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City residents willing to pay a higher price for a good lifestyle

London SkyscrapersLondoners are willing to pay around £1 billion a year to enjoy the benefits of city living, according to a new discussion paper released by LSE urban economist Dr Gabriel Ahlfeldt.

While higher wages and reduced commuting costs are major attractions luring workers to cities, a novel study by Dr Ahlfeldt from the London School of Economics and Political Science shows that lifestyle is also a major factor.

The study used approximately two million photographs posted on the file sharing sites Flickr and Picasa to value the attractiveness of neighbourhoods in two European cities – London and Berlin.

A doubling in the number of photos posted in the inner city neighbourhoods is associated with an increase in property prices by about 1.5% in both London and Berlin.

The results imply that Londoners are willing to give up approximately £100 a month of their monthly disposable income to enjoy city amenities, according to Dr Ahlfeldt.

Residents from both cities prize urban amenities, with Berliners willing to pay about £600 million a year to live amongst city amenities.

The figures were calculated by taking into account average incomes, house prices, photos and amenities in city neighbourhoods spanning a 15 square mile area of London and Berlin’s central metropolitan areas.

“The majority of photos involved images of an area’s architecture, its parks and diverse culture – recreational spaces which are obviously highly valued,” Dr Ahlfeldt said.

“Photos are strong indicators of human interest and so we can draw the conclusion that city amenities – not just jobs – are important to people.

“As the population is becoming wealthier and better educated, they are increasingly demanding diverse cultural, architectural and recreational facilities that only cities can provide. The gentrification of inner city suburbs in recent decades is testament to this.”

The study is the first of its kind to value urbanity based on geo-tagged photos shared in internet communities.

Dr Ahlfeldt said the findings endorsed emerging evidence that “beauty, distinctiveness and consumption variety” contributes to the economic success of cities.

Contact: For further media enquiries or to request a copy of the paper Urbanity, contact Dr Gabriel Ahlfeldt on 0207 852 3785 or g.ahlfeldt@lse.ac.uk

Note to editors
Dr Gabriel Ahlfeldt is a lecturer in Urban Economics and Land Development at LSE in the Department of Geography and Environment. He is also an affiliate of the Spatial Economics Research Centre (SERC) and an Associate of the Centre for Metropolitan Studies, Berlin.

Posted 31 May 2013