable evidence for those that deny that humans contribute but a fraction to changes in temperatures on earth.

Clue to Mars' warming is seen

The planet's darkening surface could account for its temperature rise, scientists report.

Global warming on Mars? It turns out you don't need belching smokestacks and city-choking traffic to heat up a planet. Changes in surface reflectivity may also do the trick, according to research published Thursday in the journal Nature.The research team, composed of scientists from NASA's Ames Research Center in Northern California and the U.S. Geological Survey, compared images of Mars taken by the Viking missions in the 1970s to pictures taken a quarter century later by Mars Global Surveyor.The surface was noticeably darker in the new pictures, said Lori Fenton, a planetary geologist at the Carl Sagan Center in Mountain View, Calif., who worked with Ames scientists on the project. Plugging in a climate model developed at Ames, the research team said the changes in surface reflectivity could account for a 1 degree Fahrenheit rise in the surface temperature of the planet. "That's a significant amount," said Rich Zurek, lead Mars scientist at the Jet Propulsion Laboratoryin La Cañada Flintridge, who was not involved in the research. The scientists believe the changes in surface reflectivity —known as albedo — are caused by wind-driven dust storms that occasionally sweep the entire Martian surface. The storms fill the air and cover the surface with fine grains that are more reflective than the bedrock. Several big storms preceded the visit of Vikings 1 and 2 in 1975, Fenton said. Comparatively, there was less heavy wind and, consequently, more light-absorbing bedrock in the picture taken by Mars Global Surveyor in 2000. If Mars is getting hotter, that could explain one finding that has puzzled planetary scientists since it was discovered several years ago: the loss of carbon dioxide ice at Mars' south pole. The CO2 ice forms a cap on top of water ice that ranges from several feet to several hundred feet in thickness. Each of the last few years, scientists have seen holes develop in the CO2 layer late in the Martian summer. So does all this mean Mars is undergoing a new round of climate change like the one that dried up its ancient lakes and drove its waterunderground? Fenton is unsure. What's going on at the south pole "is an indication of at least regional temperature change," she said.

So what's between good science and the earth warming hypothesis?

2007-03-20T20:04:00.000+04:00

Eclectecon just posted
[http://www.eclectecon.com/] the following:

Chris Essex, Ross McKitrick, and Bjarne Andresen recently published a paper [Jl. of Non-Equilibrium Thermodynamics, Vol 32, 1 - 27, 2007] in which they demonstrate that using different metrics leads to different conclusions about whether the earth is really warming. Here is the abstract:
Physical, mathematical, and observational grounds are employed to show that there is no physically meaningful global temperature for the Earth in the context of the issue of global warming. While it is always possible to construct statistics for any given set of local temperature data, an infinite range of such statistics is mathematically permissible if physical principles provide no explicit basis for choosing among them. Distinct and equally valid statistical rules can and do show opposite trends when applied to the results of computations from physical models and real data in the atmosphere. A given temperature field can be interpreted as both ‘‘warming’’ and ‘‘cooling’’ simultaneously, making the concept of warming in the context of the issue of global warming physically ill-posed.
Their conclusion is strong [emphasis added]:
There is no global temperature. The reasons lie in the properties of the equation of state governing local thermodynamic equilibrium, and the implications cannot be avoided by substituting statistics for physics.... Since temperature is an intensive variable, the total temperature is meaningless in terms of the system being measured, and hence any one simple average has no necessary meaning. Neither does temperature have a constant proportional relationship with energy or other extensive thermodynamic properties.Averages of the Earth’s temperature field are thus devoid of a physical context that would indicate how they are to be interpreted, or what meaning can be attached to changes in their levels, up or down. Statistics cannot stand in as a replacement for the missing physics because data alone are context-free.Assuming a context only leads to paradoxes such as simultaneous warmingand cooling in the same system based on arbitrary choice in some free parameter. Considering even a restrictive class of admissible coordinate transformations yields families of averaging rules that likewise generate opposite trends in the same data, and by implication indicating contradictory rankings of years in terms of warmth.The physics provides no guidance as to which interpretation of the data iswarranted. Since arbitrary indexes are being used to measure a physicallynon-existent quantity, it is not surprising that different formulae yield different results with no apparent way to select among them. The purpose of this paper was to explain the fundamental meaninglessness of so-called global temperature data. The problem can be (and has been) happily ignored in the name of the empirical study of climate. But nature is not obliged to respect our statistical conventions and conceptual shortcuts. Debates over the levels and trends in so-called global temperatures will continue interminably, as will disputes over the significance of these things for the human experience of climate, until some physical basis is established for the meaningful measurement of climate variables, if indeed that is even possible.It may happen that one particular average will one day prove to stand outwith some special physical significance. However, that is not so today. Theburden rests with those who calculate these statistics to prove their logic and value in terms of the governing dynamical equations, let alone the wider, less technical, contexts in which they are commonly encountered.

Cultural facilities tend to cluster (in Tel Aviv)

2007-02-16T11:56:00.000+04:00

In New York City there is the theater district. In London there is the west end. In Tel Aviv the cultural facilities seem to be randomly distributed. But, are they?

Gilles Benguigui, Idan Porath and I spent some time examining the variety of such facilities in Tel Aviv. First we used the old nearest neighbor method to identify clustering.

The method calculates the ratio between the average short distance between every two points and the expected average short distance of completely spatially random distribution. The ratio of the two is an index for the spatial point distribution and for spatial order.

The method is subject to some well-known drawbacks. It indicates a random distribution of points in cases that there are some clusters with random distribution of points inside the clusters. Also, the results are sensitive to the choice of boundary of the area within which the points are distributed. When the boundary of a geographic entity is ill-defined defined, it is difficult to apply the method.

To deal with this problem we created the all distances analysis. It is free of these defects. The all distances analysis method takes into account the distances between every point to all other points in the examined area.

We concluded that despite first appearances the cultural facilities cluster. Furthermore, there are several distinct clusters, each possessing particular characteristics. These characteristics were confirmed by a detailed survey of users.

Semester break at the Technion

2007-02-11T08:04:00.000+04:00

It is the end of the Fall/Winter semester at the Technion. We start late (in October) and finish in February. The Spring semester will start in mid-March and end in the beginning of July.

The upshot is that I am off to a conference and visits to various campuses in the USA.

Jerusalem will be environmentally friendly, but ultra-orthodox

2007-02-06T17:56:00.000+04:00

Jerusalem is a relatively poor city. It is the home of a large ultra-orthodox population that is characterized by men who study Torah and women that produce very many children and work to support their families. It is also the home of government employees. Although there is a high-tech industry in Jerusalem, many of its employees reside outside city limits.

For many years now, policy makers in Jerusalem have targeted ways to attract new, young and professional population to the city. One of the means that has been proposed is to create a new stock of housing for these families, away from the religious neighborhoods. It was hoped that by so doing the stigma of Jerusalem as a place dominated by "blue laws" will be replaced by an image of comfortable suburban living in the midst of nature in the Judean hills.

A land- use plan was commissioned from the Israeli/Canadian architect Moshe Safdie. The plan proposed 20,000 housing units west of the city around the main road connecting Jerusalem with the center of the country.

Today, the Israel National Planning Board rejected the plan after a prolonged debate to the sound of vocal protest from various groups wishing to preserve the green areas around the city. The mayor of Jerusalem has adopted the view that it is possible to create a sufficient stock of housing within the current city limits. Based on a new study he claims that it is possible to build 40,000 housing units within the city.

