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Urban Information Gaps

Tyler Cowen did a post a few weeks ago wondering why there are so few cheap restaurants east of the Anacostia River. The ensuing discussion mostly ended up focused on the fact that he referred to that entire area as “Anacostia” whereas DC residents are in the habit of defining neighborhoods as incredibly small areas so “Anacostia” only properly refers to one small section of the area he was talking about.

That said, the actual question was interesting and I think the answer is mostly “it’ll just take a bit of time.” There was massive disinvestment in the whole city of Washington DC in the 60s, 70s, and 80s for a whole variety of reasons and as people started reinvesting the process generally began in the most prosperous areas and then the areas that were adjacent to them. But Cowen was down there because a new location of Ray’s The Steaks opened in the area. Today the first organic supermarket east of the river is opening. Big Chair Coffee and Grill opened earlier this year.

Watching these kinds of processes play out is, I think, mostly a reminder that the real economic world isn’t the kind of frictionless, perfect information utopia that leads to markets always clearing. One upside to the genericness of a lot of suburban development is precisely that this allows it to more closely approximate such a utopia. Somewhat distressed urban areas tend to be unfamiliar to the business community, and the people familiar with the area don’t necessarily have the capital or know-how to get businesses off the ground. Consequently, the pace of development can get a bit frustratingly slow. In cities like DC that are on a generally upward trajectory, the experience of a few successful projects should build information and momentum and a generally increasing pace of progress. But for cities that didn’t manage to get on the upswing in the 1991–2007 period, I think these kind of considerations give us reason for pessimism.

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