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In Big City, New Ideas Aren't as Promiscuous as They Used to Be

Ideas can have just as much sex in the suburbs as in the city.
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(Photo: Sharada Prasad CS/Flickr)

(Photo: Sharada Prasad CS/Flickr)

Do big, dense cities foster innovation more than other places? Or, as I contend, is migration responsible? Count Richard Florida among those who see the urban experience as a natural incubator for innovation:

Startups and venture capital are shifting toward urban areas because of what they have offered all along—the economic advantages of agglomeration, clustering, and human interaction, combination, and recombination. Cities have the diversity of talent and industry, the density and interactive streetscapes, and the openness to new ideas and fast-paced urban metabolisms that enable innovation and new enterprises to thrive. Suburbs like Silicon Valley and other nerdistans have to replicate and mimic these functions—cities have them intrinsically. Great cities are wide open places, filled with creative and entrepreneurial activity, and are cauldrons of free expression, discovery, and innovation—places where, as author Matt Ridley famously put it, “ideas come to have sex.” The results of those couplings have long been books, paintings, music, and other creative pursuits, but they are also new technologies, new products, new businesses, and whole new industries. As New York City venture capitalist Fred Wilson puts it in his foreword to Tech and the City, “the story of NYC is a story of entrepreneurship, evolution, and energy.”

Emphasis added. Florida conflates theory with empirical evidence. Are cities really places where ideas more readily have sex? Of late, I've noticed more scholars testing this unsubstantiated assertion. The literature reviews remark how little we know about the relationship between geography and innovation. A recent stab at verifying the agglomeration effect, "Cities and Ideas," maps the muddy waters: "From a theoretical perspective, agglomeration may thus have a positive, a negative, or no impact at all on the adoption of new ideas as inputs to the inventive process." At this point, the relationship between cities and innovation is an open question.

Other research, to the contrary of "Cities and Ideas," concludes, "patent intensity—the per capita invention rate—is positively related to the density of employment in the highly urbanized portion of MAs." In a metro area, greater employment density is linked to patents produced. The two are positively correlated. Well, the highly urbanized portion of any MA will sport many employees who were born someplace else. The biggest cities draw in people from all over the world. We can't be sure if high density or high migration (or some other unique urban attribute) causes the innovation rate bump. We are back in muddy waters.

The authors of "Cities and Ideas" compare large cities to small cities over a long period of time (1880-2005). City size is measured in terms of population density. United States patents serve as the proxy for new ideas. The diffusion of these new ideas are tracked. Indeed, denser cities do have an innovation advantage. However, this agglomeration effect diminishes considerably over the most recent decades.

The diminishing returns of population density for the adoption of new ideas takes hold during the 1960s. During that decade, the U.S. passed the Hart–Celler Act, opening the door for highly skilled immigrants. The increase in movement of scientists around the globe correlates with the decline in density dividend for innovation. Additional analyses in "Cities and Ideas" provides supporting evidence for this hypothesis:

We find that teams of inventors are much more likely to apply fresh knowledge than lone inventors. An intriguing avenue for future work is examining to which extent this result arises because each inventor in a team brings in their own knowledge of existing ideas to the team and to which extent the result arises because inventors working in teams can solve the mysteries of new ideas faster than lone inventors through a vigorous debate on the new ideas’ merits.

Global collaboration facilitates the use of new ideas, great density not required. Such evidence does not support investment in urban innovation districts. Policy needn't target expensive real estate. The world is getting flatter by the day.