There is no doubt that dense urban fabric is to be preferred. It creates a smaller environmental footprint by encouraging the use of public transportation facilities and lowers CO2 emissions. However, there may be a significant cost associated with the new policy. It is my suspicion that Jerusalem will find it difficult to attract young, upwardly mobile families and that the outflow of young people to Tel Aviv will continue. It is likely that we will have a green , non-pluralistic and relatively poor capital city.

High-rise residential buildings and Pigou

2007-02-04T07:25:00.000+04:00

This Thursday I was an "expert witness" before the Israel National Planning Board concerning an objection launched by a local Planning Board to a 1,200 residential complex that includes a number of high-rise buildings. Among the arguments that were presented against the project was the high cost of maintaining high-rise buildings and the possibility that over time the project will turn into a slum. An additional argument of the officials of the local Board was that the quality of life of the residents in the complex will be adversely affected by the noise of the highway and train station next to the complex.

These arguments should be contrasted to the arguments of Ed Glaeser in a recent article in the New York Times
[URL: http://www.nysun.com/article/47626]. Ed Glaeser points out the contribution of Manhattan residents to environmental quality. They use less land per capita and their usage of private cars is much smaller than that of other cities. All this is due to the high density in Manhattan.

In this spirit I suggest that we encourage the construction of high-rise, dense residential complexes next to major transportation infrastructure and that we make them accessible to lower income residents by appropriate negative Pigou taxes, in relation to their contribution to the reduction of negative externalities. This is not to say that higher income residents should not benefit from such taxes.

It is common for economists to advocate taxes on negative externalities in the context of market activities. The so-called Pigovian taxes (after Arthur Pigou) should be levied on producers who pollute the environment to encourage them to reduce pollution, and to provide revenue which may be used to counteract the negative effects of the pollution. Greg Mankiw keeps track of economists who advocate Pigovian taxes. [See http://gregmankiw.blogspot.com/2006/09/rogoff-joins-pigou-club.html
Also, see the manifesto of the Pigou Club: http://gregmankiw.blogspot.com/2006/10/pigou-club-manifesto.html].

Andrew Gelman says that economists are fun

2007-01-28T21:21:00.000+04:00

I could not help it and have to direct your attention to Andrew Gelman's blog http://www.stat.columbia.edu/~cook/movabletype/mlm/. Gelman wrote:

"Sarah Igo came yesterday in our seminar to tell us about her recent book, The Averaged American. It was a lot of fun, and she commented that when she speaks to historians, they just let her speak, but we're more fun because we interrupt her frequently. I assured her that if interruption=fun, then economists are the most fun of all..."

I have to add that Israeli economists are extra fun...

Clusters of high-rise building in Tel Aviv

2007-01-28T07:46:00.000+04:00

Two colleagues (Lucien Benguigui, our PhD student Rafi Roth) and I just completed a major study concerned with the evolution of high-rise buildings in Tel Aviv. We conducted empirical analyses of the temporal and spatial evolution of the city in 3D and we built corresponding cellular automaton (CA) simulation models.

Until some 15 years ago economists were satisfied with observing cities through a prism of stylized facts and the Alonso type mono-centric urban model. The recognition of the existence of "edge cities" led to models with multiple centers. Both types of models suggest that high-rise buildings tend to cluster in space.

In our study clusters are defined as spatially continuous concentrations of buildings of pre-defined heights. We succeeded to generate 3D clusters by means of our cellular automaton model. The rules of behavior are relatively simple and have an economic intuition. More recently we attempted to identify empirically clusters of high-rise building in Tel Aviv over time with the help of GIS.

The results are interesting. The frequency distribution of building heights displays twin peaks. More, interesting, using a variety of measures we identified clusters already in the 1970s. However, over time the clusters tend to weaken.

These days we parade our results at various conferences.

Figure 1 Distribution of heights in Tel Aviv 2003

Figure 2 Distribution of heights of high buildings in Tel Aviv 2003 with exponential fit

Is there technology based solution to global warming?

2007-01-21T22:26:00.000+04:00

Last November I wrote about the important research of Nir Shaviv and his co-researchers at the Hebrew University in Jerusalem concerning global warming [see http://urbaneconomics.blogspot.com/2006/11/global-warming-alternative-viewpoint.html]. According to Shaviv's model, recently (partly) tested at CERN (see http://www.sciencebits.com/CO2orSolar), the major source of influence on the earth's temperature is solar activity that causes ionization and cloud formation.

Added evidence was provided by the Danish National Space Center (DNSC) Sky experiment that was published in the Proceedings of the Royal Society. Shaviv reported as follows [http://www.sciencebits.com/SkyResults]:This is the Royal Society's press release on the publication of Svensmark et al.: “Using a box of air in a Copenhagen lab, physicists trace the growth of clusters of molecules of the kind that build cloud condensation nuclei. These are specks of sulphuric acid on which cloud droplets form. High-energy particles driven through the laboratory ceiling by exploded stars far away in the Galaxy - the cosmic rays - liberate electrons in the air, which help the molecular clusters to form much faster than atmospheric scientists have predicted. That may explain the link proposed by members of the Danish team, between cosmic rays, cloudiness and climate change.”

Now the Shaviv team proposes a theoretical model that provides an insight concerning a possible technology that can reduce global warming. If solar activity does not provide the means for cloud formation over the Pacific Ocean, a set of giant lasers firing horizontally high in space can create the required effect.

I am far from capable of judging these ideas. But in the absence of contrary evidence, it makes me skeptical about size of the anthropogenic influence on global warming and hopeful that technology will provide the answer. I would like to hear some cogent discussion of the Shaviv hypotheses.

Richard Musgrave and Jesse Burkhead

2007-01-21T09:46:00.000+04:00

I read in Greg Mankiw's blog (http://gregmankiw.blogspot.com/) that Richard Musgrave passed away.

Musgrave was a hero at the Maxwell School when I was a student there some 30 years ago. He visited and gave guest lectures in a heavy accent. He was a short man and already then he had a huge mane of white hair.

Musgrave was a star at Maxwell not the least because the focus of research at Maxwell was set by my teacher, the late Jesse Burkhead. Jesse emphasized the expenditure side of the budget. All the PhD students worked on productivity measurement in the public sector. We all read repeatedly Musgrave's The Theory of Public Finance as well as the Burkead and Miner Public Expenditure.

It was very clear to all at Maxwell that Musgrave initiated a revolution in public finance by introducing analytics. Burkhead used Musgrave's framework to do empirical work.

Lifeline electricity rates - 2007 version

2007-01-13T19:45:00.000+04:00

In 1975 I was part of a study team charged with examining "lifeline rates" for electricity in the USA. At the time energy prices were extremely high and the world was in the midst of an energy crisis. Last week a member of the Israeli parliament proposed that people with low incomes will be provided with electricity free of charge.

It is not surprising that a politician should propose such a policy. It is somewhat surprising that Israel Electricity Corporation, still a vertically integrated government monopoly, is behind the policy. IEC is in a process of battling the intention of the government to restructure it and to introduce competition. The company is not well regarded in the public. The employees of IEC receive the highest salaries in Israel. IEC support of the policy may make it somewhat popular among the potential beneficiaries.

Just as 30 years ago, it is my opinion that this is an economically bad policy. As any first year student of economics knows distorting relative prices will cause an inefficient allocation of resources. Poverty should be addressed directly, by creating jobs. If such a policy is not enough a second best approach consists of transfer payments.

There is nothing good about lifeline rates.

We need more roads

2007-01-13T10:10:00.000+04:00

Above is a photo of the main freeway entering Tel Aviv.

