Segregation and the Spatial Externalities of Inequality: A Theory of Interdependence and Public Goods in Cities
Conventional wisdom claims that racial diversity undermines public goods provision. I show that class-based differences, instead, can produce incentivizes for cooperation for public goods. Class-based segregation reduces spatial externalities of inequality (e.g., sewage contamination, organized crime) that spill over from impoverished areas (i.e., informal "slum" settlements) to the middle class. Conversely, I argue that in integrated (de-segregated) cities, the scale of such externalities undermines the efficacy of private services (e.g., private security), thereby inducing middle-class preferences for externalities-correcting public goods. Thus, while segregation encourages exit into private service provision, integrated cities produce intergroup externalities that align the middle class with the poor in coalitions that support public goods over private alternatives. I illustrate the theory using focus groups, a proposed quasi-experimental strategy, and an original door-to-door survey of 4,208 households across 420 of the total 456 neighborhoods in the megacity of São Paulo, Brazil. The analysis introduces self-interest in reducing intergroup externalities as a mechanism for cooperation for public goods even in diverse societies. Using embedded mechanism vignettes, I distinguish the mechanism from the affective attitudes –e.g., racial tolerance/prejudice, social affinity– of intergroup contact.
Presenter: Alice Xu
