Segregation and the Provision of Spatially Defined Local Public Goods

Abstract

Racial separation may be the result of many factors: variation in income, occupational differences, and individual preference come to mind immediately. Indeed, Thomas Schelling argued in 1969 that even mild individual preference for like neighbors could produce dramatic segregation in neighborhoods. This paper examines the robustness of his conclusion in two slightly more realistic environments. One adds the complication of vacant lots and more diverse utility-based agents. Each of the cases simulated here produced equilibria with some degree of racial segregation. The results therefore sustained Schelling's conjecture that individual intent is not necessarily related to the collective result of neighborhood segregation. In all of the simulations, each individual would have been content with a local neighborhood in which approximately half of the residents were of the same race; but all individuals acting together with this motive seemed to produce segregated neighborhoods. The Schelling conjecture was undermined to some degree by inclusion of local public goods, but only if they were highly valued. In those cases, proximity to the public goods worked against the disutility of mixed neighborhood so integrated neighborhoods became more likely. If the public goods were not highly valued, though, the segregation persisted or unstable and chaotic neighborhoods persisted.