It is an accepted knowledge among urban economists that for much of the income scale, the income elasticity of car ownership is close to 1. In other words, in western countries a percentage increase in income is expected to generate a similar percentage increase in car ownership.

Israel is experiencing, and is expected to experience, a relative rapid growth in GDP per capita. There are think tank groups in Israel that predict and propose policies that will bring Israel to among the 10 highest income countries in the world within the next 20 years. I am not sure that this will happen. However, income is expected to grow and so will car ownership.

This expected growth raises an important policy issue. Already today, the density of cars on roads is creating massive traffic jams on inter-urban roads and especially during morning in-coming traffic hours and during afternoon exiting traffic hours. The cost in work time lost and in property and life losses due to traffic accidents is enormous. The number of car accident victims in Israel is greater than the losses due to wars.

There is no doubt that improvements in mass transit infrastructure will alleviate the situation, somewhat. And indeed, investment in inter-urban rail and suburban light rail systems is massive and is expected to grow. And so it should.

However, there is a need to invest in roads as well. It is unreasonable to think that people who do not reside within walking distance of fixed rail corridors will be consumers of these systems. As the cost, in terms of time, increases the demand for mass transit is expected to decrease. Therefore, unless we invest in roads the density of cars on roads will continue to grow and the associated cost with it.

Obviously, I am for the use of the price system to regulate the allocation of road space. As of now, the cost of owning and using a car in Israel is exorbitant. The tax on the purchase of a car is upwards of 100 per cent. The cost of gasoline is equally high in comparison to the USA. It is peculiar that Israelis are unwilling to part from their cars.

Low housing prices and high price of land

2007-01-07T19:43:00.000+04:00

In today's real estate section of Haaret'z newspaper, Arik Mirowski reports that in Haifa land price changes do not reflect changes in the value of apartments. Land prices are steady at US$ 150 thousands, while apartment prices, especially in the better neighborhoods have been sliding for several years now. Mirowski does not provide an explanation. He raises a question.

As a possible explanation Mirowski suggests that land prices have a quality of options. As such land prices are subject to greater volatility than apartment prices. In Haifa they indicate that finally the housing market is likely to take off. The situation of relatively high land prices in the better areas of the city and stagnant housing prices has been going on for the last three years.

Here is an alternative explanation. For the last 15 years every attempt to generate a land use change and to provide the market with a housing product that was in demand faced a massive opposition from various "green" groups. The local planning board lacked political leadership and almost no significant project was approved in Haifa. Land developers are rare animals in Haifa. The rate of housing starts has declined and most importantly, new housing products do no correspond to demand characteristics.

In other words, there is pent up demand and no supply. Land prices reflect the pent up demand and the location characteristics of the better areas in the city. The existing housing stock does not match the demand requirements. Existing demand migrates outside of Haifa. As a result housing prices are stagnant.

The housing market in Haifa is waiting for a political leader who will bring back the construction industry and allow them to build the type of housing that people want to buy.

Topology of urban transportation networks

2007-01-04T17:10:00.000+04:00

Dr. Efrat Blumenfeld-Lieberthal informed me of her recent research and agreed that I share it here. Efrat was my PhD student at the Technion. I am trying to persuade her to share my blogging chores on a regular basis. Here are Efrat's words...

There are two major contributions of the science of networks to transportation and urban systems. The first suggests that complex networks have the characteristics of small world networks, i.e. most nodes are neighbors of one another (have high clustering coefficient), but each node can be reached from all the other nodes by a small number of steps (short average path). The second contribution demonstrates that one of the best measures to characterize the nature of a network's morphology is the degree distribution of networks, which is the probability that each node has a specific number of links. It was found that in many types of complex systems the degree distribution obeys a power law. In other words, in complex systems there are few highly connected nodes and many nodes with low connectivity.

Cities are complex systems by their nature. Similarly to the organization of other complex systems (e.g. the WWW or the molecules in a cell) urban networks have no central force that affects their spatial structure. Thus, it is reasonable to assume that the spatial behavior of the components of urban systems would fit these characteristics of networks. In 2006 at the Centre for Advanced Spatial Analysis, at University College London I studied transportation networks of urban systems in different countries. I considered the cities as the nodes, while highways, railways, and air routes represented the links. I found that that these networks share some common characteristics. Apparently, the topology of the transportation networks revealed the type of economy to which they belonged (e.g. stages in the economic development of countries). The following figures present the number of links (degree) as a function of the clustering coefficient for different cities in different countries. This presentation indicates the connectivity levels of each city. It can be seen that all Western European countries present similar characteristics, while Poland and the USA behave differently.

Figure 1 – Germany

Figure 2 – Italy

Figure 3 – UK

Figure 4 – Poland

Figure 5 – USA

Royal odor externalities

2007-01-02T10:37:00.000+04:00

Photo of the town Aqabah from the south-west.

The local newspapers in Israel reported recently in small print that King Abdullah II of Jordan launched a complaint with the Israeli government concerning unpleasant odors that reach his vacation home in Aqabah, across the border from Eilat, on the Red Sea. The source of the odor is cows that belong to Kibbutz Eilot several miles north of Eilat.

In his blog on January 1, 2007 Matt Kahn wrote (http://greeneconomics.blogspot.com/):

Does the Coase Theorem Apply in the Middle East? Cross-Border Odor Disputes
It's a hard life being a king. All work and no play but at least he provides an interesting case study for environmental econ teachers. Perhaps the siting of this livestock facility is no accident? International borders are a convenient place to locate such noxious stuff.Jordan king complains of Israeli odors….

This is an old story that comes to life whenever the direction of the wind is from the north-west. Most days the situation is bearable for the King and unbearable for the Israeli and European tourists in Eilat's hotels (to the left in the photo).

It is high time to impose an odor tax and to remove the externality.

An optimistic economic 2007

2006-12-29T20:14:00.000+04:00

Israel is a small country with a very strong economy. 2006 was a very good economic year for Israel, perhaps a record year.

There were a number of events and processes during the year that suggested that the economy will stumble. First, there was a nasty war, the Second Lebanon War. Second, the dollar kept sliding and with it the ability of Israeli exporters to sell in the dollar zone. Yet, the economy came through like a lion. Growth was record breaking. Unemployment continued to decline. And inflation is non-existent.

The 4.8 per cent economic growth placed Israel at the front of western economies. While in 2003 unemployment was almost 11 per cent, this year it is at 8.5 per cent. Despite the very strong Israeli currency, for the first time in the country's history we experienced a positive balance of foreign trade, the value of exports was 2.2 billion dollars bigger than the value of imports. The stock market broke records and the interest rate is lower than that in the USA. Foreign investors brought in US $ 20 billions.

Perhaps the dream of those who would like to see Israel with per capita GNP among the top in the world is not impossible.

So, how did it happen? In the mid-1980s Israel suffered from hyper-inflation and government expenditures were close to 3/4 of the GDP. Today government expenditures represent less than 50 per cent. In addition to privatization, a series of reforms introduced price signals and incentives into decision-making processes. The market responded.

As I am fond of repeating, hi-tech exports can be expected to continue only if we cherish our human resources. The quality of life in Israel must be as close as possible to the best in the world. Only high quality of life will ensure that our investments in higher education will not lead to a brain-drain. While we cannot manage geopolitics through economic policies, it is important that those aspects of life that are manageable by us alone should be performed well.

