HPU Economist Article Featured in Popular Marginal Revolution Economics Blog

HPU Economist Article Featured in Popular Marginal Revolution Economics Blog

Gerard Dericks

HPU economist Gerard Dericks, Ph.D., has co-written an article in the December 2021 issue Journal of Economic Geography entitled, "The billion pound drop: the Blitz and agglomeration economies in London" that was showcased in the popular Marginal Revolution economics blog. Dericks is the Director of the Center for Entrepreneurship and Economic Education at HPU. 

“It has been known for a long time that greater urban densities positively impact economic output,” said Dericks. “The more productive people we are surrounded by, the greater opportunity there is for the cross-fertilization of ideas and gainful cooperation. However, land-use regulations which prevent development stymie such ‘agglomeration economies.’” 

The article successfully demonstrates that the more heavily bombed areas in London during World War II exhibit taller buildings (and greater worker density) today, and that doubling worker density increases economic output by about 20%. Counterfactual economic simulations run by the authors show that if the Blitz had not occurred, the loss of higher-density redevelopment would cause London’s present-day gross domestic product to drop by about 10% (or £50 billion).  

“This paper represents a unique contribution to the literature,” says Dericks, “in that we exploit the quasi-experimental setting of the Blitz bombings to estimate the magnitude of these positive effects and find these to be 2-10 larger in London than those previously estimated elsewhere. Our research suggests that the costs of constraining worker density in other global cities such as New York and Tokyo, appear to be much greater than previously thought, and therefore that planning policies in such cities (and perhaps elsewhere) should be considerably relaxed in order to maximize social welfare." 

Dericks joined HPU in October 2021 and leads all aspects of the Center for Entrepreneurship and Economic Education. The Center’s primary focus now is launch its "Teach the Teacher" certification course at HPU, which is specifically designed for high school social studies and economics teachers. This education will equip Hawaiʻi’s teachers to teach modules in basic economics with free market principles. Teachers will then take these principles and share them with their high school students. 

To read the complete article in the Journal of Economic Geography click here.