Amenities and City Growth

City Beautiful: Revealed Preferences for Amenities and Urban Growth
Past studies have provided only indirect evidence of the importance of consumer amenities for city growth. In this paper we introduce a new measure of the demand for urban amenities and urban variety that is based on revealed preference by consumers: the number of leisure tourist visits. Leisure tourists are attracted by an area’s special traits, such as proximity to the ocean, scenic views, history, architectural beauty, and cultural and recreational opportunities. But these are the same characteristics that attract households to cities when they are looking for a place to make their permanent home. We find that, all else equal, population and employment growth is about 2.5 percentage points higher in a metropolitan area with twice as many tourists. Housing prices alsogrow faster in “beautiful cities.” These results are of critical importance to a growing number of policymakers pursuing urban growth strategies based on historical conservation, city beautification, and the development of spaces for leisure and consumer-oriented “public goods.”