Tuesday, February 09, 2010

Actuaries Of Migration

Residents are fleeing Long Island. At least, that's the hype. Every community has a unique out-migration profile. General trends might apply to a large number of places (e.g. relocation from Rust Belt to Sun Belt). A finer look reveals the power of path dependency:

Lore has it, as Ellie Toczek tells the story, a friend of a friend moved a long time ago to The Villages. The friends from the Long Island community of Smithtown, N.Y., found The Villages so appealing they became the catalyst for what’s become an ongoing exodus from Suffolk County that included folks like Ellie and her husband Steve.

While Ellie laughed as she told the story, this tale revealed considerable insight about migration trends into The Villages, recently released Internal Revenue Service data showed. ...

... Then there are stories that involve folks like Ellie and her husband.

About two years ago, their son-in-law Michael Butt heard about a teaching opportunity with The Villages Charter School, Ellie said. The opportunity made sense to Michael and his wife Jessica since his parents Warren and Linda Butt lived in the Village of Lynnhaven.

Consequently, Ellie and Steven decided they wanted to be closer to their daughter and her family.

“We just followed the grandchildren,” Ellie said. “Now we just enjoy our lives tremendously.”

Conversely, cities such as Indianapolis suffer from a dearth of networks pointing people there. I bring up Indy because of the indignities it suffered thanks to the Colts playing in the Super Bowl. Via Aaron Renn's Twitter feed, I followed the bluster that is sometimes called "place smack". From The New Yorker:

And once I got past thinking I had any original thoughts about the irony of two sexagenarians singing about teenage wastelands, I noticed that everyone was caught up in the drama around the fate of New Orleans. It is a great sports story—a team that had never won a Super Bowl, that had been devastated by Hurricane Katrina, makes it to the Super Bowl and faces a quarterback from New Orleans. (On my only trip to Louisiana, back in the early nineties, I went out with some high-school teachers on a Friday night, and we stopped by the football game; Peyton Manning was running the offense.) But as a lifelong New Yorker working to overcome his Saul Steinbergian perspective on the universe, I wondered: But what about Indianapolis? What about its sense of place?

For help, I called my former colleague, Matt Dellinger, a proud Indianapolan based in Brooklyn. I expected a defense of the city, but at first he rattled off the nicknames used to belittle it: Indianoplace, Naptown. “We don’t have the same kind of—we did steal the team, after all,” he told me. I told Matt that if he—a writer working on a book about a highway running through Indiana—couldn’t suggest a narrative other than the void, I didn’t know who could, and he replied, “The pleasures of Indianapolis, and Indiana in general, are more subtle than your average news organization can figure out in a day.”

No one is going to move to the void, even if the taxes are low. I'm not disparaging Indianoplace. I empathize. After all, I celebrate Shittsburgh daily. Most of the Rust Belt is nowhere, which is why in-migration tends to be so anemic. If you are looking to poach talent, then best to look in other shrinking cities.

One of these days I need to do some research and figure out if scholars have studied chain migration for boomtowns in the United States. The modeling of this pattern might help regions figure out better strategies for attracting talent. How do you lure a person to a place he or she doesn't know?

Actuaries might have a working answer. Statistical technologies allow a person from far away to assess risk. You needn't know a person to functionally evaluate them. For example, an article about figuring out who might strategically default on their home loans:

On Monday, Loan Value Group L.L.C. of Rumson, N.J., introduced a program that it offers to lenders and mortgage servicers who want to identify borrowers most likely to engage in what’s come to be known as a “strategic default.” Once those lenders find the likely candidates, they can approach them pre-emptively with an offer of money that they would get later if they satisfy the terms of their loans.

To identify those borrowers most likely to strategically default, Loan Value Group analyzes loans using about a dozen criteria. These include negative equity level (say a loan-to-home-value ratio of 115 or higher), income level and geographic location. Then, it uses similar criteria and behavioral economic theory to determine the necessary reward amounts for such borrowers.

In the case of talent attraction, the trick is to identify those who are most likely to move to your Rust Belt city. The next step is to incentivize ("necessary reward") the relocation. Successful poaching builds up trust equity in a target locale (i.e. sending region) and the migration pathway is established. Bringing it back to finance, you hear from a friend about someone who was offered money to stick with a mortgage. You approach your own lender about the program as an alternative to walking away from your home.

The analogy is crude, but I think that's how Indianoplace could get on the map for outsiders. You have to do more than make a cool city. You have to get the word out effectively. Please see The Villages and Suffolk County, New York.

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