The City as Unit of Analysis

Paul Romer Paul Romer

Much of what we do in a university is organized around units of analysis. In biology, the unit is the organism; in architecture, the building; in international relations, the nation-state. Some of the most important academic innovations, therefore, have emerged when scholars identify a new unit of analysis and come together to understand it.

The field of chemical engineering was pioneered at MIT in the 1920s when chemists turned their attention to the chemical plant as a unit of analysis. And good thing, too; at the time, the United States lagged far behind Germany and England in both academic chemistry and the commercial production of dyes and fertilizer. The growth of chemical engineering in the United States helped propel the US petrochemical industry to worldwide preeminence.

The business school was invented at Harvard by professors who inserted the business as a new unit of analysis, positioned below the nation state and above the individual, alongside the market.

With the announcement today of the new Marron Institute on Cities and the Urban Environment, NYU has taken the first step toward doing for the city what Harvard did for the business and what MIT did for the chemical plant — turning it into a new unit of academic analysis. In coming weeks, I’ll use blog posts tagged with CUA (City as Unit of Analysis) to suggest how this new unit could disrupt academic life in some useful ways.

Just as people studied businesses and chemical plants long before there were business schools and departments of chemical engineering, so too have people inside and outside of the university setting long studied cities. Until now, however, efforts to study the city have examined one facet of the city using a framework developed for some other unit of analysis. To urban economists, a city is a market for labor superimposed on a market for land. To sociologists, a city is a big social group. To the architects who became urban planners, a city is a big building.

Although a chemical plant is a type of building, it is improbable that a successful petrochemical industry would have emerged from a school of plant-planning staffed only by architects. And while people who work in chemical plants respond to economic incentives, it is equally unlikely that a department of chemical economics would have been as successful as the school of chemical engineering that was pioneered at MIT.

NYU’s new Institute on Cities and the Urban Environment will not merely put window dressing on a traditional school of urban planning or a traditional department of urban economics. The urban environment that humans are so busily creating is many things: a biological environment, a social environment, a built environment, a market environment, a business environment, and a political environment. It includes not only the versions of these environments that exist inside a single city, but also those that are emerging from the interaction between cities.

Our understanding of the urban environment will draw on existing academic disciplines, but it will also develop its own abstractions and insights. Chemical engineering relied on the chemical reaction from chemistry, but developed its own abstractions. Chemical engineers identified such basic operations as distillation, filtration, and gas absorption. They also showed that all chemical plants could be understood as combinations of these primitives. Likewise, business schools relied on existing concepts (e.g., the concept of the market, from economics) but developed their own abstractions. Businesses, they taught, could be understood in terms of a small set of abstract functions — human resources, operations, accounting, research and development, finance, strategy, etc.

It is too early to identify the new abstractions that will organize our understanding of cities. But in the posts that follow I will hint at the insights that emerge almost immediately after we identify the city as a distinct unit and compare it to the business. Should businesses, like cities, run their own criminal courts and police force? (No.) If firms benefit by issuing equities, should cities issue equities too? (Maybe, but not to raise funds.) Have startup cities been as important as startup firms? (Yes.) Why? (For both types of startup, we don’t know.)

Tile image by United Nations Photo.

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