Higher order goods participation

Length of Residence and Higher-Order Goods in Greater Copenhagen Thomas Pera [June 1, 2014]

Arena CPHX P / S: copenhagen-arena.dk

Created for Copenhagen Area Survey / København Omrüde Oversigt (KOO) Rice University: Kinder Institute for Urban Research and the Danish Institute for Study Abroad

Table of Contents Executive Summary....................................................................................................................................... 2 The Issue ....................................................................................................................................................... 3 The Research ................................................................................................................................................. 5 The Findings .................................................................................................................................................. 7 Conclusions ................................................................................................................................................... 9 Bibliography ................................................................................................................................................ 11

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Executive Summary Do higher-order goods--sports stadia, concert halls, fine restaurants, etc.--attract residents to a metropolitan area? This study examines the relationship between resident participation in higher-order goods and the length of residence. The pragmatic basis for the study is cities' attempts to attract new, young, and educated residents as a response to Richard Florida's theory of the creative class. Ultimately, I find that a significant relationship does indeed exist between participation in higher-order goods and length of residence, controlling for age, income, and education. The relationship is negative, confirming the hypothesis that the shorter the length of residence, the greater the participation in higher-order goods, suggesting that residents moved to the area to participate in higher-order goods. Similarly significant, negative relationships are found between length of residence and two smaller groups of higher-order goods: one group consists of museums, opera, and live theatre, the other consists of restaurants, shops, and nightlife. No significant relationship exists between length of residence and a third subgroup of professional sporting events.

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The Issue As the Western world pushes farther into post-industrialism, Richard Florida's popular writings on the "creative class," as well as the emergence of global cities, have cities tripping over each other in their attempts to lure young, educated residents capable of knowledge creation. While cities have baited their hooks with a variety of attractive elements, one of the more popular approaches to attracting residents has been to engage in large-scale building projects catering to higher-order goods: as Edward Glaeser puts it, "the edifice complex" symbolizing city success and prestige (Glaeser, 2011). Such developments are easy for city officials to sell to the public, providing construction-related jobs and transactions along with being attached to some element that appeals to residents. The project might be a sports venue, a museum, a concert hall, or an extensive reconstruction or redevelopment of a building or area with historic interest specific to the city. Some recent proposals--such as a $1.4 billion-plus project in Buffalo containing a football stadium, concert venue, convention center, and children's museum--have even combined all of these elements into one project at in an attempt at mass appeal (Sommer & Fairbanks, 2012).

These popular elements of development are all higher-order goods. Higher-order goods are those goods that "require large populations in extensive market areas to generate the high aggregate levels of consumption needed to cover the high costs of providing the good" (Stimson, Stough, & Roberts, 2002). Opera, live theatre, professional sports clubs, museums, and even fine restaurants may be considered higher-order goods. Higher-order goods can only exist in cities with larger populations, but some might argue that larger cities exist, in part, because of higher-order goods. Richard Florida suggests that certain members of society--collectively termed the creative class--make locational decisions based on the quality of living and leisure amenities offered by competing cities (cf. Kr채tke, 2010). The creative class described by Florida consists of the members of society that drive innovation and that have knowledge-based occupations: academics, scientists, researchers, entrepreneurs, and artists are all constitutive of the creative class. In a post-industrial economy, it is the creative class that promotes the most significant economic growth in cities. Thus, Florida argues that cities should focus their resources on attracting and retaining the creative class.

When cities choose to use higherorder goods to attract residents, the resources required are often substantial.

Though the construction of stadia, concert halls, or museums may be privately funded, the city frequently provides subsidies covering at least part of the cost. Even for those cities that do not subsidize construction, large development projects represent a significant investment of space, occupied not only by the central structure, but by complementary services--e.g. parking lots or public transportation access--as well.

Cleveland's FirstEnergy Stadium and Pittsburgh's Heinz Field were both relatively

Heinz Field in Pittsburgh Wikimedia Commons: commons.wikimedia.org

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affordable by National Football League standards--$290-plus million and $281 million, respectively--but both occupy prominent waterfront space in their cities (Zhuang, 2010; Cleveland Browns, 2014). Similarly, Copenhagen has granted both its Opera House and Royal Playhouse theatre precious space along the city's historic harbor. The large-scale developments often associated with higher-order goods are significant for a city, if not for their cost, then for the impact such developments have on the structure of a city.

