Measuring Complexity
Measuring Complexity
Hasan, Lubna
2007
Online at https://mpra.ub.uni-muenchen.de/7413/
MPRA Paper No. 7413, posted 02 Mar 2008 18:29 UTC
On Measuring the Complexity of
Urban Living
Lubna Hasan
Pakistan Institute of Development Economics
2
CONTENTS
Page
Abstract 4
1. Introduction 5
References 29
3
Page
List of Tables
Appendix
Table A1. Dimensions of CDI as measured by ADB 33
4
ABSTRACT
This paper explores the concept of city ranking as a way to measure dynamics
and complexities of urban life. These rankings have various dimensions and
uses. Both the context in which these rankings are done, and their nature has
changed considerably overtime. These rankings are also afflicted with many
methodological and measurement problems. A review of major city rankings
and related literature is carried out to suggest a framework for measuring
Pakistani cities.
“Since the sources of the new economic growth are so various and finally
perhaps so fickle, the possibilities are endless. It is no accidents that, as never
before, ranking of cites dominate the media.” (Hall 1995).
“…you cannot properly measure what you don’t understand; and you cannot
improve what you don’t measure.” (Peter Newton, 2001)
1. Introduction
Cities have acquired a phenomenally important role in today’s world.
From being “isolated seats of power from where to govern rural holdings,” cities
have become the ultimate abode of humanity, and human beings are now a
predominantly city dwelling species. Today every second person inhabiting the
world is an urban dweller1. The trend is not going to change in near future as the
urban population is expected to grow at double the rate of growth of total world
population during 2005-2030 [UNCHS (2007)].
This has encouraged efforts at measuring diversity of urban life and of
cities as such2. Generally dubbed as ‘city rankings’ or ‘city ratings’, these
exercises are aimed at measuring and comparing cities on a variety of aspects-
quality of life (QoL), cost of living, business climate/opportunities, and other
criteria. These rankings are done by popular magazines, business consulting
firms, international agencies, and academic institutions, and attract a great deal
of media and public attention. In particular, QoL comparisons among areas
interest residents, business persons, politicians, and policymakers as evidence
compiles in favor of a link between area amenities and the location decisions of
households and firms (Blomquist, et al 1988).
The reduction of complexity of urban living to a single number is
appealing to politicians and media alike. For the media, it becomes an
interesting headline; for politicians, a political motive—if their constituency
ranks low on the QoL index, it can be used to demand higher development
Acknowledgements: The author wishes to thank Dr Nadeem Ul Haq for his encouragement
in writing this paper. It is his idea that a city ranking system should be developed for Pakistan.
Thanks are also due to Dr Musleh-ud Din and Dr G. M. Arif who provided incisive comments on an
earlier draft of this paper. The author also wishes to thank seminar participants at the Pakistan
Institute of Development Economics, Islamabad and participants of “the Cities Conference”,
Karachi, for their valuable comments. An earlier version of this paper entitled ‘On Ranking Cities:
Issues and Options” was published in Haque and Nayab (eds.) “Cities-Engines of Growth (2007),
Pakistan Institute of Development Economics. The usual disclaimer applies.
1
In 2005, 3.17 billion out of the total world population (6.45 billion) lived in cities
(UNCHS 2007).
2
The ‘diversity’ of urban life and why it is being measured is discussed below. Also see
Nayab (2007) for the role of cities in human life.
6
expenditure from the state on the pretext of initiating new programs that will
“enhance local quality of life”(Rogerson 1999).
This paper discusses city rankings as follows. It introduces the concept,
discusses the context in which these rankings are done, and then reviews
measurement issues in indicators. The paper also outlines a number of major
initiatives in ranking cities and discusses current efforts to measure Pakistani
cities. Finally, it puts forward suggestions for moving forward.
3
Agglomeration economies are positive externalities arising out of a concentration of
population and economic activity in one region: provision of pure public and club goods, e.g., roads,
medical facilities, health clubs, recreational facilities (cinemas and parks); a wider variety of the
aforementioned services; a more complete occupational structure (which gives greater flexibility
with respect to the skill and time requirement of a job); chances of upward mobility; and greater
personal freedom, etc.