So it is not surprising that the expected huge investments in infrastructure are a welcome step towards improving Israel's quality of life. There are some tens of billions of dollars worth of infrastructure projects being advanced. Much of the money is private investments. The projects include light rail systems in the three big cities, Israel turnpike from the north of the country to the south, Carmel tunnels in Haifa, a major water desalinization plant, several private power plants that could provide as much as 3,000 MW and the red-dead canal on the Jordanian-Israeli border.

The important thing is that much of the money that will finance these investments will come from the private sector, and from the world's money markets without government guarantees.

So, while the Central Bank of Israel is reducing the prime rate by 1/2 per cent in anticipation of deflation, I am optimistic that in 2007 we will experience a good economic year – InShaa'la.

Season's Greetings

2006-12-25T08:50:00.000+04:00

It is Christmas morning in the Holy Land and for the first time in very many months there is a glimmer of hope about the future.

The meeting this week between Olmert and Abbas in Jerusalem, the indications that some Palestinian prisoners will be freed within a week and that some security measures will be removed, make many of us here (be they Muslims, Christians, Jews and agnostics) feel the spirit of the season. It may even snow at the higher elevations in the Galilee, in Jerusalem and perhaps in Haifa.

Obseity, sprawl and teaching urban dynamics

2006-12-22T22:12:00.000+04:00

How far away from ground level and from today do we need to go in our imagination so that we can understand urban evolution? What details in the puzzle can we discard without loosing the essence of urban phenomena that we are trying to understand? What is the characteristic time of cities? These are among the fundamental questions that I discuss with my students in urban economics.

Generally, it is easier to sink deep into the "technology" of economic reasoning. I find it fun to plow through the logic of maximization to generate rough explanations of crude phenomena. But such exercises, while elegant, leave too much out of the puzzle. The students find it fun to read papers on issues that they did not think economists consider. Such is the case with the new paper by Eid, Overman, Puga and Turner entitled: "Fat City: Questioning the Relationship Between Urban Sprawl and Obesity".

This year I am spending much less time on working through the typical topics in urban economic. This is despite the fact that the course is an introductory urban economics course. I decided to spend part of the semester on non-linear urban dynamics. The students seem to be fascinated by my presentation of cellular automaton simulation models and playing with them. They enjoy attempts to identify urban fractals. I insist on looking at detailed data sets and in comparing the results of the simulations to the data and to economic intuition.

I am wondering whether anyone else is doing something similar.

Charlie Leven and Charlie Tiebout - the birth of a model

2006-12-21T14:52:00.000+04:00

Charlie Leven was a guest in my urban economics class last week.

He lectured about some aspects of the Tiebout "voting with feet" model. He then proceeded to tell the class under what cinrcumstances the model was born. It turns out that a at a lunch at Northwestern University during the early 60s, the two Charlies and another person whose name Leven did not recall discussed the high property rates in Evanston. The third person at lunch, who was unmarried and had no kids, announced that he is moving a few miles away from campus into Chicago - where tax rates are lower.

In reaction, Charlie Tiebout proceeded to describe his model. At the end of the lunch he announced that he is going to write it up and publish it.

If I am not mistaken this was his only contribution to urban economics.

Cross border planning coordination in the Middle East

2006-12-21T12:53:00.000+04:00

I just returned from a two-day annual meeting of the Israel Geography Association. I was asked to chair a session concerning regional planning issues.

An interesting paper was presented by an ex-representative of the Defense Department on the National Planning Board. The paper was concerned with coordination of planning actions on both sides of the "green line", the pre-1967 boundary between Israel and what is today the Palestinian Authority. Parts of the lands beyond the green line are controlled by the Israeli Military and managed by the Civilian Authority. Until recently, the author of the paper was the representative of the Defense Department on the planning board of the civilian authority as well.

I was amazed to hear that there is absolutely no coordination of land use plans for roads, trains, water supply, open spaces, etc. I would have thought that such coordination would be of interest to authorities on both sides of the green line. We live in a very small area with very high density of population. Furthermore, the ecological systems do not recognize borders.

At the same time there is a great deal of coordination across the border between Israel and Jordan. Yesterday on the news I heard of a new system of controlling rat infestation in open fields by means of small white owls. I understand that Muslims are averse to owls. There was much discussion between the agriculture ministries in the two countries before the system was successfully implemented.

Urban sprawl and ecosystem fragmentation

2006-12-16T10:29:00.000+04:00

Much of the public discourse among public policy types about the malaise of urban sprawl and its effect on ecosystems lacks an in-depth understanding of the dynamics of each system and of both at the place where the two interact.

As a result of population growth, the associated urbanization, the irregular nature of the boundaries of urban built-up space and urban leap-frogging the interface area between the two systems is ever increasing. The outcome of the interaction is an encroachment of the urban system into the ecosystem. Quite often, the interactions between these two lead to the disintegration of the “weaker” ecosystem. Despite wide interest in the phenomenon, the two systems have rarely been studied jointly. There is a need to understand their joint dynamics with a focus on ecosystem dynamics under the pressure of the sprawling city.

It is important to note that urban and ecological systems are open, non-linear and self-organizing. Both display discontinuities in space and non-uniformity in time. These characteristics create a methodological challenge and require the use of innovative modeling tools. At the same time, the study of their joint dynamics can provide important insights of numerous interactive phenomena on the urban/non-urban fridge. In particular, a quantitative understanding of urban expansion and related retreat of the natural ecosystems may clarify how the functioning pieces of ecosystems could be preserved within the urban realm.

Together with a colleague from Tel Aviv University (Itzhak Benenson) and two colleagues form Civil and Environmental Engineering at the Technion (Yohay Carmel and Maxim Shoshany) we are making first steps to develop simulation models that will be capable to generate quantitative understanding of these phenomena.

I am looking forward to hearing from you concerning our project and to getting suggestions. Write to me at ardaniel@tx.technion.ac.il. I will place your methodological comments in the blog.

How much would Israelis be willing to pay to have peace?

2006-12-15T07:29:00.000+04:00

Israelis are news junkies. On the half hour they hear the "hourly news update". This morning I was greeted with "Another two Kassam rockets landed in Shderoth…" Acts of war and terrorism are a daily topic of discussion here.

Following Robert Barro's new paper [On the Welfare Costs of Consumption Uncertainty, by Robert J. Barro, NBER WP 12763, December 2006] I am wondering how much Israelis would be willing to pay to live in the peaceful environment of small town Canada or the USA.

Barro claims in the abstract of the paper that:

Satisfactory calculations of the welfare cost of aggregate consumption uncertainty require a framework that replicates major features of asset prices and returns, such as the high equity premium and low risk-free rate. A Lucas-tree model with rare but large disasters is such a framework. In a baseline simulation, the welfare cost of disaster risk is large -- society would be willing to lower real GDP by about 20% each year to eliminate all disaster risk, including wars. In contrast, the welfare cost from usual economic fluctuations is much smaller, though still important -- corresponding to lowering GDP by around 1.5% each year.

On the one hand, 20% of GDP per year sounds like a lot of money. On the other hand, my intuition says that Israelis would be willing to part with much more. Obviously there are culturally determined differences in the willingness to pay for certainty of peace.

City planning MA curriculum

2006-12-14T07:08:00.000+04:00

What should we teach people who want to be urban planners?

This is a recurring question in our planning department. This year we intend to upgrade our graduate professional MA program and to make our graduates highly competitive. This has become a particularly pressing issue since 3 of our colleagues retired this year and there are several universities that intend to compete with our program. What should be the profile of the replacement faculty members?