Academically, using higher-order goods for economic development is viewed critically (Delaney & Eckstein, 2007) or, at best, as a mixed bag (Glaeser, 2011). Yet cities have continued to use higher-order goods as a means to sparking economic activity. We may speculate four possible reasons for cities' persistence: first, and unlikely, city officials are not aware of the academic research; second, city officials succumb to the political pressures of popular support for higher-order goods; third, as Delaney & Eckstein (2007) suggest regarding stadia, a local growth coalition of businesses and political elites influential in development seeks to benefit itself rather than the city, as a whole; fourth--the topic with which this study is concerned--city officials have bought into the creative class, or similar, concepts as an engine of economic growth that academia has not yet examined. Further research will likely have no effect on the first three reasons. Additional analysis of the fourth reason, however, may benefit cities that place their hopes in the creative class.

A basic argument for the creative class as a driver of economic growth can be broken into the following premises: 1: There is a positive association between creative class members and economic growth.

2: The creative class is mobile. Members can move between cities if they choose.

3: Cities have the ability to affect members' locational choice. Implicit is the idea that members' locational decisions are rooted in rationality, e.g. factors exist that consistently affect members' locational choice.

Cities that use higher-order goods in the attempt to attract the creative class are hoping that such goods are one of the factors mentioned in Premise (3).

This study is not concerned so much with the validity of Florida's theory of the creative class in its entirety as it is with the mere attraction of potential members of the creative class. As such, I will examine the relationship between the attendance of, and participation in, higher-order goods and the length of stay of a resident in the metropolitan area, hypothesizing that attendance and participation will be negatively correlated with length of stay. Specifically, I ask, "Do higher-order goods attract residents to a metropolitan area?" My reasoning is that higher-order goods--Florida's leisure amenities--are part of the attraction of a city; therefore, one who has moved to a city in order to participate in higher-order goods is, of course, more Map Produced by Florida's Martin Prosperity Institute Martin Prosperity Institute: martinprosperity.org

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likely to participate in higher-order goods than someone who has been in a city for a long time.

The Research Mobility and the Creative Class Though this study does not attempt to prove or disprove Florida's theory of the creative class, much of the study's relevance is contingent upon two aspects of Florida's theory, if that theory is to be accepted. The first aspect is the efficacy of the creative class to drive economic development; essentially, the creative class becomes insignificant if it has no impact on cities.

The relevance of this study also hinges upon a second aspect of Florida's theory: the ability of the creative class to move from city to city and their willingness to do so. Assuming that the previous is true, we can extend it to encompass the ability of cities to influence the creative class' locational choice. Maisetti et al. (2012), in the context of city branding, describe the duality of the creative class: on the one hand, this creative class is dominant regarding the production of new values, new spokespersons of the city, as well as transnational and multicultural public spheres; on the other hand, it is grounded in highly flexible labour markets, quick de- and disqualification and new forms of gentrification from which economic cleavages and social exclusion may emerge (p. 4) At once, Maisetti et al. describe the positives and negatives of the creative class as well as indicate the flexible labor markets in which they exist. These labor markets exhibit, as it pertains to the creative class, functional flexibility (Pollert, 1988): they are characterized by "lowered job demarcations and multi-skilling" of a core of employees comprised of the creative class.

Examine a Silicon Valley--the poster child of the creative class--technology firm and the workplace will look much different from a traditional grey, cubicle-filled office building.

Employees have flexible hours, can carry out a variety of tasks, are maybe working from the comfort of a beanbag chair, and are constantly connected to the internet. Google employees can even enjoy a free hair cut at work (Strickland, 2011). Companies attract members of the creative class using these workplace perks, and in turn, cities attempt to attract companies, otherwise known as mobile capital. In this sense, the creative class might be considered mobile: that they work for companies that are not rooted in a specific region and can move anywhere. If companies want to attract high-level employees, they must consider the amenities offered by the city in which they are located to be a perk akin to a workplace hair cut.