7
riots, social unrest. All these constitute disamenities for urban residents. Urban
living is, therefore, influenced by the trade offs between positive city effects and
negative urban loads.4 City ranking studies of early seventies were designed to
capture these diverse area attributes and study their links with the urbanization
and migration trends and quality of life of urban residents.
Beginning 1990’s, these ranking exercises received a considerable make
over. Initially developed to measure QoL differences across metropolitan areas
and to assess their link with the location decisions of firms and individuals, these
rankings have assumed more dimensions over time. Now, they are used as a
promotional tool for city marketing (“to put the area on the map”) to attract
businesses and residents. The onset of globalization has changed the context
within which development takes place. It has altered considerably the geography
of capital (both physical and human). The ability of transnational corporations to
relocate their operations across the globe has placed cities in a new set of
relations with capital, where capital is highly mobile and the relative position of
cities much weaker (Rogerson 1999). The increased “fluidity of capital” has
enhanced the relevance of city rankings as cities try to create a niche for
themselves in this competitive environment by offering a “new set of local place
attributes”—the QoL being one such factor. “Cities tend to market themselves
rather like competing consumer goods… city administrations find themselves
impelled to establish some unique quality for their city, some magic ingredient
that no other city can precisely match” (Hall 1995: 13). It is in this context of
vigorous efforts by urban mangers to “place their area on the map” and make it
look more competitive that the roots of recent (popular) city rankings are
located.
Recent research also suggests that places attract human capital and talent
by offering a range of lifestyle amenities. Individuals with high levels of human
capital are economically more mobile and have more options in their location
decisions. Cities offering more lifestyle opportunities—termed “entertainment
machines” by Lloyd (2001)—draw such talent to themselves (Florida 2002).
Glaeser, Kolko, and Saiz (2001) write that high human capital workers increase
the productivity of a region; at the same time, high human capital areas are
pleasant places to live in. Cities must attract workers on the basis of QoL if they
are to remain strong. Urban amenities are crucial factors that determine urban
viability and growth. Shapiro (2006) contends that improvement in QoL
accounts for 40% of employment growth for college graduates in US
metropolitan areas. City rankings are used to attract human capital and
“consumer power”—consumers with money—into the region (Rogerson 1999).
These rankings are often used as a political tool as well. The European
Union, for example, considers “the improvement of QoL” as a principal
objective in its general framework of sustainable development. The Committee
of the Regions (1999) recommended setting up a “system of local and regional
4
Cicerchia (1999) qualifies positive city effect as ‘access to superior urban functions,
opportunities and services’, while urban load refers to congestions and environmental degradation
[cited from McCrea et al (2006)].
8
5
See also Fahey, Nolan, and Whelan (2003).
6
In particular, city rankings have been around for almost three and half decades. Ham, et al
(2004) write that the idea of rating places is not new and the earliest effort to rank areas goes as far
back to 17th century America when places with plentiful game, heavier livestock supply, and low
probability of death from Indian attacks were considered more “livable”.
7
This is cited from Slottje (1991).
8
See Booysen (2002) for a review of composite indices of development. Lijn (undated) has
also compared a modified HDI and PQLI for 133 countries.
9
Cobb (2000) summarizes Sen’s argument as: “QoL derives from states of being and
opportunities for doing... Without capabilities associated with being (such as health, social
connections, and self-esteem) and doing (political activity, intellectual challenges, and engaging
work) a person is not able to take advantage of the benefits… [Cobb (2000): 10].
9
10
The issues of definition and measurement of QoL, objective and subjective indicators will
be dealt with later in the paper.
10
11
For example, birth and death registration, registration at unemployment bureaus etc.
12
Rogerson (1997) adopted this approach in measuring QoL in British counties. Turksever
and Atalik (2001) have also used this approach in estimating QoL in metropolitan areas of Istanbul,
Turkey.
13
Table 1
QoL Factors Used to Assess Key City Rankings
QoL Factor Smith Liu Boyer and Rogerson, Burnley Hart, PCC
Savageau et al et al
1973 1976 1981 1988 1988 1989 1990
Environment/pollution X X X X X
Atmosphere/peace and X X X
quiet
Climate X X X
Lifestyle opportunities X
Employment X X
Retirement X
Housing costs and X X X X X X
access
Healthcare/public X X X X X X
health
Crime/public safety X X X X
Transport/traffic flow X X X X
Education X X X X X
provision/levels
Recreation X X
Economy/business X X X
climate
Arts/cultural diversity X X X X
State X
taxes/development aid
Commercial space X
Proximity to X
suppliers/market
Food costs/cost of X X
living
Political environment X X
Wages X X
Source: Rogerson (1999).
