Measuring Local Quality of Life in Santa Monica

The LA Times reports that the City of Santa Monica has received $1 million dollars to create a local quality of life index.  Below the fold, I sketch out the methodology to measure quality of life and my price tag would be $20 to finalize this report.

“Much of the prize money will be paid to consultants who help develop the index, Kubani added. He said the city is contributing about $750,000 in contributions of staff time, but no additional dollars.

Fitness trainer Angela Parker lives and works in Santa Monica and called her city a “very special neighborhood.” She said she was pleased that the city wants to examine nontraditional metrics such as connectedness.”

Starting in my 1993 Ph.D. dissertation, I’ve worked on revealed preference methods for identifying areas with high quality of life.  If a city offers mediocre labor market opportunities but rents are high and people keep moving there and incumbents don’t move out, then this suggests that its quality of life must be quite desirable.   For some of my peer reviewed stuff, read this, or this or this.      Below the fold, I discuss the specifics about measuring Santa Monica’s quality of life and the nasty index numbers problem that the fat cat consultants will have to face.

The LA Times article makes a big deal that the consultants will survey the people of Santa Monica and measure their “connectedness”.  In Robert Putnam’s work on Social Capital and in my work (joint with Dora Costa) on social capital, researchers have used nationally representative data sets that include survey questions of; “do you often meet with neighbors?”     Such work doesn’t speak to the issue that the LA Times highlights of; “If an earthquake takes place, will the people of Santa Monica congeal as a community and help each other?  If they try to help, how much extra safety does this provide for the less fortunate?”.

The RAND consultants will create statistics such as “smog days”,  “the murder rate”,  “share of high school students who go to a 4 year college”.  But, how will they add up these apples and oranges into a single index of “Wellbeing”?      This is the index weights problem.  The person who picks these weights is imposing his/her priorities on the rankings. The same issue arises when US News and World Report ranks universities.  The Magazine collects a lot of data and then weights each category equally but why is this the right set of index weights?  Santa Monica consists of many different neighborhoods.  North of Montana (zip code 90402) is a different place than neighborhoods near the Santa Monica airport.  How will the well paid consultants factor in this heterogeneity?

While the RBC readership has little love for economists, the economic approach would simply map local real estate prices relative to the rest of Los Angeles.  High home prices in most of Santa Monica immediately indicate that quality of life is high.  Do renters in Santa Monica have high quality of life?  It would be interesting to survey them regarding why remain in an expensive place if life isn’t good.   Housing in Memphis is cheaper.   Opportunity cost is an important concept.

 

 

 

Author: Matthew E. Kahn

Professor of Economics at UCLA.

22 thoughts on “Measuring Local Quality of Life in Santa Monica”

  1. “If a city offers mediocre labor market opportunities but rents are high and people keep moving there and incumbents don’t move out, then this suggests that its quality of life must be quite desirable.”

    True dat. But how many cities satisfy all four criteria? Matthew’s links might have something interesting to say about those that don’t, but the links point to paywalls.

    1. If a city offers mediocre labor market opportunities but rents are high and people keep moving there and incumbents don’t move out, then this suggests that its quality of life must be quite desirable.

      …quite desirable for those who choose to live there.

  2. Index weights are not only a problem, they make most of these projects dubious. There is no one measure of “quality of life,” precisely because different people have different preferences. Parents want good schools, retirees want good medical facilities, twenty and thirty-somethings want promising job opportunities and good recreation of all types. Etc.

    Real estate prices? Maybe. But then you’re weighting judgments by wealth, aren’t you? Also, if there is one particularly attractive aspect of the community that aspect, rather than broader considerations, may drive prices. If the weather is nice and there are golf courses maybe you attract well-off retirees willing to pay for that. Fine, but isn’t that just another version of the weighting problem?

  3. “High home prices in most of Santa Monica immediately indicate that quality of life is high. ”

    This type of measurement is a one-dollar-one-vote measurement. It tells you how desirable the city is for those with money. That may be what those spending the money ant (and it certainly seems to be all Matthew ever cares about), but it is surely not to much to point out that this is not the whole story.

    I think the real issue here is” what is the goal of this money?” It appears to be so that those who run cities can learn what makes quality of life high, and so provide their cities with more of that and less of what reduces quality of life.
    Given this, I’m not sure I understand Matthew’s sneering. He seems to be claiming that social science and statistics know NOTHING about how to disaggregate information from heterogeneous statistics, which is a strange sort of thing for an economists to be saying — essentially “you don’t know how to compare smog days with high school drop out rate, therefore you SHOULD compare them by how they are revealed in dollars spent”!
    It’s not like heterogeneous well-being indices have never been constructed before, and there are a plethora of such indices in existence, many of which do use economic inputs. Beyond that, there are many ways to approach this problem, especially in an age of Google, for example examining clustering or even just a totally dumb regression of house prices against every other variable one can think of.

