'Microeconomic Modeling in Urban Science': The success of the theory that redefines the study of cities

This is a machine translation of the original release issued in Spanish

PRESS RELEASE from ISCI
October 2024

The book Microeconomic Modeling in Urban Science , written by Francisco Martínez, has reached the mark of 10,000 copies sold, an unusual milestone for a work of a technical nature. Martínez, who is dean of the Faculty of Physical and Mathematical Sciences at the University of Chile and researcher at the Institute of Complex Systems Engineering (ISCI), has captured the attention of academics and specialized professionals from around the world with his innovative approach to understanding the complexity of cities.

The book proposes a microeconomic approach that, through stochastic simulation models, offers new tools to address the challenges of contemporary cities, from urban planning to resource allocation.   “We analyze each individual as an agent who makes decisions to maximize his or her utility or happiness, or profit in the case of firms, which is the usual microscopic perspective in microeconomics, which is why it is called microeconomic modeling,” explains Martínez, highlighting the importance of considering individual behavior in urban analysis.

The theory presented in the book challenges traditional conceptions of urban development . “Many of the common arguments about cities fall apart when we understand that there is a law that governs their growth and functioning,” says Martinez. This “universal law” he refers to is comparable to the law of gravitation, in the sense that, despite cultural and geographical differences, cities tend to evolve in a similar way due to underlying patterns in human behavior.

Martínez's work is not only relevant for its interdisciplinary approach, which integrates economics, engineering and geography, but also for its ability to make complex concepts about how cities function more accessible. The author describes the city as a system of agents—households, businesses, governments—that interact in a physical and economic space. Using big data and advanced simulations, he has managed to make his model represent the real dynamics of the urban market.

"I worked from 2010 to 2016 on developing a theory capable of reproducing and explaining the law that Geoffrey West had empirically found in cities worldwide," says Martínez, referring to the well-known theoretical physicist whose work has been fundamental in the study of complex systems. This intellectual collaboration has allowed Martínez to develop a model that not only explains, but also predicts urban behavior on a large scale.

The model proposed by Martínez has potential applications in public policy design. Urban planners and decision makers could find in this approach a useful framework for predicting the impacts of different interventions, from investments in transport and real estate infrastructure to changes in land use regulations. The model's ability to explain how investments in public transport can lead to increases in land value, for example, offers a well-founded explanation for understanding who the real beneficiaries of these projects are.

"The price of urban land and housing does not rise, as is assumed, only due to speculation, but because the value of the land captures the greater wealth that is generated when the city grows in production," explains Martínez. This perspective offers a new understanding of the dynamics of the real estate market and its relationship with urban economic growth.

The fact that Microeconomic Modeling in Urban Science has achieved such wide dissemination reflects not only the relevance of its theoretical contributions, but also the growing global interest in understanding the complexities of urban growth. As cities face ever-increasing challenges—from population expansion to the climate crisis—Martínez’s proposed tools are positioned as essential for anticipating and managing the future of cities.