Table 2
Summary of Dimensions Used in QoL Studies
Dimension % of Studies Using
the Dimension
Economy 59
Environment 59
Social 59
Safety 53
Education 53
Health 47
Housing 41
Amenities 35
Transportation 35
Infrastructure 24
Density 12
Climate 6
Source: Lanteigne (2005)
conditions of life. “These ranking exercises treat the attributes of a good life as
a location to be purchased” [Cobb (2000): 9], and have predominantly become
‘place based’ rather than ‘people based’.
Since the QoL index is a weighted index, another issue that needs to be
tackled is the weighing scheme. Early efforts to rank cities, e.g., by the Places
Rated Almanac, assigned equal weights to all categories. However, people do
not accord equal importance to different factors affecting their lives. Table 3
ranks those factors that people consider important to their lives. Rogerson
(1997) used the survey method to assign relative weights in which respondents
were asked to rank components of QoL index according to their priorities. The
principal component and hedonic methods can also be used to derive weighing
scheme (Slottje 1991).
Table 3
Items Considered Most Important in People’s Lives
Priority Item
1 Relationship with family/relatives
2 Own health
3 Health of close friend/family member
4 Finances/housing/standard of living
5 Relationships with other people
6 Availability of work/ability to work
7 Other (crime, politics, happiness/well being)
8 Social life/leisure activities
9 Conditions at work/job satisfaction
10 Education
11 Religion/spiritual lore
12 Environment (pollution, rubbish, noise, safety, and
cleanliness)
Source: Rogerson (1999).
Summing up, measuring the diversity of urban centre and urban life as
such is fraught with many methodological issues. These include: choice of
indicator (objective vs. subjective); dimensions to be included in the
construction of the indices; and questions regarding aggregation technique (e.g.,
weights to be assigned to different factors). Having discussed these, we now turn
to major city ranking initiatives being undertaken around the world.
16
UN-HABITAT GUIP
The GUIP is an initiative under the United Nations Human Settlement
Program. The first Global Urban Indicator Database (GUID1) was launched in
1996,13 and data from 237 cities was collected using 1993 as the reference year.
A city development index was derived to rank cities according to their level of
development. The Istanbul+5 conference (2001) reviewed the indicators
program and another round of surveys was conducted in 1998. The second
Global Urban Indicators Database (GUID2) collected data from 232 cities in
113 countries. Data on a number of indicators (Table 4) were collected from
secondary sources based on the latest available information, and converted to
US dollars using guidelines provided by the International Monetary Fund
(IMF)’s International Statistics Yearbook 1998.
Table 4
UN-HABITAT GUIP List of Indicators
Tenure Tenure types, evictions, house price and rent-to-income ratios, land price
to income ratios
Infrastructure Water, sewerage, electricity, telephone
Health and Under-five mortality, life expectancy at birth, literacy rate, combined
education enrollment
Water Water consumption, water prices
Waste Wastewater treated, formal solid waste disposal, formally recycled
management
Population Total population (metropolitan area, urban agglomeration, national
urban, national), population growth rates
13
Established in 1988 as the Housing Indicator Program, its scope was later broadened in
1993 to measure sustainable urban development prior to the HABITAT II Conference in 1996.
17
Economic GDP per capita, city product, household income, informal employment,
and unemployment rate
workforce
issues
Transport Travel time, transport modes to work
Safety Reported crime rates
Local Local government revenue and expenditures
government
Table 5
Calculation of CDI by UN-HABITAT GUIP
Index Formula
Infrastructure 25 x water connections + 25 x sewerage + 25 x electricity + 25 x
telephone
Waste Wastewater treated x 50 + formal solid waste disposal x 50
Health (Life expectancy – 25) x 50/60 + (32 – child mortality) x 50/31.92
Education Literacy x 25 + combined enrolment x 25
Product (log city product – 4.61) x 100/5.99
CDI (Infrastructure index + waste index + education index + health index +
city product index) /5
Source: UN-HABITAT GUID2.