I admit that I am prejudiced concerning the answer to this question. The terms that come to mind are excellence and product differentiation. While some colleagues propose that we provide our students with a taste of all disciplinary approaches and others think that we should have courses concerned with current issues, I propose to enhance as much as possible the toolkit with which our graduates will face their professional world – GIS, statistics, economics, law…

If we wish to make our product competitive, we need to give more than other departments of some of these tools. This will have to come at the expense of something. I propose that we produce technical specialists.

Since many of our students have a geography BA degree, they will find it difficult to handle a rigorous stats, econ and law curriculum. I propose to reduce the number of students and to increase the quality of the incoming class.

Baumol, inoculations and my flu

2006-12-12T21:20:00.000+04:00

For the last several days I am under the influence – the flu.

As I ache and moan, almost on an hourly basis, I remind myself of the Baumol model that points out the optimal number of people that a welfare maximizing government should inoculate. As the number of inoculated people increases, the probability of being adversely affected by the flu decreases. At some point the costs and benefits are balanced at the margin.

Having listened to the public ads by the government that people should be inoculated I could only think that the government's calculations are mistaken. In short, I did not take the shot. Now I am paying for it.

If you did not know it, Baumol paints. Here is an example.

The perils of electricity restructuring

2006-12-11T08:36:00.000+04:00

Eleven years ago I was appointed by the government of Israel to head a task force to propose electricity restructuring in Israel. The task force proposed legislation intended to break up the vertically integrated monopoly and eventually to privatize the separated parts.

The struggle between the government and the union of electricity union started immediately. While I was testifying in the Parliament's economics sub-committee a group of labor leaders were outside the room sending messages to the politicians inside. The reforms were postponed for 10 years and then for another year. Now the time has come to implement.

During the first stage of the reform, the electricity system will consist of 4-5 generation companies, all subsidiaries of Israel Electricity Corporation (IEC), 3-4 regional distribution companies, also subsidiaries of Israel Electricity Corporation and one transmission company. The question that is being debated in Israel concerns the nature of the transmission entity.

A variety of models exist in the world. TRANSCOs are transmission companies that own the wires. In some places these companies manage the wires business, including the dispatch of electricity and the congestion that sometimes occurs in the wires. Transmission System Operators sometimes are TRANSCOs and sometimes they do not own the wires. In such cases they are called Independent System Operators (ISO).

The legislation proposed that in Israel there should be an ISO. If we want to create some measure of competition among the generators in a wholesale market we need to have a level playing field and the ISO should be separated from the rest of IEC. We should follow the good examples of Alberta in Canada and of Norway.

For a non-technical review of such issues you may wish to look at my somewhat outdated book:

Czamanski, D. Privatization and Restructuring of Electricity Provision, Prager, Greenwood Press 1999.

Co-existence during the Holiday of Holidays in Haifa

2006-12-10T07:13:00.000+04:00

Each year around this time Haifa celebrates the Holiday of Holidays. Depending on the lunar calendar the Jews and Muslims celebrate their major holidays around Christmas.

The celebration consists of four consecutive weekends during which artists and artisans of all faiths display their work, musicians and theater groups perform and food is sold. It is a joyous time and it feels good to be together.

While few foreign tourists have discovered this event, Israelis flock in. Having read in the New York Times recently about Boston's effort to woo Black tourists (December 8, 2006), I was aware yesterday that there were very many Arab Israelis in the crowd looking in, buying and celebrating.

Later on I found myself in a coffee house along Ben-Gurion Avenue that is lined up with coffee houses and restaurants. Again, the crowd was mixed. There were tables with young professional at which Arabic was spoken and tables with Hebrew speakers. For the most part, the tables were separated. I was delighted to see a table at which there were young Arabs and Jews together.

Haifa is a city with indications of co-existence.

Infrastructure and economic growth

2006-12-08T18:53:00.000+04:00

Many in Israel consider the government's expenditures on higher education and on research (not R&D) as insufficient. There is no disagreement that the country is not spending sufficient amounts on physical infrastructure such as land transportation, energy, etc. Some suggest that eventually this will affect the quality of life to such extent that many will leave the country and affect its future performance.

Recently I agreed to participate in a strategic planning exercise concerned with the possibility that a small open economy, such as Israel or a big urban area elsewhere can increase drastically its rate of economic growth in a very short time. While the project is concerned with all aspects of economic life, the working group that I participate in is concerned with infrastructure. In particular, I was asked to lead the energy infrastructure team.

The issues that I have started to consider include possible obstacles that the absence of appropriate infrastructure can create on the path to accelerated growth. Energy infrastructure consists of the physical elements required for:

· The exploration, development and production of primary energy,
· The transformation of primary energy into useable forms by means such as electricity generation and oil refining,
· The transmission and distribution of energy to end-users by means such as wires, pipelines and end-use stations, and
· The storage of energy in various forms.

The required infrastructure in Israel should grow in some relation to population growth and that of the national economy. The nature of the future infrastructure will be also influenced by technological changes and relative to the world energy prices.

As in many other aspects of this country, also here special attention must be devoted to the special conditions of Israel, i.e., scarcity of local energy resources and economic distance from sources and markets.

Among the issues that we are considering are the following:

1. What infrastructure will be needed? This is perhaps the most difficult issue that this report will address. Lack of “appropriate” infrastructure will be felt in the future and unevenly over time and space.
2. How can we decide what is enough and what is optimal?
3. Will insufficient infrastructure affect the quality of life to the extent that it will generate out-migration and impact the desired rate of economic growth?
4. Who should supply this infrastructure?
5. What should be the preferred method of financing the infrastructure?

High tax rates, alienation and black markets

2006-12-07T12:46:00.000+04:00

I just returned from a PhD exam. The candidate presented some data that were startling and illuminating.

The study was concerned with the impact of new by-pass roads on smaller cities and towns, especially Arab settlements in Israel. As part of the study, Wafa presented official Israel Central Bureau of Statistics data concerning income levels by neighborhoods. She then declared that the data are unreliable. The numbers cannot reflect the actual income in the towns. The NIS 3,000 per month (some US$ 700) does not permit the housing and car ownership that she observed. It is noteworthy that the per capita GDP in Israel today places it among the richer countries of the world.

Wafa conducted an extensive survey and reported that most people interviewed were quite willing to report black market transactions of major proportions. Indeed, the real income seems to be four times the official income.

There is no doubt that black markets exist. However, their extent here is beyond what I would have expected, even in the high tax environment that we live in. The marginal tax rate on a professor's salary is above 50 per cent.

I suspect that part of the explanation of this phenomenon is related to alienation in light of the prolonged disregard by the government of the plight of marginal populations.

Is Haifa aging?

2006-12-06T06:46:00.000+04:00

I just received the following comment from a colleague at the Technion:

Glad to read that you are optimistic about the future of Haifa. Less glad to see that you join the false common statement about the "continuous outflow of young people from Haifa".

First, as we all know, young people tend to move from place to place much more often than older ones. Hence, we find considerable turnover of young persons everywhere, especially in bigger cities.

Second, in my work for the Master Plan of Haifa, I made a special analysis of the migration balance of Haifa's 20-44 age group in four years: 1998-2001. I found that in each of the four years a large number of this age group left Haifa - 5,000 to 7,000 persons a year - but very similar number of persons from the same age group entered the city in each year.

A most serious disadvantage of Haifa is the bad reputation of the city in specific fields. As detailed above, and as your student - Lilach Berger Roth - found in a different field, much of the bad reputation is based on false rumors that people tend to spread around. Let's try to avoid it.

Naomi Carmon
Professor of Sociology and Urban Planning

Here is some additional information that may shed some light on Haifa demographics.

