Are Big Cities Bad Places to Live? Estimating Quality of Life across Metropolitan Areas

David Albouy

NBER Working Paper No. 14472
Issued in November 2008, Revised in December 2011
NBER Program(s):Environment and Energy Economics, Labor Studies, Public Economics

The standard revealed-preference estimate of a city's quality of life is proportional to that city's cost-of-living relative to its wage-level. Adjusting estimates to account for federal taxes, non-housing costs, and non-labor income produces more plausible quality-of-life estimates than in the previous literature. Unlike previous estimates, adjusted quality-of-life measures successfully predict how housing costs rise with wage levels, are positively correlated with popular "livability" rankings and stated preferences, and do not decrease with city size. Mild seasons, sunshine, hills, and coastal proximity account for most inter-metropolitan quality-of-life differences. Amendments to quality-of-life measures for labor-market disequilibrium and household heterogeneity provide additional insights.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w14472

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