14
The participating cities include: Bangalore (India), Bishkek (Kyrgyz Republic), Cebu,
Mandaluyong, Naga (Philippines), Colombo (Sri Lanka), Dhaka (Bangladesh), Hanoi (Viet Nam),
Hohhot, Honk Kong (China), Kathmandu (Nepal), Lahore (Pakistan), Medan (Indonesia),
Melbourne (Australia), Phnom Penh (Cambodia), Seoul (Republic of Korea), Suva (Fiji Island), and
Ulan Bator (Mongolia).
19
Table 6
Calculation of CDI by ADB CDB
Index Formula
Infrastructure 25 x water connections + 25 x sewerage + 25 x electricity + 25 x
telephone
Waste Wastewater treated x 50 + formal solid waste disposal x 50
Health (Life expectancy – 25) x 50/60 + (32 – child mortality) x 50/31.92
Education Literacy x 25 + primary enrollment x 25 + secondary enrollment x 25 +
graduates/350 x 25
Product (log city product – log 400) x 30/2.71 + (log of residential density –
1.98) x 30/4.86 + 40 x (log population – 2.78)/6.7
City (Infrastructure index + waste index + education index + health index +
development city product index)/5
Congestion (log travel time – 2.08) x 30/2.71 + (log of residential density – 1.98) x
30/4.86 + 40 x (log population-2.78)/6.7
Connectivity (log Internet + 0.71/6.34) + log corporations/6.7 + (log tourism –
3.42)/5.75 + (log flights – 4.33)/5.27 – 0.07/3.3
Source: ADB CDB Database (2001).
• utilities,
• household supplies,
• food away from home,
• health and personal care,
• transportation,
• clothing and footwear, and
• sports and leisure.
Information is also collected on additional 25 items to calculate
Accommodation costs table, Education costs table and Business Travel
expenses. Mercer calculates three cost-of-living indices: (i) the reversible mean-
to-mean index, (ii) the efficient index, and (iii) the convenience index. The
mean-to-mean index compares mean prices between the base city and host city.
The efficient index compares the average of low and mid-prices in the base city
with mean prices in the host city (for experienced consumers). The convenience
index compares the average of low and mid-prices in the base city with high
prices in the host city (for inexperienced consumers).
Table 7
Weights of EIU Cost-of-Living Index
Category Weight
Shopping basket 25.0
Alcohol beverages 3.5
Household supplies 4.5
Personal care 4.0
Tobacco 2.5
Utilities 6.5
Clothing 13.0
Domestic help 3.5
Recreation and entertainment 18.0
Transportation 19.5
Total 100
The EIU city report gives two indices: (i) the mean index, which
compares average prices in the home city with average prices in a foreign city;
and (ii) the high index, which compares average prices in the home city with the
highest prices in a foreign city [EIU (2005a)].
15
Individual indicators are given a rating of 1 to 5. They are then weighed according to the
above breakdown and converted into an overall index.
23
Table 8
Weights of EIU QoL Index
Category Weight
Stability 25
Healthcare 20
Culture and environment 25
Education 10
Infrastructure 20
Total 100
• community safety,
• demographics, and
• housing.
About 7,800 respondents were interviewed via telephone (500 from each
city/district, and 1,500 from outside the sample cities/districts).
16
The system started with 16 municipalities in 1999. It was expanded to include four more
municipalities by 2004 and covers 40% of population.
25
Creativity Index
This composite index was developed by Richard Florida to measure the
creative capabilities of American cities. The creativity index is a combination of
four (equally weighted) indices: (i) the talent index, (ii) the high-tech index, (iii)
the innovation index, and (iv) the diversity index. The talent index measures the
creative class’s share of the workforce. The high-tech index is based on the
Milken Institute’s tech pole index. The innovation index measures patent per
capita, and the diversity index measures an area’s openness to different kinds of
people and ideas.
17
This is preceded by their earlier work on social development ranking of districts. See Pasha et al
(1996). Also see Pasha, Mallik and Jamal (1990), Jamal and Mallik (1988) and Pasha and Hasan
(1986).
