As more and more people live in cities, there is an understandable desire to better understand how cities function and their impact on citizens behavior.  One of the more interesting recent studies was published recently by the London School of Economics (LSE) and looked at how population density influenced economic output and also inequality levels in the city.

The study suggests that densely populated cities have a number of benefits, whether in terms of more innovation, higher productivity levels, better access to private and public services, and even a greater preservation of green spaces.

These advantages come at a price however, because the premium placed on space makes housing expensive, which tends to result in higher levels of inequality.  The data found that highly skilled workers benefit from high density with higher wages, but lower skilled workers struggle with the high cost of living in the city.

A densely populated city can also have obvious issues around congestion and air pollution, which can have a negative impact on the health of citizens.

Urban life

The conclusions were reached after an analysis of 180 previous studies on urban life to try and find the economic effects of population density.  Overall, the authors believe that despite the various drawbacks, the benefits of higher population density tends to make densifying a city worthwhile, at least in the developed world.

For cities in developing countries, the evidence is a little bit harder to come by so conclusions are not so clear cut.  The density levels of cities in the developing world are also greater than in the developed world, so it was not possible to come to firm conclusions either way.

With the OECD estimating that 70% of the world’s population will live in cities by 2050 however, it’s valuable to have this kind of insight to ensure that cities are not only as productive and satisfying as possible, but don’t exacerbate the problems with inequality that are already serious enough across much of the world.

“Most countries pursue policies that implicitly or explicitly aim at promoting ‘compact urban form,’ but so far these policies have not been well-grounded in evidence,” the authors say.  “With this article, we hope to contribute to transparent evidence-based policy making, by highlighting the various economics costs and benefits of density, and showing the trade-off between economic efficiency and inequality.”