Research profile: The economics of geography


Ever wondered why it’s hard to find an interesting meal in small towns? And sometimes even in big cities?

Nathan Schiff

Assistant Professor Nathan Schiff has, and he is using his interest in urban economics to answer those questions and numerous others.

Schiff is working on several projects concurrently. The first relates to determining why some cities offer a much greater variety of non-tradable consumer goods, products, or services that must be consumed where purchased, like those offered by bars, concert halls, movie theaters, and restaurants. In order to answer this question he is focusing on factors that affect the varieties of restaurants in cities.

Schiff analyzed restaurant varieties in more than 700 cities using information he obtained from online databases in conjunction with other sources of information on city populations and geography. He came to the conclusion that it is not just population size and characteristics, such as ethnic diversity and median income, that affect variety, but also the clustering of people in small geographic spaces. When people with similar tastes live in close proximity to each other they provide a sufficient customer base to support a restaurant varietal that couldn't exist if the same people were more widely dispersed. This difference in population densities can help to explain why otherwise comparable cities may have different levels of product variety.

A second area of research is focused on how prices and taxation policies in different U.S. states affect cross-border shopping patterns. He is studying states that border each other but have different lotteries. While lottery tickets in both states have the same one dollar list price, differences in the jackpot values lead to different payouts. His research has shown that when these payouts differ significantly people living near a state border will drive to another state to buy their tickets.

The degree of cross-border shopping has implications for state-level tax policy. If a small state with a large border population raises its sales tax, residents of that state and others living along the border, may choose to purchase products in the location where taxes are lower. This would result in the tax increase yielding less tax revenue per capita than for a larger state with sparsely populated borders (and thus less cross-border shopping). Schiff's study shows that the size of the border population can have a direct impact on the interdependence of state policies.

Visit Dr. Schiff's profile for more information on his research.