Urbanity

I define a composite amenity that provides aesthetic and consumption value to local residents: Urbanity. A novel data set of geo-tagged photos shared in internet communities serves as a proxy for urbanity. From the spatial pattern of house prices and photos I identify the value of urbanity in two of the largest European cities, Berlin and London. I find an elasticity of indirect utility with respect to urbanity of about 1%. The aggregated willingness to pay equates to about $1 bn per year in each city or, on average, 1.5% of household income. The results demonstrate the important role cities paly as centers of leisure, consumption and beauty.