Economics & Finance / Industry & Sectors / Real Estate & Housing

Why Living in Paris Costs You 39% More: The Hidden Price of City Growth

Pierre-Philippe Combes, Gilles Duranton, Laurent Gobillon

This video breaks down a groundbreaking study from *The Review of Economic Studies* (2019) by Pierre-Philippe Combes, Gilles Duranton, and Laurent Gobillon. It reveals the real cost of living in a big city, using French data to show that for every 10% population increase, residents in small cities need 0.3% more spending to maintain their lifestyle—but in Paris, that jumps to 0.8%. The study finds that housing costs skyrocket with city size, with Paris residents spending 39% of their income on housing. But here's the shocker: if cities are allowed to expand outward, those costs drop by half. The video explains why urban growth isn't as expensive as you think, and why restrictive policies might be making things worse. Discover how city size, land prices, and policy choices shape your wallet.