Welcome to Economic Pulse Analytics! As Managing Partner and Chief Urban Economist, I wanted to take this opportunity to introduce myself, and to explain to you why I decided to start an urban economics, demographics and market research consultancy.
For the past 10+ years I have been working at the crossroads of urban economics and international development. During this time, I have been fortunate enough to serve in a variety of capacities across different geographical regions. Within the United Nations system (Nairobi and New Delhi), I served as an urban economist investigating the challenges that developing countries were facing and worked with local administrations to develop strategies for planning and managing cities under conditions of rapid urbanization. As an academic, I held appointments with the KTH Royal Institute of Technology (Stockholm) and Harvard University (Boston), conducting research on the relationship between urbanization and economic development and teaching courses on urban economics and challenges for metropolitan urban regions. As a Board Member for the Block by Block Foundation (Seattle), I have been working with Microsoft and Mojang (the creators of the popular game Minecraft) to develop new approaches to public participation using digital technologies. I was also fortunate enough to be part of a 3-year process involving a wide array of stakeholders, which included representatives from slum dwellers associations, academia, the private sector, and local and national level governments that contributed to the development of a strategic roadmap for sustainable urban development; this included contributions to the Sustainable Development Goals and the New Urban Agenda. These experiences have not only exposed me to the many urban development challenges that cities are facing around the world, but they have also shaped my understanding of what makes cities work (and not work in many instances).
Site visit to a project in Kalobeyei Refugee Camp, Kenya | 2018
During my interactions with planning offices across the globe, one particular theme regularly stood out in my mind. Rarely were there ever Urban Demographers or Economists in the room. As someone who has been heavily steeped in the quantitative rigour of data analysis, it always struck me as odd that discussions about the forces shaping cities and their future demands in terms of housing, infrastructure and employment, were taking place in the absence of sound demographic and economic analysis.
The truth of the matter is that rarely do you find Urban Demographers and Economists outside of academia. Instead planning offices are typically staffed with Urban Planners, Architects and Design experts. While these professions are highly knowledgeable about the spatial and structural aspects of the city, very few planning educations are equipped with the quantitative and statistical techniques required for sound economic and demographic analysis. Consequently, many urban planners and local decision makers are tasked with making important decisions about the future of their cities without the reliable data to base them on. Urban Economists, however, are armed with an extensive repertoire of tools borrowed from the economic discipline that can help local administrations better understand the macro and micro level forces shaping their communities. In doing so, they provide important insights into industry trends, the labour force and offer techniques for distinguishing among public policy alternatives. Demographers, on the other hand, possess important analytical and forecasting tools that can inform local administrations about the evolving population dynamics of cities and how they are changing as a result. This can tell us whether cities are going to shrink or grow and what age cohorts are the most influential. Such information can be useful when it comes to managing municipal budgets and providing public services such as education, healthcare and policing. Unfortunately, rarely do we see these experts on the payrolls of local governments or international organizations. In most instances, decisions about the future needs of our communities are being based off of national trends. These figures are almost always crude estimates that become heavily distorted as a result of multiple rounds of aggregation.
World Urban Forum 10, Abu Dhabi, UAE | 2020
It is for this very reason that I started Economic Pulse Analytics – to provide reliable demographic and economic research and advisory services to inform decision making at the sub-national level. Economic Pulse Analytics works with a range of clients, including local administrations, regional districts, economic development societies, planning and architecture firms, local chambers of commerce and businesses to navigate the complex data landscape. Our approach is to focus on what we do best, which is analyzing trends and providing actionable intelligence, so you can focus on what you do best – serving your communities.
So how can urban demographers and urban economists help you? Although I intend to write several more detailed blogs about each of these areas in the coming weeks, it is worth providing a brief overview of their potential applications here.