The municipality of Haifa is home to 268,000 residents, or nearly 103 thousand households. The population is heterogeneous. Jews comprise some 82 per cent of the population, some 4 per cent are Muslims and almost 14 per cent are Christians (both Arab and non-Arab). Immigrants from the former Soviet Union, having arrived since 1989, make up nearly a quarter of Haifa's residents.

The Haifa metropolitan area is home to 530,000 residents, or 175,000 households. The metro area includes the group of towns that surround the Haifa municipality and rural communities that increasingly serve as bedroom communities for people who work in Haifa and desire to live in suburban, single family housing.

Despite the influx of immigrants in the 1990s, the population of Haifa has been declining, especially since 2001. There are conflicting forecasts for Haifa’s population growth in the coming decade. The skeptical scenario suggests that the population of Haifa will continue to decline. The more optimistic approach, based on the performance of the hi-tech industry and encouraged by the Haifa municipality, is that the negative immigration trend will cease, or even reverse itself in the near future

Population growth in Haifa

Source: Central Bureau of Statistics, Statistical Abstract of Israel, no. 56, 2005

Despite the declining population, since 2001 the total number of households in Haifa has been constant and is expected to increase slightly due to the decreasing number of persons per household and to the improving quality of life in the city.

An associated demographic characteristic of Haifa is the relatively low percentage of children. The share of older people (age groups over 45) is high compared to both Tel Aviv and the rest of Israel. Haifa's population is ageing. Younger people seek education and better jobs in central part of Israel and families with kids migrate out to bedroom communities in the vicinity of Haifa.

The balance between the religious groups in Haifa is slowly shifting, as the Jewish residents are growing older and the younger ones leaving, while the number of Christians and Muslims is growing. Unlike elsewhere, the national and religious tensions between the main ethnic and religious population groups in Haifa (mainly between Jews and Arabs, and between Muslim Arabs and Christian Arabs) appear to be of a subdued nature. This situation is evident both at the municipal government level, as political frictions that appear on the national level, do not influence the daily management of the city, and in daily life. While there are distinctly Arab neighborhoods in Haifa, there is an increasing integration of populations, especially as well-to-do Arab families move into affluent, mostly Jewish neighborhoods.

On the issue of urban branding I posted a note some two weeks ago, on November 23rd.

The impact of immigrants

2006-12-04T17:50:00.000+04:00

In his blog today Matthew Kahn (http://greeneconomics.blogspot.com/) discusses the relationship between immigrants and urban crime. This question is certainly not unrelated to the situation in Haifa, my home town.

Within less than a decade, Israel's population increased by almost 1,000,000 immigrants. The wave from the former Soviet Union started in 1990 immediately after the fall of the Iron Wall.

However, the increase in crime, especially petty theft and drunk driving, is dwarfed by the positive impact of this immigrations wave. There can be no doubt that the increase in the country's human capital has contributed tremendously to the expansion of Israel's hi-tech industry. At the same time, Israel has become a good example of growth that is demand-driven. The new population, given transfer payments and housing subsidies, created growth that is unprecedented.

An interesting side phenomenon concerns the behavior of the housing market. In the years 1990-1992 housing prices fluctuated widely as a result of the demand shock. It is interesting that it took the market only 2 -3 years to settle to a new equilibrium with only slightly higher price levels.

Palestinian and Israeli artificial islands

2006-12-03T11:26:00.000+04:00

One of the main issues at the heart of the Israeli-Palestinian conflict is the division of land west of the Jordan River among the two entities. For some time now Professor (emeritus) Michael Burt from my faculty claims that there is a way to reduce the conflict between the two nations that stems from, among other things, shortage of land.

The Israel coastal plain is home to 70 per cent of the country's population, some 4.5 million people. There are some 3,500 sq. k. in the coastal plain. In a business as usual scenario, by the year 2040 this population is expected to increase to above 9 millions.

In the Ghaza strip of the Palestinian Authority there are some 1.1 million people. The strip is 350 sq. k. The population is expected to increase relatively quickly and by the year 2040 it will be 4.4 millions. This is an unbearable density.

Burt proposes that we utilize the relatively shallow coastal waters of the southern Mediterranean, along the Ghaza and Israeli coast, to build a series of artificial islands that will relieve the expected future population pressures. Burt proposes a "Blue Avenue" in a form of chain of islands with "Blue Parks" that will be equivalent to green parks.

Lest you think that this is just a dream, Burt assembled a team of engineers and proceeded to analyze various aspects of the endeavor. Burt invented sponge like water breakers and designed various types of artificial islands.

At one point Burt asked me to perform some simple economic calculations. The economics of the islands is doable. For example, the cost of building an island is 8 times the value of land in the Haifa Bay area. Luck would have it that Haifa Bay is the home of Israel's petrochemical industry. It occupies a piece of land that creates a polluted corridor 8 times its size. By removing the petrochemicals, the power station, the airport and some smaller activities to the proposed islands, it is possible to create a new city next to Haifa and double Haifa's population. The resulting total value of land ex post the construction of the city will pay for the land needed for the current activities on the islands and land for future expansion of 100 per cent.

Tourism is a good predictor

2006-12-02T12:02:00.000+04:00

There is good news for Haifa, my hometown.

At present and for the last few decades, there is continuous outflow of young people from Haifa. This is somewhat surprising. The city is endowed with natural beauty and two leading institutions of higher learning – Technion and Haifa University. Many young people come to Haifa to study. But I know of almost no middle-aged family in Haifa who has not experienced the discomfort of the kids leaving the city as soon as they reached the age of leaving home. Fortunately, the age at which kids leave home is increasing.

The result of this out-migration by young people has created a stigma. In some sense, Haifa is a "has-been city". Despite its burgeoning hi-tech industry young professionals prefer to commute to the city from as far as 100 km. Many hi-tech companies provide shuttles to Haifa from as far as Tel Aviv as well as from the local train and inter-urban bus stations.

To emphasize the dire situation of Haifa, I should mention that the traditional industries on which the city was built have been declining for a long time now. The Haifa port and the refinery have competitors to the south. And so have many other smoke stack industries. Fortunately, the leaders in Haifa are not advocating that we invest effort in bringing to Haifa growing industries in which we have no competitive advantage.

What can be done to change this trend? How can we keep skilled people from leaving the city?

The ongoing debate between Richard Florida and Ed Glaeser concerning the means to keep people, and skilled people in particular, from leaving a city makes me optimistic about the future of Haifa. The Florida vision is that the by creating dense, bohemian downtowns, tolerance and arts it is possible to attract the creative class. The Glaeser vision is that good schools, relatively short commuting times by car and street safety are the key. Well, we have good schools and commute times in Haifa, including from the outer burbs, are relatively small. Also, Haifa is has the reputation of co-existence of Arabs and Jews. Finally, the mayor is an arts freak.

But what make me most optimistic is that tourists are coming to Haifa. Despite the fact that the city has only 700 modern hotel rooms, the tourists have discovered the 8th wonder in the world of tourism… The Bahai hanging gardens are unsurpassed by any place in the world. Also, before long the Carmelite Order will complete the renovation of their sacred gardens at Stella Maris, the spiritual home of the Order. Haifa will become the world's capital of gardens and parks.

As Ed Glaeser claims, tourism is a greater predictor of how well a city is doing. Intensive tourism reflects a positive view of a place. A city with tourists suggests that the city has positive characteristics.

Is there order in the distribution of retail facilities?