Martin-Brelot et al. (2007) conduct an in-depth study of just how mobile the creative class is at the individual level of analysis. Their exploratory study focuses on eleven European cities: Amsterdam, Barcelona, Budapest, Dublin, Helsinki, Leipzig, Milan, Munich, Poznan, Riga, and Toulouse. Martin-Brelot et al. denote the categories of creative class that may exist-e.g. "graduates from engineering, manufacturing, and construction," or "graduates from humanities and arts"--to then look at where residents with those characteristics live and where they came from (p. 858). They examine the variables "place of birth" and "place where the highest level of education has been obtained," and then combine the two to create a third variable they name "types of trajectory" (p. 861). "Types of trajectory" has three categories: born in town or local region; born outside, but studied in town or region; and born and studied outside.

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Martin-Brelot et al.'s inclusion of the place of educational obtainment is significant because it recognizes that variable as a significant place of residence that defines where one is from. Even more importantly, Martin Brelot et al. surveyed residents on their reasons for living in the city.

Interestingly, only 1.2% of residents said their primary reason for living in their current city was due to the "diversity of leisure and entertainment" (p. 862). Much more significant, according to respondents, was that they were born in the region (19.7% ranked as primary reason), that their family lives in the city (17.2%), that they studied in the city (11.6%), that they had proximity to friends (7.6%), that they moved because of their job (21.1%), or that the city had good employment opportunities (7.5%). However, the diversity of leisure and entertainment was cited much more frequently as a secondary reason for living in the city, with 23.7% of respondents saying that it was a reason for living in the city.

Martin-Brelot et al.'s study shows, then, that though leisure and entertainment options-and so higher-order goods--may not be primary reasons for which residents live in a city, such options may influence, to a degree, the locational decisions of the creative class. Both MartinBrelot et al. and Dai et al. (2012) suggest that human capital, as opposed to the creative class, is a chief driver of economic growth. Human capital, while similar to the creative class described by Florida, is more characterized by entrepreneurial skills, human knowledge and skills important to the production process, and social capital (Dike, 2013), and is often measured in cities using levels of educational attainment (Mellander & Florida, 2006).

Attraction and Retention of the Creative Class Rather than focusing on the factors that might attract new residents to a city, Mellander et al. (2011) is concerned more with the factors that encourage current residents to stay there.

Mellander et al. focus on three groups of factors: "(1) satisfaction with community or placebased factors such as aesthetic appeal, outdoor space and recreational amenities, artistic and cultural amenities, the ability to meet people and make friends; (2) community economic conditions; and (3) individual-level demographic factors such as income, human capital, and age" (p. 5). Mellander et al. conclude that, of the three groups, satisfaction with community or place-based factors is the most influential in residents' decision to stay, citing, in particular, the physical attractiveness of a place as motivation to stay. Following this logic, higher-order goods would, at first glance, have little direct impact on residents' decisions to stay in a city, and perhaps even to relocate. Yet for sports stadia--one form of higher-order good--Wann & Polk (2007) find a positive correlation between a person's sports team identification and a belief in the trustworthiness of others. Melnick (1993) similarly suggests that sports spectatorship engenders socialization. Higher-order goods, then, could perhaps promote some of the community placebased factors referred to in Mellander et al.

This Study Using data collected from the 2014 Copenhagen Area Survey, I examine the relationship between length of residence and participation in higher-order goods in order to determine if residents are attracted. Conducted by the survey firm Epinion, this survey is a representative survey of 1,093 residents living in the greater Copenhagen area with a response rate of 77 percent. The survey was conducted online--in Danish--and took seventeen minutes to complete, on average. The purpose of the survey was to assess the quality of life of residents, as well as their opinions on significant current issues.

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For this study, I define length of residence simply by the number of years a resident has lived in the area. 'Participation in higher-order goods', however, is separated into four different categories for clarity. The first three categories are taken directly from questions asked on the Survey and are related to how often a resident attended or visited one of the three following groups of higher-order goods in the past year: 1) "Copenhagen area museums, operas or live theaters," 2) Copenhagen's Indre By [city center] restaurants, shops, or nightlife,� and 3) "professional sporting events in the Copenhagen area." Respondents were able to answer, "Once a month," "More than two times, but less than once a month," "Once or twice," "Not at all," as well as, "Don't know." The response with the highest rate of participation is assigned a value of four, the second highest a value of three, and so on. The fourth variable is an index of the first three variables so as to understand an individual's participation spanning different types of higher-order goods. For the index, values range from three--no participation in any of the first three categories--to twelve: monthly participation in all of the categories. Let us term (1) participation in culture, (2) participation in nightlife, (3) participation in sports, and (4) participation in higher-order goods. Beyond the primary variables of interest, I control for the variables of age, level of education, and income.

