The Paradox of Local Knowledge

In Who Plans? Jane Jacobs’ Hayekian critique of urban planning, Market Urbanism’s Nolan Gray connects the thinking between Jane Jacobs criticism of urban planning in The Death and Life of Great American Cities with Austrian economist FA Hayek’s criticism of central planning.

As summarized by Gray, “Jacobs emphasizes the importance of local knowledge. Where orthodox urban planners assume that the essential information in planning decisions can be gained through abstract principles and statistical aggregates . . . Second, Jacobs knew that decentralized planning was the best way to make the most of local knowledge. Local residents often have the knowledge needed to make wise decisions about urban form.”

The result, according to Gray, is that local knowledge-lead decentralized planning helps create and strengthen the complex relationships and spontaneous order of cities and city neighborhoods.

It’s a good article, but it’s lacking in depth. For one thing, local knowledge can be distorted by, well, locals. Most people operate with some kind of cognitive bias. For example, drivers always seem to think parking is scarce and traffic is getting worse, even when parking is plentiful and car ownership is dropping; older residents are more sensitive to noise and trash than younger residents and so on. One of the most common cognitive biases is what City Observatory called the Immaculate Conception Theory of Neighborhood Origins, which states that neighborhoods used to be developed “ethically, modestly and with an eye towards community rather than profit.”

But more importantly, local knowledge is a common justification for NIMBYism, especially the sort that refers to existing zoning codes as absolutes and views any change as inappropriate, out of scale, out of context and a threat of neighborhood quality of life. For those who attend development meetings in different neighborhoods regularly, one tends to hear the same litany of complaints over and over, as well as being able to point out a bunch of different counter-examples. Long-term residents of neighborhoods with proposed development are also more likely to be skeptical of trends like the millenials’ disinterest in car or home ownership.

Many urban residents also believe that rents rise because landlords are greedy or that building more housing makes it more expensive, so it’s clear that local knowledge, like statistical knowledge, has its limits.

One difference between the decentralized planning of a Hayek (or even a Jacobs) and the way planning works in Boston or New York, is that NIMBYs aren’t planning for themselves, but trying to force a plan on someone else. They’re part of the centralized planning process.

More importantly, there is often a difference between what people say they want, as opposed to how they act.  In other words, it’s very important to pay attention to revealed preferences. Throughout Death and Life Jacobs talks about how many of the key features of functioning city districts, like the atmosphere of trust created by eyes-on-the-street or the way residents could leave keys with certain business owners, functioned on a nearly unconscious level.

For example, people will consistently say they want to live somewhere that sounds rather like a small village — a few shops within walking distance, not too dense, plenty of parks, yards and parking, but many who say that will still choose dense, walkable, urban neighborhoods.

Again, local knowledge has its limits and these should be understood.

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