2006-11-29T07:32:00.000+04:00

For the past 20 years I am the proud owner of the leading economic consulting firm in Israel. The firm specializes in real-estate development (http://www.czamanski.com/). This morning, my partner (and ex-student) published a newspaper article with a list of the failing shopping centers in Israel.

The obvious question that the article raises is why are there failures among the shopping centers? From an academic perspective, a more interesting question is whether there is order in the distribution of retail facilities. Emergence of order in complex systems is linked to the self-organization processes. Urban landscapes are often rugged and irregular, yet their distributions display a type of structure that researchers traditionally identify as order. Theories such as the central place may be considered to be descriptions of self-organization processes. One of the most commonly used examples of such order in urban systems is the rank-size rule, sometimes called Zipf's law.

Here are some graphs depicting Israel's commercial facilities system and hinting at the existence of emerging order.

Growth in the total number of commercial centers

Ln Area versus Ln Rank

In order to test for presence of Zipf's law in the size distribution of commercial centers, we plot ln Area versus ln Rank. It is immediately clear from the above graph that the classic rank-size rule does not hold for any of the years: none of the curves can be approximated by a linear function.

Cumulative frequencies are plotted in the following figure.

Scaling of the cumulative frequency curves

It is evident that the cumulative curves are shaped quite regularly and the deviation of the large centers from the general trend observed in rank-size graph is imperceptible in this type of presentation. A number of mild steps in the cumulative frequency curves may signify a distinction between size groups. The generally smooth shape of the curves suggests that the distribution is represented by the whole range of sizes more or less evenly and that there is no clear size groups associated with a hierarchical structure. By performing scaling it is possible to demonstrate that the frequency distribution curves for the different years do in fact follow an identical pattern.

These graphs provide initial clues to the understanding of the structure of retail facilities in Israel. Contrary to some of the classic theories no clear hierarchy is observed in the size distribution of commercial centers. Zipf's law does not hold. However, a number of large commercial centers in the later years appear to be an exception from this law. Assuming that the self-organization processes are really taking place within the system, the large facilities may be considered "too big". A possible explanation is that their excessive sizes are a result of competitive decisions of developers, who may be prepared to incur loss in the short run, in order to insure control over a greater share of the market in future.

However, this does not seem to explain the failed facilities, inasmuch as the failures are among the smaller centers. Now I am waiting for my ex-student, Dr. Maria Marinov, to return from climbing mountains so that we can complete several papers on this topic.

Urban Alienation

2006-11-27T10:14:00.001+04:00

I just read Matt Kahn extolling Boston as an urban place [http://greeneconomics.blogspot.com/]. Matt and his family were lucky to meet Paul Samuelson in a public place twice within one week.

Matt's experience reminded me of a lecture I gave to my urban economics students some years ago. I was trying to define a city. Among other characteristics of cities I mentioned the sociologists' view that cities are places in which one experiences alienation and where one does not often encounter on the street familiar faces.

Some months after that lecture I was marching down Fifth Avenue in New York City. Suddenly I heard a familiar voice from across the street shouting hello to me. It was a student from my urban economics class at the Technion tickled pink that he found a counter-intuitive example to his professor's ramblings.

Globalization

2006-11-26T06:50:00.000+04:00

Today I heard on the local radio a social activist who presented an anti-globalization discourse and a plea. He asked that we fashion our consumption behavior by considering such issues as the exploitation of poor workers in developing economies. As it is, we over-consume. He gave an example of sports shoes for which we pay upwards of US$ 100. In the developing country where the shoes are manufactured, the workers who labored on the production of these shoes were paid about 25 US cents.

I was reminded of a story I heard many years ago from my economist father. While on an official visit to Indonesia he started walking from his hotel to some meeting place, a distance equivalent to 10 minutes walk. His host suggested that they mount a man-pulled rickshaw as a good alternative. When my father refused to be pulled by a skinny, bare-footed old man, the host suggested that if he does not allow the man to pull him the old man will starve.

Another argument that is frequently brought against removal of trade barriers is that ex post trade the process of adjustment in sectors that need to be reduced in size accelerates and will be very costly. The dislocation will affect a large portion of the labor force.

During a short visit in Canada on the eve of the implementation of NAFTA (North American Free Trade Agreement) I met a friend who owns a car parts manufacturing plant in Toronto. He was very apprehensive about the possible impact of NAFTA and speculated about moving his plant to the USA, closer to his market. Today, my friend's plant employs upward of 1,500 workers – a threefold increase.

Similar arguments are often made within countries. In Israel there exist massive subsidies of manufacturing activities that are located in the peripheral regions of the country. Generally, the plants take advantage of the subsidies in place of moving the activities offshore. Often, the activities are on the verge of closing. It is true that the plants create jobs. However, investment in human capital and training programs for the local population would create a more fundamental impact on the peripheral economies by creating an economy that is similar to the economy in the developed parts of the country.

Global Warming - An Alternative Viewpoint

2006-11-24T21:39:00.000+04:00

"Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing ever happened" Sir Winston Churchill.

There is no doubt in my mind that there are significant externalities associated with the consumption of fossil fuels. At the same time, unlike some (see for example http://www.energybulletin.net/3322.html), I am convinced that we are far away from reaching Hubbard's peak in oil production. This I say having observed for the last three years monthly data on exploration, production and above all production costs and prices of oil and gas (see Canadian Energy Research Institute's Commodity Report – Crude Oil and Commodity Report – Natural Gas at http://www.ceri.ca/#Commodityreport).

Above all I remain a skeptic about the size of the anthropogenic influence on global warming. The model developed by Nir Shaviv (see http://www.sciencebits.com/CO2orSolar) and recently (partly) tested at CERN suggests that the major source of influence on the earth's temperature is solar activity. This alternative view, if true, has major repercussions for Kyoto type policies. Indeed, the vast amounts of resources that we are devoting to reducing CO2, could be usefully devoted to other income generating activities.

Branding cities

2006-11-23T09:32:00.000+04:00

First, I wish a happy 88th birthday to the urban economist I know best -- my dad. Happy birthday to Stan Czamanski.

I do not think that it is disputable that Haifa is a most beautiful city. It is a home to some 500,000. In addition to the Technion – Israel Institute of Technology and Haifa University, Haifa hosts a myriad of hi-tech research and development labs and centers. It is a mini silicon valley. Unfortunately it is physically divided into two zones separated by an industrial area that includes a refinery and a variety of petrochemical plants.

Despite its apparent competitive edge Haifa is losing young people to Tel Aviv, the primate city in the country. And so, like in so many cities there is an ongoing debate in Haifa how to change the rate and direction of the city's evolution.

Next week a newly formed national NGO of architects will hold a major conference in Haifa on the rejuvenation of central cities and downtowns. The focus of this conference will be on Haifa. In anticipation of the conference, a number of workshops are being conducted in the city with the participation of residents. The purpose if to identify planning actions that can be used as levers for rejuvenation.

There is something genuine in the notion that purposeful actions can change the city's dynamics. It seems reasonable to suppose that urban self-organization processes can be redirected, at least slightly, by changing some key parameters in the context within which self-organization processes take place. Before an effort like this can yield results there is a need to identify these key parameters.

Urban economic theory has not been productive in yielding useful information for such exercises. Indeed, it has been concerned with generating insights that are very broad and at a resolution that places it far from the trenches where action takes place. So, in the absence of science folk medicine will have to do.

On a similar note…

Yesterday I gave an invited lecture to all the city managers in Israel. The only other speaker at the workshop was the mayor of the host city. The mayor spoke first and explained that his role as an economic leader is to generate income for the city's fisc by overcoming the city's inability to raise sufficient income through the property tax.