    What REALLY seems to be happening here is the sort of knee-jerk government hatred that has so many of us scornful of everything Matthew writes; He primarily seems to be upset that this program is being run by local government. I imagine if the facts all remained exactly the same, except we were told that 21st Century Realty were investing in constructing such an index, or even better that Facebook were sponsoring a crowd-sourced contest for the construction of such an index, he’d have a completely different post, this time telling us how the wonders of the free market would be able to aggregate and appropriately weigh such disparate statistics as “smog days”, ”the murder rate”, ”share of high school students who go to a 4 year college”, and carefully separate the many different neighborhoods of Santa Monica.

  4. Myself, I adore economists. I do, I do.

    Now, I will tell a story from Cambridge, Mass, when I was canvassing for a candidate whose platform favored diminishing the strictness of Cambridge rent controls (1977, I think, David Clem). One of the couples on whose door I knocked didn’t really like Cambridge very much. They lived there because it was about midpoint for their commutes, and BECAUSE THEY HAD A REALLY GOOD DEAL ON THEIR RENT CONTROLLED APARTMENT so they were stuck there. Even though they would have been just as happy or happier in Arlington or Newton, she told me, they had to stay where they were.

    So you may want to figure out if there is some way to identify Santa Monicans who don’t really want to be there, but are stuck because of low rents.

    1. Stuck — imprisoned! — in that rent-controlled apartment blocks from the beach. If only Kafka still lived to properly describe the hell.

        1. You know what bugs me about that? If they were married, would she be in trouble with the law? So, it’s not just, don’t get involved with gangsters, but if you do, make sure they buy the cow? I mean, do any of us control who we fall in love with? Not that I would nominate her for citizen of the year or anything.

  5. Santa Monica has been under fairly strong rent control (stronger than LA) since 1979 so renter persistence in an expensive area shouldn’t be a big surprise. As a ‘native’ I can attest to the heterogeneity of neighborhoods although gentrification has smoothed some boundaries and ‘elevated’ a few formerly working class neighborhoods over the past few decades.

  6. I agree that, if this project is as described, then it’s not something I’d want my local government to be spending its resources on. I also agree that there’s often a problem with subjectivity in the construction of these kinds of indices.

    That said, MK’s suggestion that you can just use housing prices as an analogue for “quality of life” seems equally problematic. In my experience, people refer to “quality of life” as one, but not the only, factor influencing how desirable a place is to live. For example, a newly minted young lawyer might weigh the pros and cons of taking a lower-paying job in beautiful Burlington, Vermont, versus a higher paying job in a faceless DC suburb. The DC suburb has higher property values, not because it has a higher “quality of life” than Burlington, Vermont, but because many people prioritize “high-paying job opportunities” over “quality of life”.

    People may not agree on what constitutes a “high quality of life” — the young lawyer’s spouse might find life in chilly Vermont unbearable, and would prefer to return to their home area in Louisiana, say. But almost everyone recognizes that there is something that makes place A more desirable than place B, and that something is not reducible to property values.

    MK’s assumption that “property values = quality of life” recalls the analogy of the drunk man looking for his car keys under the streetlight, because the light is better there than in the dark alley where he actually lost them. It’s very easy to contrast place A and place B’s quality of life if you just equate quality of life to property values. But if people don’t mean “property values” when they say the phrase “quality of life”, then MK’s model is not reality-based.

    1. Agreed. When I was in the academic marketplace some forty years ago, there was what was (I think) called the Wisconsin differential, the lower starting salary for those who decided to opt for life along the shores of Lake Mendota rather than in a more urban setting. Of course, the cost of living was lower there as well, so it may have evened out.

  7. If you want to find something bad, follow the money. If you want to find something good, follow the people.

  8. Adapting above comments to produce shorter MK:

    “1.There’s no good way to weight; using money as votes is a good way to weight.

    “2. The fact that some people will have more votes causes no particular concern.”

  9. While Santa Monica might not have many good jobs, Los Angeles and Culver City are right next door and offer tons.

  10. The rent method suffers from a narrowing of the universe of comparison. It tells you something about Santa Monica compared to neighbouring districts in greater LA. It doesn’t tell you anything about living in Santa Monica as compared to Amsterdam, Costa Rica or Bhutan – all places with a reputedly high quality of life. Emulating Bhutan may be off the political map (though it might appeal to Governor Brown), but “being more like Amsterdam” is, or should be, within the space of policy goals.

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