We live in a world of lists. There are to-do lists and honey-do lists, shopping lists and laundry lists.
Wikipedia lists 419 entries in its “Lists of lists” category, from “Lists of A&M Records Artists” to “Xenosaga Lists.” Buzzfeed.com has built its following with quirky lists, such as “24 Classic Pop Songs That Peaked At Number Two” and “30 Cats Hanging Out In Shoes.” And, naturally, “The 33 Most Important Lists Ever Written.”
There’s something about the list that appeals to the human mind’s craving for order. And when the list-maker makes the effort to rank the items on his list? Well, that really strikes a chord.
Public policy makers like to make lists and indices, too, ranking countries, states and cities by their traffic congestion, environmental friendliness, you name it. But the perennial question with many of these lists and rankings is: Do they tell us anything truly valuable?
So I was intrigued recently when I saw the first attempt at ranking America’s metropolitan areas by their degree of economic freedom.
Such rankings have long existed for countries and states. But no one had compiled one for U.S. cities until Dean Stansel, economics professor at Florida Gulf Coast University, tried his hand at it last year.
The good news: Stansel found metro Atlanta ranked 60th out of the nation’s 384 metropolitan statistical areas, as determined by the Census Bureau.
The bad news, part 1: Due to data limitations, those rankings reflect the situation in 2002, the last time the Census Bureau reported figures that are central to Stansel’s index.
But fear not. There is more value in knowing which cities had more economic freedom back in 2002 than you might think.
For one thing, 2002 was toward the beginning of the last complete business cycle. Economists like to observe and compare how economies performed from one peak to another. The U.S. economy peaked in March 2001 before entering a brief recession, and then again in December 2007 before entering the Great Recession. It hasn’t peaked again since then (or so we hope).
So, how did the cities with more economic freedom, according to Stansel, perform between those peaks?
Far, far better than those with less.
Looking at one key metric, employment growth, we see a vast advantage for the freer metro areas. (I limited my comparison to the 51 that have populations of at least 1 million, which seems more useful than contrasting, say, metropolitan Chicago with metropolitan Valdosta.)
Total employment in the top 17 (one-third) of those metro areas between March 2001 and December 2007 grew by 9.3 percent. In the middle 17, it grew by just 3.2 percent.
In the bottom 17, it grew by a paltry 1.2 percent.
The average ranking (out of 384) for the metro areas whose job growth outpaced the national average — places like Houston and Nashville — was 113.
The average for those which experienced sub-par growth — places like Birmingham and Denver — was 217.
The average for those that actually lost jobs during an economic expansion — places like Detroit and San Francisco — was 277.
However I sorted the data, the freest cities on Stansel’s index performed best during those years.
Now for the bad news, part 2: While Atlanta was one of the freest metros, its job growth ranked near the bottom of that cohort.
Why did that happen? That’s a question I’ll examine in the weeks to come.