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From Neighborhoods to Nations

From Neighborhoods to Nations: The Economics of Social Interactions

Yannis M. Ioannides
Copyright Date: 2013
Pages: 552
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  • Book Info
    From Neighborhoods to Nations
    Book Description:

    Just as we learn from, influence, and are influenced by others, our social interactions drive economic growth in cities, regions, and nations--determining where households live, how children learn, and what cities and firms produce.From Neighborhoods to Nationssynthesizes the recent economics of social interactions for anyone seeking to understand the contributions of this important area. Integrating theory and empirics, Yannis Ioannides explores theoretical and empirical tools that economists use to investigate social interactions, and he shows how a familiarity with these tools is essential for interpreting findings. The book makes work in the economics of social interactions accessible to other social scientists, including sociologists, political scientists, and urban planning and policy researchers.

    Focusing on individual and household location decisions in the presence of interactions, Ioannides shows how research on cities and neighborhoods can explain communities' composition and spatial form, as well as changes in productivity, industrial specialization, urban expansion, and national growth. The author examines how researchers address the challenge of separating personal, social, and cultural forces from economic ones. Ioannides provides a toolkit for the next generation of inquiry, and he argues that quantifying the impact of social interactions in specific contexts is essential for grasping their scope and use in informing policy.

    Revealing how empirical work on social interactions enriches our understanding of cities as engines of innovation and economic growth,From Neighborhoods to Nationscarries ramifications throughout the social sciences and beyond.

    eISBN: 978-1-4008-4538-5
    Subjects: Business, Economics

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-x)
    (pp. xi-xvi)
  4. CHAPTER 1 Introduction
    (pp. 1-10)

    We engage in social interactions “without knowing anything about it” throughout our lives; these interactions teach us new skills and influence our choices. Examples are easy to find: recycling and composting practices; sending a child to a charter school; ideas for software innovations that come from a chance encounter in a Silicon Valley, California, or Austin, Texas, bar; learning from classmates—about schoolwork or about getting pregnant or how to avoid it; gaining weight; attending a church, synagogue, or mosque; joining a gym or a country club; supporting a sports team; getting involved in a civic association or spending time...

  5. CHAPTER 2 Social Interactions: Theory and Empirics
    (pp. 11-78)

    This chapter addresses the role of the social context in individual decisions. Many important markets continue to coexist with nonmarket arrangements. Social interactions, that is, nonmarket interactions, are ubiquitous, and social institutions do matter to an extent not fully appreciated by economics (Arrow 2009). Understanding the social consequences of economic decisions requires that we acknowledge their social context. With economics increasingly venturing into the traditional realms of other social sciences, recognizing the importance of social interactions can be particularly helpful in understanding a diverse set of phenomena, from obesity and cigarette smoking to economic inequality.

    In the canonical case of...

  6. CHAPTER 3 Location Decisions of Individuals and Social Interactions
    (pp. 79-147)

    When my neighbors add to their house by remodeling it, or simply keep up its maintenance in ways that shame me, they give me an incentive to keep up, too. My children’s hearing about academic, sports, and other accomplishments of other children in the neighborhood motivates them to imitate them or even to react in a nonconformist way. These types of effects are known asendogenoussocial effects because they originate in deliberate decisions by other members of one’s reference groups.

    Individuals may value the actual characteristics of others in their social and residential milieus and deliberately seek particular configurations...

  7. CHAPTER 4 Location Decisions of Firms and Social Interactions
    (pp. 148-199)

    This chapter aims at understanding location decisions of firms as decisions in the presence of social interactions, thus unifying a number of approaches economists have used in studying such decisions and in measuring patterns of industrial agglomeration. It is a salient fact that firms’ evaluations of alternative locations dependdirectlyon where other firms locate and that this makes these approaches most interesting within a social interactions framework. To assess such direct effects, this chapter uses as a benchmark outcomes where firms compete for scarce land sites that have differential effects on their own profitabilities but no other interactions.


  8. CHAPTER 5 Social Interactions and Urban Spatial Equilibrium
    (pp. 200-247)

    All city dwellers experience serendipitous urban encounters. One person mentions an event, another person links it to something else, a third speculates, and as a result a theory is developed that might influence those particular people’s actions and lives later on that day, and perhaps beyond too, and not just their economic lives. All this originates in random encounters facilitated by density.

    In this chapter I build on the foundations laid down in chapters 2–4 to address social interactions when economic agents operate in actual physical space, measured by the distance between each other and to urban centers within...

  9. CHAPTER 6 Social Interactions and Human Capital Spillovers
    (pp. 248-291)

    Locations where the population and the economic activity are most dense are almost always the most productive. Economists explain this as the product of two forces: one, people concentrate in areas where natural amenities and resources lead to high productivity; two, people are more productive in places where they are concentrated in space. A high density of people and firms generates urban production economies that make agglomeration productive. Urban production economies are external effects that benefit producers and workers. They have been described by Marshall (1920) as technological externalities due to knowledge spillovers and to sharing of inputs at the...

  10. CHAPTER 7 Specialization, Intercity Trade, and Urban Structure
    (pp. 292-348)

    Cities are high concentrations of population and thus of economic activity that punctuate the economic and geographic landscape. An uneven concentration of economic activity has been around for a long time, but the emergence of rapid urbanization signaled the beginning of economic development (Bairoch 1988). While city-rural trade has been important for urban development, De Vries (1984) and others argue that the growth of cities was due to technological advances in agriculture and transportation. The economic development of many European economies also depends on international trade, not just on cities trading with their hinterlands. Cities have risen and fallen with...

  11. CHAPTER 8 Empirics of the Urban Structure and Its Evolution
    (pp. 349-397)

    The extraordinary revival of interest in economic geography and urban economics that the economics literature has been experiencing has also registered an empirical presence.¹ Anotable portion of this interest pertains to Zipf’s law for city sizes. Some of the motivation for this surge in interest comes from scholars who see Zipf’s law as an instance of a broader class of phenomena, many of which have been studied by physicists as well as other scientists.

    Zipf’s (1949) law for cities, an alleged empirical regularity that has become of considerable interest to researchers, is arguably one of the best known empirical facts...

  12. CHAPTER 9 Intercity Trade and Long-Run Urban Growth
    (pp. 398-450)

    In the study of urban growth, one direction has emphasized its historical aspects. Massive population movements from rural to urban areas fueled the initial stage of urban population growth and have been associated with sustained increases in living standards. Growth is typically associated with urbanization, but the reverse does not always hold, as the evidence from Africa suggests. Innovations are closely associated with urban concentrations. A related direction focuses on the physical infrastructure of cities and how it may change as cities grow. It also focuses on how changes in commuting costs, and in the industrial composition of national output...

  13. CHAPTER 10 Urban Magic: Concluding Remarks
    (pp. 451-456)

    Social interactions are fundamental in the functioning of economies at many scales. We engage in social interactions throughout our lives, though we do not label them as such, just as we speak prose without labeling it.

    New technologies, from writing to steam to the internet, have facilitated new ways to interact. Nevertheless face-to-face contacts remain strikingly important to us. They are an extraordinarily efficient communications technology fundamental to the functioning of cities. They solve incentive problems, facilitate socialization and learning, and provide psychological motivation. Moreover, face-to-face contacts as a mode of social interaction are particularly valuable in environments where information...

  14. NOTES
    (pp. 457-482)
    (pp. 483-516)
  16. INDEX
    (pp. 517-521)