Urban Demographics – Demographics is the basis of community planning. Its most useful application is perhaps that it offers techniques for forecasting population growth. How can we plan and build communities over 5- 10- and 20-year time horizons if we are unable to accurately anticipate how many people will be living in them? This has an impact on housing and land supply, urban basic service provision and also in terms of enrollment/participation rates for certain activities (ie. daycares, schools, hospitals, elderly care facilities, etc.). While basic demographic techniques, which are those most often used at the local level, can tell you that a community is growing by 2-3 percent annually, more sophisticated forms of demographic analysis can inform you of population growth trends, which age cohorts are growing versus those that are shrinking, and whether a community is growing due to births, deaths or migration. The latter is important in that unlike births, communities growing as a result of migration usually means a growth in the working age population. This more detailed approach offers a higher level of precision and helps to answer important planning questions. What are our housing needs now and what type of housing should be built for the future (ie. single family, condos, retirement homes, etc.)? What public and private services are most important for the future of our community (ie. daycares, schools, hospitals and elderly care facilities)? And, how can we design our community to best meet the needs of its inhabitants (ie. age friendly, family friendly, etc.)?
Urban Economics – Economics is another fundamental aspect of community planning. It explains why cities exist in the first place. Urban Economics offers a robust toolkit to analyze important urban issues such as employment, crime, housing, public transport, municipal finance and so on. The outcomes serve as the basis for important local level decision making processes. In its most comprehensive form, urban economics can be applied to model market dynamics at the sub-national level, where we rarely have access to reliable data. In this way it has the ability to demonstrate how interconnected industries are and how a shock (positive or negative) to one industry can impact another one. For example, growing global competition in the automobile industry could result in the closing of an automobile manufacturing plant in a medium sized community. The damage, however, would not solely be confined to the automobile plant, as the plant also relies on local and regional suppliers for different automobile components (ie. brakes, tires, etc.). Since the closing of the automobile plant would result in layoffs for the plant (and likely for supporting industries), this would no doubt have an impact on personal consumption patterns (ie. restaurants, groceries, hair salons, etc.) and the wider community as a whole would likely be worse off. Understanding the interconnected nature of the local economy can be useful for local level decision making, such as whether or not the local government should provide some sort of temporary relief for struggling businesses or if they would be better off diversifying their economy to minimize future shocks. Such models can also be useful for understanding how investment in a certain project or sector reverberates throughout the economy as a whole.
Market Research – Aside from public sector applications, demographic and economic tools can also be usefully employed for private sector applications as well. One example is market research for consumer products. As people transition through different stages of their lives, we know that their preferences and spending patterns change. For example, we know that the average age of first-time mothers is 27 and first-time fathers 31. Accordingly, this corresponds with the peak age for spending on baby products. Shelter and food expenditure reaches its peak between 30 and 39 where households are likely to be larger consisting of two generations under the same roof (parents and children). Downsizing occurs after children leave the home, which coincides with an increase in spending on secondary accommodation between 55 and 64. After the age of 65, aging processes begin to effect one’s health and we see spending on healthcare rise. Geodemographic analysis, which clusters populations based on statistically similar neighborhoods, adds a spatial component to this, analyzing consumption patterns based on where one lives. It is based on the assumption that two people from the same neighborhood will have more in common than two people from different neighborhoods, and that two people from similar neighborhoods, despite being separated from distance will have similar preferences. For example, households located in neighborhoods that have larger lot sizes will likely require yard maintenance equipment. Similarly, two young households located in middle income neighborhoods on either side of the country will likely have similar shadow spending. Sector specific market analysis can provide useful information for businesses that need to know about changing consumer preferences and market growth potential.
Demographics, economics and market research offer important vantage points upon which to understand the dynamics of our changing businesses and communities. When properly employed, they offer essential insights to inform decision making and manage change. If you are interested in the trends that are unfolding at the sub-national level and how urban economics and demographics can be leveraged to build more prosperous and resilient communities, please continue to follow Economic Pulse Analytics on our social media channels or reach out to us directly.
Kyle Farrell is Managing Partner and Chief Urban Economist at Economic Pulse Analytics. He works closely with local governments to provide them with population, housing and employment forecasts to make more informed decisions about their future. He holds a PhD with specialized knowledge in Urban Economics and regularly consults for the United Nations.
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