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Honorable Mention

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Professor Costas Arkolakis and Dr. Sun Kyoung Lee


The presence of “agglomeration forces” in production markets is widely accepted and has been recently quantified in the economics literature. Social scientists have done little theoretical work, however, and even less quantitative work, on how the logic of agglomeration might also apply to social groups and the gains that people derive from their social interactions. This paper attempts to bridge this gap by modeling and measuring the benefits in terms of social prestige that arose from the spatial concentration of socialites in Manhattan in the 1920s. I formulate a model of location-based social status determination that illustrates why these benefits might make spatial concentration desirable for members of the social elite. To test the model, I draw on the 1920 and 1924 volumes of the New York Social Register, federal income tax data for New York City residents in the 1920s, and United States Federal Census records to compile a novel dataset containing demographic information, club affiliations, occupations, incomes and addresses of over 700 socially prominent men living in Manhattan in the early 1920s. Treating club memberships as a proxy for social prominence, I exploit an instrumental variable approach, using expected changes in family size as an instrument for neighborhood choice, to measure the relationship between an individual’s residence relative to others in the group and his social status. My results suggest that there are strong, statistically significant benefits in terms of social status that come with living in closer proximity to others in one’s social group; in the context of my 1924 Manhattan data, a move of just a few blocks from 12 West 44th Street to 421 Park Avenue would, on average and all else equal, result in a 54.3% increase in club memberships for the mean individual in my dataset.

Open Access

This Article is Open Access