Economic Efficiency or Urban Quality of Life?

Jardim Santa Rita, Sao Paulo, Brazil, circa 1988

“Paving Streets for the Poor: Experimental Analysis of Infrastructure Effects” is an economics paper published last month by Marco Gonzalez-Navarro and Climent Quintana-Domeque. According to the abstract, “This study is the first providing experimental [economic] evidence on the role of infrastructure in reducing poverty for the urban poor.” The research focuses on the material conditions of residents of Acayucan, Veracruz, Mexico, before and after their street is paved for the first time. The authors show that households’ acquisition of durable goods, motor vehicle ownership, home improvements, and collateral credit use increased, and that according to their cost-benefit analysis, the return was at least as much as the investment. Gonzalez-Navarro is affiliated with J-PAL, the Jameel Poverty Action Lab, whose stated mission is to “reduce poverty by ensuring that policy is based on scientific evidence…J-PAL and its partners are driven by a shared belief in the power of scientific evidence to understand what really helps the poor, and what does not.”

Abhijit Banerjee, a well-respected economist at MIT and co-director of J-PAL, believes that with respect to schools in poor countries, brick and mortar investments are less useful than improving teacher quality. Esther Duflo, co-founder of J-PAL, says that while new structures are desired by school principals so they’ll have a more pleasant place to live; by school fundraisers so that they will be able to raise more money; and by students because it is a tangible improvement; she doesn’t believe that the buildings necessarily improve learning. Her suggestion is, “Let’s try and focus the money on where it will make the most difference without being influenced by whether or not it is photogenic.” Analysis of individual construction projects is notably absent from the programs J-PAL pursues.

Jardim Santa Rita, Sao Paulo, Brazil, circa 1991

I appreciate Banerjee and Duflo’s approach of breaking the vast subject of “poverty in developing countries” into discrete problems to be researched as individual experiments, without expecting to be able to make sweeping conclusions about causes or solutions. However, the amount of trained labor that would be required to perform a significant number of experiments is daunting.

New approaches to evaluating urban quality of life in developing countries are balancing economic measures with social and environmental ones. As Marines’ Pocaterra’s recent post mentions, UN-HABITAT’s “State of the World’s Cities 2012/2013” report proposes a new way of evaluating urban prosperity – the “City Prosperity Index” – based on 1) productivity, 2) infrastructures, 3) quality of life, 4) equity and 5) environmental sustainability. The report asserts that urban infrastructure is the key to productivity, and here J-PAL’s tactics may be helpful in determining which types of infrastructure projects are the most efficient investments.

Jardim Santa Rita, Sao Paulo, Brazil, 1995

Pocaterra also reminds us of the increased attention that global cities will be receiving in the coming years. I agree that a global effort to educate people about the role of cities – on par with the last decade’s efforts to educate people about climate change – is necessary.  Cities are now seen as needing to have the capacity for resilience in the face of social, economic, and climate upheavals.  UN-HABITAT goes so far as to say that “Cities can also be a remedy to the regional and global crises.” While this is difficult to prove, it is a sign that public opinion may be shifting away from seeing cities as  negative by definition, and may begin to see them as the engines of growth and positive change that they have the potential to be.