Economic growth and the weather

Very interesting post on the Economix blog that contrasts the decline of Pittsburgh and the rise of Phoenix. While a variety of factors have played a role in this development including things like transportation costs, one of the most significant -- and least obvious -- may be the weather:

There is no variable that predicts urban population growth in the 20th century better than January temperature. The figure below illustrates the connection between metropolitan area population growth from 1980 to 2000 and the January temperature. While 19th-century cities formed in places where companies had a productive edge, generally because of access to water ways or coal mines, 20th-century cities formed in pleasant places where people wanted to live.

It's useful to keep this in mind when people talk about economic growth, which seems to invariably revolve around public policy. Public policy alone, however, does not dictate where growth occurs. For example, take a look at this ranking of economic freedom of the 50 states. It stands to reason that greater economic freedom will correspond with greater economic growth, and this is largely true. That said, I would not be quick to write off #49 California in large part because its wonderful weather and proximity to the ocean makes it a desirable place to live. Meanwhile, I have a difficult time seeing #1 Kansas become a leading economic growth engine simply because it is mostly a flat, rather featureless area that is hard to get people excited about.

vs.

This is not to downplay the role of factors such as taxes and regulation -- California has more people leaving the state than moving in largely because of the onerous burden it places on people and businesses -- but we should keep in mind that there are other forces at work.