26
Figure 1
City Developemnt Index
120
100
80
CDI Value
60 CDI
40
20
0
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Fig. 2
Ranking of World Cities by GUO City Development Index
120
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CDI Value
60 L
40
20
0
0 20 40 60 80 100 120 140 160
CDI Rank
Lahore is also a participating city in ADB’s CDB for the Asia and Pacific
Region, according to which it falls in the “low-developed city” category,18
which ranks low on the connectivity index (24) and high on the congestion
index (73.1). Figure 3 plots connectivity index and figure 4 plots congestion
index.
Fig. 3
120
100
80
60
40
20
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Ph
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Connectivity
18
The ADB CDI is similar to the UN-HABITAT’s CDI. We therefore do not discuss
Lahore’s position on this index.
28
Fig. 4
100
90
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Congestion
Table 9
Mercer Cost-of-Living Index
Rankings Cost-of-Living Index
March 2006 March 2005 City Country March 2006 March 2005
68 105 Mumbai India 79.9 70.8
131 127 Dhaka Bangladesh 62.5 62.5
139 141 Bangalore India 56.4 51.7
140 136 Karachi Pakistan 56.1 56.1
Source: Mercer Human Resource Consulting, Cost-of-Living Survey,
Worldwide Rankings 2006.
The EIU’s QoL index for 2005 rates life in Karachi as extremely hard,
with an index value of 60% (0% means no hardship and 100% means extreme
hardship, a score above 50% means that life is severely restricted due to
terrorism, etc.).
29
It is evident that only two Pakistani cities (Karachi and Lahore) feature in
international/regional comparisons, while other major cities do not appear in the
picture.
which are based on widely shared values” (Diener and Suh 1997: 194).
Moreover, objective indicators are easier to compare across time and
geographical space [Costanza, Farley and Templet (2002)]. Their weakness lies
in the fact that they are chosen in an ad hoc manner, depending on the subjective
opinion of the researcher selecting them. Diener (1995) has proposed a value-
based index of QoL that uses variables that reflect a society’s common values.
The greatest limitation of objective indicators is that they might not reflect
people’s experience of well being (ibid).
Subjective indicators, on the other hand, measure individual perceptions
of well being based on a respondent’s judgment rather than that of policymakers
or researchers. However, they suffer from the weakness that similar life
circumstances might be viewed differently by different respondents, making it
difficult to take individual responses as valid and accurate. Such indicators
might not reflect the objective quality of community life as much as
temperaments and personal relationship (Diener and Suh 1997).
Which factor should be given more importance is also controversial. How
should weights be assigned to different factors? In the initial years of city
rankings (the late 1970s and early 1980s), the practice was to weigh each factor
equally. This practice was discontinued since people are apt to differentiate
between the importances of different factors. Currently, statistical procedures
like principal component method and the hedonic approach are used to assign
weight. Rogerson (1997) has worked around this problem by using a survey
method in which respondents were asked to order different attributes according
to the priority they attached to each (cited from Rogerson 1999).
To estimate QoL in Pakistani cities, this paper recommends that objective
indicators be supplemented by subjective ones, since both capture different
dimensions of well being. Objective indicators measure “facts” (such as housing
and infrastructure) while subjective indicators focus on “softer” issues such as
the perceived adequacy of dwelling (Veenhoven 2004). The first type measure
attributes at the city level and the latter at a personal level. This is in line with
Rogerson (1999) and endorsed by Diener and Suh (1997) and Veenhoven
(2004). “What is good for the people cannot be determined without taking their
views into account” (Diener and Suh 1997: 207). An objective indicator should
include attributes around which consensus has emerged. These include measures
of economic well being, housing, health and education, work opportunities,
infrastructure (public services), transport, land, environment, public safety,
recreation, cultural activities, and urban governance. The exercise should be
done on an annual basis. This should be supplemented by an annual residents’
perception survey about their quality of life. With respect to the performance-
based city rating system for Pakistan, Table A1 (appendix) lists factors used in
the construction of City Development Index (CDI) for Lahore and Karachi,
which can serve as a useful starting point for developing such a system. The
next important issue in this exercise concerns data. City level data on most
indicators is not readily available. While previous studies [Jamal, Khan, Toor
and Amir (2003), Pasha et al (1998) etc.] had used census data for their analysis,
it is not a suitable source if conditions/performance of cities and quality of life is
31
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34
Appendix
Table A1
Dimensions of CDI as measured by ADB
Demographic City Population