The Market for Neighborhoods: A Q&A with Salim Furth

Salim Furth is a senior research fellow at Mercatus whose work studies the ways regional, urban, and macroeconomic trends and policies affects how we live and work. He recently wrote a feature for National Affairs titled “The Market for Neighborhoods,” which explores what it is that makes a great neighborhood and why it can be difficult to find or build one.

Although the market for housing is by now quite-well developed (albeit sometimes frustrating), the market for neighborhoods remains elusive. As Furth explains, this is partially due to structural problems in developing or even defining the supply of and demand for neighborhoods.

We sat down with him to learn more about the article, and why developing a “market for neighborhoods” is such a hard problem.

Thanks for taking the time to talk with us today, Salim. Your article should be of interest to anyone who cares about neighborhood strength and has perhaps been disheartened to see it dwindling in many parts of the country. What was it that inspired you to write the piece?

One reasonable criticism of economists is that we only study what we can measure. That’s becoming truer in an era when empirical work is getting a lot more prestige and attention relative to theory. But criticism is easy; engaging with economic ideas in a field that resists quantification is harder. This essay was my own attempt to do so.

There are a lot of ways you can define a neighborhood. It can be as simple as a zip code, or as abstract as a state of mind—not everyone who is a part of a neighborhood lives there, as you note. You use a specific definition in your article: neighborhoods are social entities, “communities, sets of relationships and potential relationships that enrich or impoverish the lives of those who live in the same place.”

What makes a neighborhood strong, and why does it matter?

For the sake of this article, I’m using a social definition of a neighborhood. So a strong neighborhood is one with a thick weave of overlapping relationships. I hypothesize that such a community forms around shared, social public goods—things like public schools, clean streets, or local businesses that a large number of people value and interact with. When a lot of people are invested in a lot of those kinds of public goods, the result is tons of overlapping relationships and a general sense of community, even among twenty or thirty-thousand people.

Do you think a market for strong neighborhoods currently exists? What would that mean, anyway?

That’s really the question at the heart of the article. My goal was to sketch the contours of the neighborhood—how it’s valued and enjoyed (“demanded” in econ-speak), how it’s created and maintained (“supplied”), and whether that really constitutes a market. I conclude that there’s something like a ‘market’, loosely defined, on the demand side, but that the supply side doesn’t have many market characteristics.

Usually economists study things that are clearly markets: there are a bunch of people bringing something to exchange, a bunch of other people who want it, and some rules for exchange. So there’s clearly a market for assassinations. Marriage is more of a borderline case, and so are neighborhoods.

Let’s talk about the supply of strong neighborhoods. You note that there’s a kind of self-reinforcing element here: “demand literally creates its own supply,” since people who want to live in or contribute to a strong neighborhood will just do the kinds of things that create them—organizing listservs and clean-ups, opening a corner market, or gathering up the neighborhood kids to play a weekly game of “Sgroiball” in the summer, as your neighbor in Milton, MA did.

Geography is part of the story; sometimes natural boundaries or amenities can encourage special neighborliness. But you point out that the car has kind of changed this. Institutions that used to serve mostly people within walking distance, like churches and schools, can now attract folks from an hour or so away. So “communities” aren’t as geographically determined as it once was.

You talk about how “stroads” affect such personally-curated community choices. What are they, and why are they a problem?

A lot of people are blaming smartphones and social media for the dissolution of community, but those are amateurs compared to the automobile.

If I hop in my car, I can get to the front doors of at least half a million people in 20 minutes. That’s too many for the kind of thick social weave that makes a strong neighborhood. As a result, even the strongest urban neighborhoods today are a faint echo of what was normal as recently as 1960. Check out Alan Ehrenhalt’s The Lost City if you think I’m exaggerating.

Now, I don’t think I want to go back and trade away personal mobility for stronger community. But I’d love to get rid of stroads.

A stroad is a road (or highway) that’s trying to be a street. It was built to carry lots of traffic from Place A to Place B. But it’s got all kinds of chain retail establishments along it, because that’s where the customers are. It ends up getting congested with people turning in and out of the retail stores, it’s much less safe than either a highway or a city street, and it has none of the charm of a traditional main street. And if you live anywhere in the U.S., there’s probably a stroad that’s cannibalizing your main street.

I won’t repeat it all here – curious readers will have to crack open the essay – but for a variety of reasons, stroads shouldn’t be thought of as a “free market” outcome.

You suggest many explanations for why a “market for strong neighborhoods” has struggled to take off. Maybe we just don’t have enough time to devote to strong neighborhoods, or people don’t actually care too much about neighborhood strength. Maybe people prefer big suburban houses to denser, old-fashioned neighborhoods—although you note that neighborhood strength has declined in both, anyway. And there’s the traditional economic explanations for social problems: government regulation and market failure.

But it’s hard to tackle a problem when it doesn’t even have a name. Your article does just that: provides a conceptual framework for a felt but unarticulated social challenge. Are you optimistic that better defining and analyzing the “market for strong neighborhoods” will help us to improve the number and quality of strong neighborhoods?

I’m rarely optimistic. The good news that I have for readers is that they can opt in to neighborliness. Few places in America today provide a strong neighborhood to everyone as a public good, but in most places the people who choose to go out of their way to invest in local public goods end up known and cherished. It takes more work, to be sure, but you might start a trend in your own neighborhood.

Thanks for speaking with us today, Salim!

For more, be sure to check out Salim’s National Affairs piece, “The Market for Neighborhoods,” and you can visit his Mercatus scholar page to view other research and commentary.

Photo credit: Busà Photography/Getty Images.