How can cities use economics for better decisions?
Cities are shaped by many choices — what to invest in, what to postpone, and how to balance immediate pressures with long-term well-being. But behind these decisions lies something we don’t talk about enough: economics. In this Urbcast episode, economist Sanni Nørgaard Breining from Ramboll Management Consulting explains how an economic lens can help cities avoid costly mistakes, understand long-run impacts, and create more resilient, inclusive places.
Why long-term thinking matters more than ever
In academia, Sanni studied how life shocks — illness, premature births, health incidents — affect people and families over time. These findings taught her how long-run effects can be, even when they’re invisible in the short term.
Today, she sees the same patterns in city development. Urban investments with benefits far beyond the political cycle — safer streets, climate adaptation, green stormwater systems, resilient infrastructure — are often the first to be cut. Yet, as she explains, this short-termism can be extremely expensive. Take Copenhagen’s 2011 cloudburst: over DKK 6 billion in damage. A large share of that could have been prevented with earlier climate investments.
But the real challenge is psychological and economic: Future risks feel abstract. Benefits that arrive after 4–10 years don’t fit neatly into budget cycles. “If we can show a credible story that making these investments is worth it, that becomes our anchor when tough decisions appear.” Her team’s research supports this. A European study showed a clear link between urban resilience scores and city GDP growth. Strong resilience isn’t a luxury — it’s a driver of prosperity.
The housing affordability paradox: success creates pressure
Copenhagen’s success brings another challenge shared by many thriving cities: affordability.
The pattern is simple but painful:
As cities become more livable and attractive, more people want to live there.
Demand rises faster than supply.
Prices increase.
Essential workers get pushed out.
Inequality grows.
This, Sanni argues, is not something we can “design” our way out of — cities must build their way out by expanding affordable options and ensuring mixed neighborhoods. Diversity is not only a social value. It’s an economic one. Without nurses, teachers, service workers and young families living near the core, the city loses both resilience and quality of life.
Who pays — and who benefits?
One of the biggest barriers in city economics is that the investor and the beneficiary are often not the same.
A city may invest in green mobility, public space upgrades or health-improving initiatives. But the national government reaps the healthcare savings. Or private investors benefit through rising land values. This mismatch often leads to underinvestment — even when society as a whole would gain. Sanni argues that better data, better modelling and more transparent partnerships can help align incentives so that each actor sees the value of contributing.
Placemaking, “good vibes,” and the economics of belonging
Placemaking might sound soft — “good vibes” and beautiful squares — but Sanni’s team set out to quantify it. Inspired by Jan Gehl, they created a placemaking score measuring how people perceive their local area: comfort, activity, social interaction, desire to stay, overall atmosphere.
Then they linked the scores to:
housing prices
perceived loneliness
neighborhood satisfaction
The results were interesting. Areas with strong placemaking not only had higher housing value but also lower loneliness. Placemaking, it turns out, is not only aesthetic. It has measurable social and economic impact. But it raises another tension: improvements can lead to gentrification. Sanni emphasizes the need to pair quality public space with policies that preserve diversity.
Beyond GDP: measuring what really makes cities work
GDP has long dominated economic thinking, but it tells only part of the story. Sanni points to the rise of well-being economics, doughnut economics, and new frameworks that include:
social cohesion
equality
health
environmental sustainability
These dimensions are essential for long-term prosperity — but they’re not always capitalizable in financial terms. For change to stick, Sanni argues, cities must connect social value to financial incentives where possible, so public and private actors can act on the same logic. Her work on placemaking provides early evidence: thriving communities are good for both people and economic outcomes.
Cities under pressure: the need for evidence-based choices
Cities today face a widening list of responsibilities: schools, mobility, safety, climate resilience, housing, health, public life. All under tight budgets and mounting external pressures. The risk? Reacting with fear-based or politically convenient decisions.
Sanni’s summarized the talk by: “Start with data, start with evidence. It won’t solve everything, but it will stop us from making the wrong choices.”
