New Data Tool Tracks Gentrification

When a new Starbucks opens in a community, residents may have a positive or negative reaction, but a study finds that their homes will appreciate it.

A Harvard Business School study on gentrification used Yelp data to assess how the presence of certain businesses affects home prices. The findings show that each 10-unit increase in the number of Yelp reviews for a business correlates to a 1.4 percent increase in home prices in the given ZIP code, "The most natural hypothesis to us is that restaurants respond to exogenous changes in neighborhood composition, not that restaurant availability is driving neighborhood change." CNBC reports that the paper's conclusion writ large is the "strong association" between gentrification and growing numbers of grocery stores, cafés, bars, and dining establishments.

A hot topic in policy debates worldwide, gentrification is defined as the process of rebuilding homes and businesses accompanied by an influx of middle-class or affluent people at the expense of earlier, often poorer residents. One big issue is the lack of consistent data to determine the effects of the trend — positive or negative. The Harvard economists said their study, the first of its kind using Yelp data, shows there are new, more accurate ways to analyze the emotional issue.

Read more