new Harvard Business School paper uses Yelp data to find that the entry
of each Starbucks into a ZIP code is associated with a 0.5 percent
increase in housing prices within a year.
- “The presence of a
Starbucks is far less important than whether the community has people
who consume Starbucks,” the paper found.
- The economists say the
study is the first of its kind to track gentrification using a platform
such as Yelp, a potential new tool for policymakers hoping to monitor
"It’s not clear whether housing prices are rising due to the Starbucks
opening itself or simply because more affluent customers that would go
to the coffee chain have moved into the area.
professor Edward Glaeser said Yelp data reveals it may be the latter.
The study found that each 10-unit increase in the number of reviews is
associated with a 1.4 percent increase in housing prices in the ZIP
“The most natural hypothesis to us is that restaurants
respond to exogenous changes in neighborhood composition, not that
restaurant availability is driving neighborhood change,” the paper
This is the broader point of the paper, which surmises
that gentrification is “strongly associated” with increases in the
numbers of grocery stores, cafes, restaurants and bars."
"What remains uncertain, though, is any idea of causality, Glaeser wrote.
“Yet, it seems true that Yelp establishments from 2007-2011 predict
changes in education levels over the next five years, but education from
2007 to 2011 does not predict increases in the number of Yelp
establishments, once we control for the initial level of Yelp
So Starbucks may not be causing gentrification, but its arrival may confirm the gentrification trend.
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