The Findings Before examining the effect length of residence has on participation in higher-order goods, we might understand how often Copenhagen residents, in general, participate in higherorder goods. At first glance, the results are encouraging regarding our hypothesis (see Figure 1).

Figure 1

Figure 2

The mean value for participation is 7.25 and roughly 46 percent of all residents scored a value of 7 or higher. In order to score a value of 6 or higher, respondents will have had to participate in all of the higher-order goods at least "once or twice" in the past year, or had more consistently

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participated in one or two of the categories. The latter appears to be likely (Figures 2, 3, 4).

Figure 3

Figure 4

As the graphs show, participation in nightlife is greater than both participation in sports and participation in culture, even far exceeding the former. The relatively high rates of participation in higher-order goods, then, are largely due to residents' tendency to participate in city center restaurants, shops, and nightlife. Participation in sports, though small, may still be a draw for new residents and so its inclusion in the index remains important.

More specific to this study, there are significant relationships between length of residence and participation in higher-order goods (Figure 5), length of residence and participation in culture (Figure 6), and length of residence and participation in nightlife (Figure 7), in each instance controlling for age, level of education, and income. The relationship between length of residence and participation in sports (Figure 8) is not significant. As predicted, the relationship between length of residence and participation in higher-order goods is negative: as length of residence increases by an additional year, participation in higher-order goods decreases by 0.009 points. Over the same time, participation in culture decreases 0.005 points and participation in nightlife decreases 0.008 points, representing similar negative relationships.

Figure 5

Figure 6

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Figure 7

Figure 8

Understanding that the relationship between length of residence and participation in sports is the weakest of the relationships studied, I have removed the category in order to reveal the strength of the relationship between length of residence and participation in higher-order goods, excluding sports. As expected, the results show that when participation in sports is not considered, the strength of the relationship increases (Figures 9, 10). Now, as length of residence increases by one year, participation in higher-order goods, excluding higher-order goods decreases by 0.013 points.

Figure 10

Figure 9

Conclusions Based on the findings, we may confirm the hypothesis that as length of residence increases, participation in higher-order goods decreases. Thus, newer residents of the Copenhagen area are more likely to participate in higher-order goods than are older residents.

Furthermore, we might suggest that residents that are new to the area, based on their increased interest in higher-order goods, have moved to the area with the explicit intentions of participating in those higher-order goods. However, we cannot accept this suggestion as a foregone conclusion: this study was not all encompassing. While we were able to control for important 9|Page

factors--such as age, income, and education--we did not control for other factors that might affect the mobility of a person, namely his occupation. Still, the data gathered indicates that the conclusion that higher-order goods attract new residents is not unreasonable.

More importantly, a division within the different categories of higher-order goods was uncovered. Higher-order goods related to culture--museums, operas, live theatre--as well as restaurants, shops, and nightlife, taken collectively, could potentially attract new residents. That distinction does not appear possible for higher-order goods related to sports, between which length of residence there was no significant relationship. Even among the general population, residents infrequently participated in professional sporting events. City officials ascribing to the theory of the creative class should therefore be advised against undergoing development of sports stadia in the intention of attracting new residents.

It could be that new residents more frequently participate in higher-order goods not because they were attracted to the city for such reasons, but simply because once having moved to the city, they find new experiences and attractions to enjoy. In contrast, for residents who have been in the region longer, they may participate less because they have already visited these attractions and the novelty has worn off. The data cannot tease out the degree to which this alternative explanation may matter, so further research must be undertaken.

Even though we have observed participation in higher-order goods to have a significant relationship with length of residence, we cannot blindly advise for the development of higherorder good projects without taking into account the associated costs. If private interests drive the development, requiring little to no public funding, then city officials should encourage the development. Despite the potential attraction to new residents a shiny opera house might bring, its construction costs and investment of city space may outweigh its positive effects. That, however, I leave to future research.

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