Lost opportunities can tell us much

'Survivorship bias' means giving LRT say to those who are risk-adverse

By Ryan McGreal

Posted February 22, 2010 in Essays (Last Updated February 22, 2010)

Published on February 19, 2010 in the Hamilton Spectator

Recent quotes from business owners on the rapid transit choices facing Hamilton add up to a dispiriting - but perhaps inevitable - lack of imagination and understanding.

At issue are the three options in the Metrolinx Business Case Analysis for the east-west route:

Hamilton needs transformative change. Incrementing the status quo has not served us well - particularly the city's poorest neighbourhoods.

LRT doesn't just carry more people more quickly. It attracts hundreds of millions of dollars in new investment and draws many more people to live and work in the area, frequent its businesses, generate demand for new businesses, and interact creatively and productively.

Higher-order urban activity raises infrastructure productivity and boosts the rate of creative economic output. When cities intensify, energy and infrastructure costs grow more slowly than population, but the rate of innovation grows more quickly.

That adds up to more of the net economic growth and employment opportunities that Hamilton desperately needs.

Unfortunately, the business owners quoted lately seem to think LRT is merely about moving people around. I wish someone would organize a fact-finding trip with these business owners to the King-Spadina area in Toronto.

Once a manufacturing centre, King-Spadina was a mess of empty factories and warehouses in the 1990s, when a group of visionary urbanists came together to develop a new plan for the district.

Through a combination of planning rules that encourage mixed-use investment and an anchoring streetcar line, King-Spadina has experienced an impressive influx of new condominium developments, offices and entertainment businesses created through both adaptive reuse and new construction.

When the plan was unveiled, skeptics scoffed. "How will people get there?" they sneered. The answer, of course, is that people moved there in droves.

In just a 45-hectare area, King-Spadina attracted $55.6 million in new investment between 2000 and 2007, creating 700 new jobs and 230,000 square feet of property.

The population has quadrupled since 1996, and the biggest cohort has been young professionals looking for an urban lifestyle close to employment and social amenities.

One would be forgiven for assuming business owners would be head-over-heels about such an opportunity coming to Hamilton.

Surprisingly, business owners may not be the best people to talk to when determining whether and how to transform a neighbourhood. When the economic system is failing most people, does it really make sense to base planning decisions around the few who manage to survive?

The risk of owning a business and the fact that the current system works for them makes such business owners inherently risk-averse. Transformation may well bring huge benefits - particularly for property owners who will enjoy the windfall of rising property values - but it also means that the rules for success change.

The business strategies that work in a poor, failing economic and social environment might not transfer to a booming, thriving environment.

As a result, business owners feel they have a lot to lose.

Compound the fact that many owners don't actually seem to understand that LRT is qualitatively different from buses, and it's a recipe for fear and doubt.

But for every business owner worried that LRT might adversely affect their business, how many potential businesses locate elsewhere or simply never start up at all? How many potential customers never materialize because they chose to live elsewhere?

In the case of a transformative initiative like LRT, there's a real danger that survivorship bias will lead us horribly astray.

Survivorship bias is the error of studying only entities that survived some kind of selection process, and ignoring those entities that did not survive.

Business writer Jason Cohen shares the anecdote of British engineers during the Second World War trying to determine how best to armour planes undertaking aerial raids in Germany.

Studying the patterns of bullet holes on planes that returned from aerial raids, they noticed that the holes were mainly on the wings and tail, with few near the cockpits or fuel tanks.

Survivorship bias means concluding that the planes need more armour on the wings and tail because that's where the returning planes have the most bullet holes.

Of course, the planes that were hit in the cockpits and fuel lines were not available for study.

The business owners along the B-Line are survivors of the economic battle downtown Hamilton has suffered over the past half-century.

How many businesses were "shot down" because of Hamilton's low-quality transit, low population densities and pedestrian-repellent one-way streets?

Who will speak for those failed businesses and lost opportunities? How can we incorporate them into our public discourse so the survivorship bias of existing businesses doesn't lead us astray?

* Note: under the phased approach, the route east from Ottawa Street would be served by the current BRT-like B-Line service, not by BRT on dedicated lanes.