José Lobo

Growth, innovation, scaling, and the pace of life in cities

Humanity has just crossed a major landmark in its history with the majority of people now living in cities. Cities have long been known to be societys predominant engine of innovation and wealth creation, yet they are also its main source of crime, pollution, and disease. The inexorable trend toward urbanization worldwide presents an urgent challenge for developing a predictive, quantitative theory of urban organization and sustainable development. Here we present empirical evidence indicating that the processes relating urbanization to economic development and knowledge creation are very general, being shared by all cities belonging to the same urban system and sustained across different nations and times. Many diverse properties of cities from patent production and personal income to electrical cable length are shown to be power law functions of population size with scaling exponents, β, that fall into distinct universality classes. Quantities reflecting wealth creation and innovation have β ≈1.2 >1 (increasing returns), whereas those accounting for infrastructure display β ≈0.8 <1 (economies of scale). We predict that the pace of social life in the city increases with population size, in quantitative agreement with data, and we discuss how cities are similar to, and differ from, biological organisms, for which β<1. Finally, we explore possible consequences of these scaling relations by deriving growth equations, which quantify the dramatic difference between growth fueled by innovation versus that driven by economies of scale. This difference suggests that, as population grows, major innovation cycles must be generated at a continually accelerating rate to sustain growth and avoid stagnation or collapse.

Urban Scaling and Its Deviations: Revealing the Structure of Wealth, Innovation and Crime across Cities

With urban population increasing dramatically worldwide, cities are playing an increasingly critical role in human societies and the sustainability of the planet. An obstacle to effective policy is the lack of meaningful urban metrics based on a quantitative understanding of cities. Typically, linear per capita indicators are used to characterize and rank cities. However, these implicitly ignore the fundamental role of nonlinear agglomeration integral to the life history of cities. As such, per capita indicators conflate general nonlinear effects, common to all cities, with local dynamics, specific to each city, failing to provide direct measures of the impact of local events and policy. Agglomeration nonlinearities are explicitly manifested by the superlinear power law scaling of most urban socioeconomic indicators with population size, all with similar exponents (1.15). As a result larger cities are disproportionally the centers of innovation, wealth and crime, all to approximately the same degree. We use these general urban laws to develop new urban metrics that disentangle dynamics at different scales and provide true measures of local urban performance. New rankings of cities and a novel and simpler perspective on urban systems emerge. We find that local urban dynamics display long-term memory, so cities under or outperforming their size expectation maintain such (dis)advantage for decades. Spatiotemporal correlation analyses reveal a novel functional taxonomy of U.S. metropolitan areas that is generally not organized geographically but based instead on common local economic models, innovation strategies and patterns of crime.

The production recipes approach to modeling technological innovation: An application to learning by doing

We do two things in this paper. First, we put forward some elements of a microeconomic theory of technological evolution. This involves adding nascent (essentially undiscovered) technologies to the existing technologies of neoclassical production theory, and, more importantly, expanding the notion of the production plan to include the recipe---the complete description of the underlying engineering process. Second, we use the recipes approach in constructing a simple microeconomic model of shop-floor learning by doing. We simulate the dynamics of the model and report the effects of changes in the basic parameters on the resulting engineering experience curves. For correctly chosen values of these parameters, the predictions of the model match the observed data on experience curves. Journal of Economic Literature Classification Numbers: D20, D21, D24, D83, L23, O30. Submitted to Journal of Economic Dynamics and Control.

Does Size Matter? Scaling of CO2 Emissions and U.S. Urban Areas

Urban areas consume more than 66% of the world’s energy and generate more than 70% of global greenhouse gas emissions. With the world’s population expected to reach 10 billion by 2100, nearly 90% of whom will live in urban areas, a critical question for planetary sustainability is how the size of cities affects energy use and carbon dioxide (CO2) emissions. Are larger cities more energy and emissions efficient than smaller ones? Do larger cities exhibit gains from economies of scale with regard to emissions? Here we examine the relationship between city size and CO2 emissions for U.S. metropolitan areas using a production accounting allocation of emissions. We find that for the time period of 1999–2008, CO2 emissions scale proportionally with urban population size. Contrary to theoretical expectations, larger cities are not more emissions efficient than smaller ones.

Invention as a combinatorial process: evidence from US patents

Invention has been commonly conceptualized as a search over a space of combinatorial possibilities. Despite the existence of a rich literature, spanning a variety of disciplines, elaborating on the recombinant nature of invention, we lack a formal and quantitative characterization of the combinatorial process underpinning inventive activity. Here, we use US patent records dating from 1790 to 2010 to formally characterize invention as a combinatorial process. To do this, we treat patented inventions as carriers of technologies and avail ourselves of the elaborate system of technology codes used by the United States Patent and Trademark Office to classify the technologies responsible for an inventions novelty. We find that the combinatorial inventive process exhibits an invariant rate of ‘exploitation’ (refinements of existing combinations of technologies) and ‘exploration’ (the development of new technological combinations). This combinatorial dynamic contrasts sharply with the creation of new technological capabilities—the building blocks to be combined—that has significantly slowed down. We also find that, notwithstanding the very reduced rate at which new technologies are introduced, the generation of novel technological combinations engenders a practically infinite space of technological configurations.

