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Turns out city life can be a route to riches—but only if you are already doing well.
That’s according to a wide ranging study just released by the Santa Fe Institute. Researchers analysed data from across the United States, categorizing urban residents based on income levels.
They found that as large cities become mega urban areas, the top 10 percent of income earners gain a disproportionately larger share of the wealth.
According to study co-author Geoffrey West:
“What was a huge surprise in this research was that, as the city grows, there’s no advantage to people in the bottom 10-20th percentiles. As you go down the income deciles, the value-added for city-dwellers got less and less in a systematic way… so much so that, in the bottom decile you get nothing at all. There’s even evidence that you’re losing quality of life. Here we found that rich are getting even richer than we thought and the poor are getting even poorer than we thought.”
Housing played a large factor in the disparate outcomes and widening wealth gap that occurs as cities grow larger. The study noted that housing costs increase at a much faster rate than incomes of low-wage earners.
Many studies about urban scaling have been flawed, say the Santa Fe Institute researchers, since they have often focused narrowly on things like overall income levels. They didn’t account for how particular segments of earners performed, or analyse factors like costs of living.
“Previous literature has looked at urban scaling through a lens of homogeneity,” said study co-author Omidyar Fellow Vicky Chuqiao Yang. “But we know from other literature, especially in economics, that many societies are unequal and economic outputs are not distributed evenly.”
Agenda 2030 Rethink?
Clustering more people into mega “smart cities” is a major goal of elitist policy makers, outlined in the UN’s “Agenda 2030” and other initiatives.
The reasons given often include environmental advantages of sustainable development, and access to services that could improve health and alleviate poverty. For example, a UN page on Agenda 2030 cites alleviating “abject poverty” as a goal:
“With its core vision to achieve freedom from fear, want and indignity, the human security approach addresses challenges stemming from and resulting in persistent conflicts, social exclusion and abject poverty. In emphasizing the triangular relationship between peace and security, development and human rights, it highlights the essential connections between these variables and helps accelerate the drive towards inclusive and sustainable development.”
But the Santa Fe study presents compelling evidence that cities, especially large ones, exacerbate income inequality. Since more than half of people on the planet already live in urban settings, the implications of attempting to drive even more people into such arrangements could have devastating consequences.
The arguments of many economists that city dwellers benefit generally compared to rural counterparts, doesn’t hold up when it comes to the more vulnerable segments of population. Quite simply, in urban environments, the poor are prone to fall even further behind.
“For the lower decile, there is no proportional increase in wealth,” noted study co-author Chris Kempes. “So, the city is not increasing economic benefit, but it’s not decreasing it either. However, since costs do go up, the experience of the poorest individuals gets worse.”
Inequality is mainly an urban issue, according to the researchers, and is driven by deep-seated societal factors.
Poorer areas get less advantages from urbanization. Today’s poorest city residents are more likely to live in their own neighborhoods, away from richer regions. Consequently, they benefit less from social or cultural mixing, as well as new ideas and inventions that are often touted as advantages of city life.
The findings appear in the Journal of The Royal Society.