I thought of a number of questions during the mayor's presentation. What is the source of the city's attractiveness? What activities in the city make it unique on a world scale? How is the city promoting itself? Are there clusters of economic activities that create a competitive advantage to the city? Is there a basis for the branding of this city?

It turns out that little thought has been devoted by the city managers in the room to these questions.

Will urban open spaces remain or disappear?

2006-11-21T15:32:00.000+04:00

In my city there is growing militancy concerning the need to protect open spaces. Every proposal to build a new project receives close scrutiny and more often than not vocal opposition. Many developers are reluctant to build in Haifa. Shortage of starter homes for young couples and upper-end housing for middle-aged people caused out-migration and a stagnant construction scene.

It is my presumption that the concern over open space is exaggerated. There is a natural economic tendency for the value of homes in proximity to open spaces to increase as these spaces become scarce. Thus, it is possible to think that there is an optimal amount of open space in each city. Beyond a certain point developers will prefer to build less volume and more expensive homes located next to parks.

In a paper published some years ago we presented a cellular automaton (CA) simulation model of a city and tested the results against an actual city [see Benguigui, L Czamanski D., Marinov, M., “The Dynamics of Urban Morphology: the Case of Petah Tikvah" in Environment & Planning B, 28, 2001, pp. 447 – 460]. The simulations results corresponded to reality for the test years and when extended into the future suggested that open space in cities does not disappear. Even when extending the computer runs into the far future, open space remains.

In a more recent project [see Benguigui, L., Blumenfeld, E., Czamanski, D., “The Dynamics of Urban Morphology” in Environment and Planning B, 33, 2006, pp. 269 – 284] we studied the spatial evolution of the Tel Aviv metropolitan area. The results suggest a particular pattern of formation of contiguous built-up areas. The number of built-up clusters grows and eventually stabilizes on a much smaller number.

There seems to be an economic intuition and some preliminary evidence that the self-organizing nature of cities will not eliminate urban open spaces.

The cost of urban planning

2006-11-19T10:35:00.000+04:00

There is no doubt that urban planning creates potential welfare gains in the sense that it reduces the effects of inevitable negative externalities associated with urban life. But, observation of actual processes of land-use regulation leads to the conclusion that there can be little doubt about significant costs associated urban planning as well.

Last month Ed Glaeser and Bryce Ward published a working paper entitled "The Causes and Consequences of Land Use Regulation: Evidence from Greater Boston" [see
http://www.economics.harvard.edu/hier/2006papers/HIER2124.pdf]. In it the authors claim that the behavior of housing prices cannot be explained by the scarcity of land alone. Glaeser and Ward claim that regulatory restrictions on supply are to be blamed for at least some of the phenomenon.

My doctoral student Rafi Roth and I have been working with a simple model of real-estate developer whose investment decisions are influenced, by among other things, the characteristic time of development. We defined characteristic time as the time from the moment that initial property rights are purchased and until the income is received for the finished real-estate product that the developer has produced and sold.

It turns out that characteristic time is influenced principally by urban planners and that it varies in particular fashion across space. Furthermore, it is largely responsible for observed leap-frogging behavior of development, especially during periods of economic downturns. In some sense planning has a counter productive effect in the sense that it creates incentives to build away from existing built-up areas.

Moreover, it is possible that under some conditions the cost of planning actions is borne by lower income groups.

Where does the city end?

2006-11-18T09:02:00.000+04:00

This week while presenting an economic argument about the formation of cities, I was asked a seemingly simple question by a student in my urban economics course. "Where is the boundary of a city and where does the countryside begin?" she asked.

The question immediately reminded me of two urban economists who crossed my academic path. Richard Florida replaced me in the early 1980s when I left Ohio State University for my present academic home at the Technion. In a Newsweek article some months ago [July 3-10, 2006] Dick Florida, guru of the creative class approach to urban development, suggested that to identify borders of a megalopolis one should observe at night the pattern of lights while flying above the area.

This was the suggestion that I heard many years before from my teacher of urban economics, Seymour Sacks. Chomping on a cigar (it was allowed then) Seymour started each lecture with a number that he fished out (seemingly) at random from a volume of the census. Seymour also claimed that the boundaries of cities can be identified from the air and at night.

In a recent study two colleagues and I attempted to identify the boundaries of Tel Aviv, while ignoring municipal boundaries. The basis for our study was a series of historic footprints of the built-up area, such as the following picture for the year 2000.

It is immediately apparent that depending on the resolution at which we observe an urban area all cities display lack of contiguity. There are vast amounts of open spaces without buildings. Some open spaces are small and create narrow corridors between buildings. Other open spaces are very wide.

We decided to consider street-wide open space corridors as part of built-up urban areas. We were able to identify a very large number of urban clusters within the Tel Aviv urban region. A description of this work was published as Benguigui, L., Blumenfeld, E., Czamanski, D., “The Dynamics of Urban Morphology” in Environment and Planning B, 33, 2006, pp. 269 – 284.

Based on these data, here is a suggestion for a precise identification of urban boundaries that does not require a plane trip at night. It is based on the concept of fractal. This indicator permits the identification of self-similarity.

By starting at the historic core of a city and by marginally increasing the area of the old core we can repeatedly calculate the fractal dimension of the area. [See for example Benguigui, L., Czamanski D., Marinov, M. and Portugali, Y., “When and Where Is a City Fractal?” in Environment & Planning B, 27, 2000, pp. 507-519]. We reach the city's boundary at the point that self-similarity ends.

Obviously there is a shortcoming in this method in the sense that we do not take into account functional geographic flows, etc. However, there is an advantage too. The method does not rely on data that include accidental aggregations based on data presented at the level of municipalities.

Is there order in the distribution of high-rise buildings?

2006-11-17T18:26:00.000+04:00

The simple approach of economists to this question changed significantly in the last 15 years.

In the past the vision was that all people and activities in cities seek to locate in the closest proximity to some central place. Competition forces some to compromise and to select a location at some distance form the center. The image of a city as a sand pile that is populated by the tallest buildings at its center and increasingly lower buildings as the distance from the center increases was supplemented by an image of a "wave of expansion" of development from the center outwards.

This is an old story and obviously far from being realistic in the case of the vast majority of big cities in the world. Here is a picture of Tel Aviv.

In fact, the extant reality is so complex that we can ask "is there order in the distribution of high-rise buildings?" As you can imagine the answer is far from obvious.

Were we to mark on a map of a city, or better on a blank sheet, a black dot for each high-rise building in a city, it is quite likely that at first glance the result would look to us as a random distribution. In an initial analysis of Tel Aviv my research team has identified the formation of clusters - groups of high-rise buildings that are spatially contigous.

There is almost no research (at least economic research) concerning the frequency and spatial distribution of high-rise buildings. There are 3 or 4 researchers who are attempting to build cellular automaton (CA) type simulation models.

A new urban economics blog

2006-11-17T18:25:00.000+04:00

A number of reasons motivated me to start this weekly blog.

First and foremost, I wish to communicate with my current and past students of urban economics. This fall semester I returned to teach my introductory urban economics course at the Technion - Israel Institute of Technology.

Second, the community of urban economists has not been forthcoming. It is not very communicative. Urban topics are not covered extensively in blog world.

Finally, I hope to contribute a somewhat different perspective on urban issues, one influenced by a backdrop of my home in Haifa, Israel.

In many ways this is an experiment. I am not sure whether the sparcity of urban issues blogs does not represent a market test of a lack of interest. I will try to bring here results of recent research and policy discussions.

And so wish me luck....