Using patent technology codes to study technological change

Much work on technological change agrees that the recombination of new and existing technological capabilities is one of the principal sources of technological novelty. Patented inventions can be seen as bundles of distinct technologies brought together to accomplish a specific outcome – and this is how the US Patent Office defines inventions. The technologies constituting inventions are identified by the US Patent Office through an elaborate system of technology codes. A combinatorial perspective on invention, emblematic of approaches to technological change informed by evolutionary economics and complexity science, is inherent in the use of technology codes to summarize what is technologically novel about a patented invention. The technology codes represent a set of consistent definitions of technologies and their components spanning 220 years of inventive activity, and are an underutilized data resource for identifying distinct technological capabilities, defining technology spaces, marking the arrival of technological novelty, measuring technological complexity, and empirically grounding the study of technological change. The present discussion provides an introduction to the use of patent technology codes as well as some basic empirics. Our results highlight the highly discriminating nature of the codes and their usefulness in characterizing the type of processes by which technological capabilities generate novelty.

Night-Time Light Data: A Good Proxy Measure for Economic Activity?

Much research has suggested that night-time light (NTL) can be used as a proxy for a number of variables, including urbanization, density, and economic growth. As governments around the world either collect census data infrequently or are scaling back the amount of detail collected, alternate sources of population and economic information like NTL are being considered. But, just how close is the statistical relationship between NTL and economic activity at a fine-grained geographical level? This paper uses a combination of correlation analysis and geographically weighted regressions in order to examine if light can function as a proxy for economic activities at a finer level. We use a fine-grained geo-coded residential and industrial full sample micro-data set for Sweden, and match it with both radiance and saturated light emissions. We find that the correlation between NTL and economic activity is strong enough to make it a relatively good proxy for population and establishment density, but the correlation is weaker in relation to wages. In general, we find a stronger relation between light and density values, than with light and total values. We also find a closer connection between radiance light and economic activity, than with saturated light. Further, we find the link between light and economic activity, especially estimated by wages, to be slightly overestimated in large urban areas and underestimated in rural areas.

Urban Scaling and the Production Function for Cities

The factors that account for the differences in the economic productivity of urban areas have remained difficult to measure and identify unambiguously. Here we show that a microscopic derivation of urban scaling relations for economic quantities vs. population, obtained from the consideration of social and infrastructural properties common to all cities, implies an effective model of economic output in the form of a Cobb-Douglas type production function. As a result we derive a new expression for the Total Factor Productivity (TFP) of urban areas, which is the standard measure of economic productivity per unit of aggregate production factors (labor and capital). Using these results we empirically demonstrate that there is a systematic dependence of urban productivity on city population size, resulting from the mismatch between the size dependence of wages and labor, so that in contemporary US cities productivity increases by about 11% with each doubling of their population. Moreover, deviations from the average scale dependence of economic output, capturing the effect of local factors, including history and other local contingencies, also manifest surprising regularities. Although, productivity is maximized by the combination of high wages and low labor input, high productivity cities show invariably high wages and high levels of employment relative to their size expectation. Conversely, low productivity cities show both low wages and employment. These results shed new light on the microscopic processes that underlie urban economic productivity, explain the emergence of effective aggregate urban economic output models in terms of labor and capital inputs and may inform the development of economic theory related to growth.

Urban scaling in Europe

Over the last few decades, in disciplines as diverse as economics, geography and complex systems, a perspective has arisen proposing that many properties of cities are quantitatively predictable due to agglomeration or scaling effects. Using new harmonized definitions for functional urban areas, we examine to what extent these ideas apply to European cities. We show that while most large urban systems in Western Europe (France, Germany, Italy, Spain, UK) approximately agree with theoretical expectations, the small number of cities in each nation and their natural variability preclude drawing strong conclusions. We demonstrate how this problem can be overcome so that cities from different urban systems can be pooled together to construct larger datasets. This leads to a simple statistical procedure to identify urban scaling relations, which then clearly emerge as a property of European cities. We compare the predictions of urban scaling to Zipfs law for the size distribution of cities and show that while the former holds well the latter is a poor descriptor of European cities. We conclude with scenarios for the size and properties of future pan-European megacities and their implications for the economic productivity, technological sophistication and regional inequalities of an integrated European urban system.

Urban economies and occupation space: can they get "there" from "here"?

Much of the socioeconomic life in the United States occurs in its urban areas. While an urban economy is defined to a large extent by its network of occupational specializations, an examination of this important network is absent from the considerable body of work on the determinants of urban economic performance. Here we develop a structure-based analysis addressing how the network of interdependencies among occupational specializations affects the ease with which urban economies can transform themselves. While most occupational specializations exhibit positive relationships between one another, many exhibit negative ones, and the balance between the two partially explains the productivity of an urban economy. The current set of occupational specializations of an urban economy and its location in the occupation space constrain its future development paths. Important tradeoffs exist between different alternatives for altering an occupational specialization pattern, both at a single occupation and an entire occupational portfolio levels.