Bigger sometimes simply means it’s just bigger

“Is that all you got to say this week?” HomeFree asks as he bends over my laptop at the diner. He’s that kind of fellow. Named for his mother’s favorite movie star, he is inquisitive with a preference for the obscure.

“Yes,” I reply. “I’m writing about the relationship between population in a metro area and its economy as measured by GDP.”

“Bigger is better,” he says. “The more people, the more and better things an economy can produce. That means the value of those things (their GDP) is also greater.”

“Not true,” is my rejoinder. “I took all 382 metro areas in the U.S. and found no meaningful statistical relationship between their population size and their Gross Domestic Product.”

“Can’t be,” HomeFree says. “Economists always talk about the good things that happen as an urban area gains population. Growth has been a virtue going back to biblical times.”

“No,” I insist, “there’s much more to it. There’s natural resources, location, education of the population, industry mix, and other factors at work. High per capita GDP doesn’t mean people are better-off. It does indicate the capacity of the economy to be productive and, perhaps, meet the needs of the population.”

I proceed, “Which Hoosier metro has the highest per capita GDP?”

I give him no time to answer. “It’s Columbus, ranking 18th out of those 382 metro areas. And what’s their population? They’re down there in 376th place.”

HomeFree seems puzzled; I press my advantage. “Elkhart-Goshen is just five places behind Columbus in per capita GDP, but ranks higher (217th) in population.”

“No relationship between population and GDP per person?” he asks.

“Right,” I say, “but Indianapolis ranks 34th in population nationally and 32nd in GDP per capita. Muncie is even more ‘balanced’ than Indy; it’s the most ‘balanced’ in the nation, ranking 329th in both measures.”

“How about New York, Chicago and other big cities?” he asks.

“Some of the biggest in population are also among the top in GDP per capita. New York is first in population and 11th in per capita GDP, but Chicago is third in population and only one place in front of Indianapolis in per capita GDP. The San Jose metro in California, on the other hand, is right behind Indianapolis in population at 35th and is second in per capita GDP. Size alone doesn’t tell the story.”

“Just think about Midland in the oil fields of Texas; that metro leads the nation in per capita GDP with lots of machinery producing a highly valued product, crude oil, with the 246th largest population.

“Casper (WY) with all that low sulphur coal is 12th in GDP per person, but 375th in number of persons. Weirton (WV)-Steubenville (OH) straddles the Ohio River in the heart of high sulphur coal and closed steel plants, struggling with 339th place on the GDP scale and 321st in population.

“It’s not how big you are, but what you can do with what you’ve got.”

Morton Marcus is an economist, formerly with the Indiana University Kelley School of Business. Send comments to dr-editorial@greenfieldreporter.com.