What Makes a City a Good Place to Live?

Using a Milken Institute study, Pew Research tells us that a list of the best-performing large cities in the U.S. is topped by the Austin, Texas area while we could travel to Atlantic City, New Jersey to see the bottom. For ranking, their key variables were jobs, wages and technology trends with energy and technology fueling the rise to the top in 2013.

From: Milken Institute

But we can look at more than the economy to judge a city.

The Reasons We Like Where We Live

According to a University of Illinois economist, in addition to jobs and wages, we care a lot about amenities. Qualities that relate to geography and climate like proximity to a coast, slopes, sunshine, warm winters, and mild summers can make a city more attractive. Add to that restaurants, bars and cultural institutions and you get a spike in quality of life ratings that can offset more traditional economic perks.

And that takes us to Portland, Oregon.

Called a city for the over-educated and underemployed by the NY Times, Portland has been a magnet for people who value non-dollar amenities. As a result, the city has not needed the attraction of tax breaks and personal income growth. Instead a two-income family could be composed of a barista and a freelancer who enjoy “locally grown kale, homesteading, beer, bikes and Birkenstock…”

In his 2012 paper, using dollar and non-dollar amenities, University of Illinois economist David Albouy tops his list of the best cities to live with Honolulu, Hawaii and Santa Barbara, California while his top five states are Hawaii, California, Vermont, Colorado and Oregon.

Our Bottom Line: Externalities

Harvard scholar Ed Glaeser tells us that cities are where innovation incubates and the environment is treated more kindly because people who live close to each other use fewer resources. Also, we could add that business firms enjoy a more concentrated labor pool for choosing employees. So, whether we focus on Austin or Portland or Honolulu, and use the Milken Institute’s variables or a broader set of amenities, the top U.S. cities generate positive externalities from which we can all benefit.