Irrational Choice Migration: Geographic Heuristics and Superstar Cities

Why does the best talent move to the most expensive cities? One theory posits that the returns to skill are so great that the migration is a rational choice. The large salary justifies the exceptionally high cost of living.

The draw of superstar talent to a superstar city also would seem to overcome distance. Most relocation is to a nearby locale, with massive urban agglomerations acting as the exception to Ravenstein's rule. As a result, a place such as New York City will have stronger relationships outside of the country (e.g. London) than inside it (e.g. Buffalo).

The absolute distance between New York and London is much longer than between NYC and Buffalo. But the cognitive distance, informed by globalization, turns the relationship on its head. From the vantage point of Manhattan, London is much closer.

In psychology, the heuristic of distance is used to understand how humans perceive similarity. Then along came Amos Tversky, who annihilated the theory. As captured in The Undoing Project, human subjects wouldn't conform to the hypothesized symmetry of similarity judgments:

When people compared one thing to another - two people, two places, two numbers, two ideas - they did not pay much attention to symmetry. To [psychologist Amos Tversky] - and to no one else before Amos - it followed from this simple observation that all the theories that intellectuals had dreamed up to explain how people made similarity judgments had to be false. "Amos comes along and says you aren't asking the right question," says University of Michigan psychologist Rich Gonzalez. "What is distance? Distance is symmetric. New York to Los Angeles has to be the same distance as Los Angeles to New York. And Amos said, 'Okay, let's test that.'" If, on some mental map, New York sits a certain distance from Tel Aviv, Tel Aviv must sit precisely the same distance from New York. Yet you needed only to ask people to see that it did not: New York was not as much like Tel Aviv as Tel Aviv was like New York. "What Amos worked out was that whatever is going on is not a distance," says Gonzalez. "In one swoop he basically dismissed all theories that made use of distance. If you have a distance concept in your theory you are automatically wrong."

From New York, Tel Aviv seems a world away, if even on the horizon. In Tel Aviv, New York is a familiar presence, like a neighboring town or suburb. If you have a distance concept in your migration theory (e.g. distance decay) you are automatically wrong?

For Amazon, Seattle is like New York City and Washington, DC. We go where we know. Proximity matters. The line between the Pacific Northwest and the Northeastern superstars is shorter than the one to Chicago or Dallas. However, for superstars residing in the Big Apple, Seattle is no substitution for London. The migration is an irrational choice.