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Liveable Is Bankable: The Big Business of City Rankings

Melbourne or Miami? London England or London Ontario? Picking 'the best place to live' started as sport; now it's an industry. With ever more market segmentation, even the developing world is involved. And yes, rankings make a difference.

Choose the city where you live? Aside from a privileged few, most of us take what we can get. Nonetheless, there is a surging market for urban ratings. Whether demand is prodding supply, vice versa or both, there's a burning interest from both providers and users.

City Picking Started With Unliveability

The idea of scoring cities for their liveability – their quality of life – was not the initial aim of Mercer, a personnel consultancy that in 1994 began to pioneer the practice. Rather, the aim was to advise multinational companies on how to compensate their employees in undesirable areas, just as the civil service and military give 'hardship pay' to those posted to unpleasant places. But some bright spark figured out how to turn lemons into lemonade, and started producing a positive list of locations. Mercer's "Quality of Living Ranking" captured enough attention to spark competition from news magazine The Economist, which launched its "Global Liveability Ranking" in the 1990s; both were joined in 2006 by lifestyle magazine Monacle's "Quality of Life Survey". Five years later came the OECD (the joint think-tank of world's 34 most-developed nations), which judges quality by country in its "Better Life Index". Various derivative and niche players have meanwhile entered the fray. Consultancy ECA International publishes "Location Ratings", Singapore's National University issues a "Global Liveable Cities Index", AT Kearney puts out a "Global Cities Index". Business newshounds at Bloomberg, Forbes and 24/7 Wall St offer their takes on where's nicest to live.

Everyone's a Winner – Sort of

A big booster to the ratings business has been a proliferation of market segments. Not only are there prizes for the 'most liveable city in the world', there are winners by region, by size and by a host of other factors, such as healthcare, culture, education, transport, housing, public utilities and personal safety. In 2012, The Economist went so far as to rehash its global rankings according to additional criteria of urban sprawl, air quality and green space. The result was a shuffled deck. Best cities were still among the best, and worst among the worst, but rankings within those groups changed considerably. In the land of consumer choice, America – where supermarkets casually offer 10 different kinds of peanut butter – market segmentation can be extreme. Rankings are published of cities there that are best for retirees, the budget-minded, political left-wingers, political right-wingers, even beer-drinkers (the brew-thirsty top two were Billings, Montana and Hershey, Pennsylvania).

Except if You're in a War Zone

Despite raters' attempts to spread the laurels, some cities can't win for losing. Threats to personal safety, i.e. violent crime and military action, are trumping negatives. Add a dusting of corruption, repression, poor connectivity or communications, and liveability rankings plunge. Leading the list of losers are cities mainly in Africa and the Middle East that present some or all of these ailments. Among the perennials are Dhaka, Harare, Kabul, Lagos and Mogadishu. With the unrest of Arab Spring and its aftermath, these have recently been joined by Algiers, Tripoli and Damascus. In the Syrian capital, as one newspaper reports, children still play in the streets, albeit with real guns and live ammunition. In the coming 2015 ratings, these likely will be joined by Donetsk and Luhansk in the war-torn east of Ukraine.

Living Well: it Helps if You're Rich

Liveability has a not-so-surprising correlation with economy. The world's most liveable cities are a fine-tuning of the world's most prosperous ones, with bonus features thrown in. Persistent chart-toppers come from the rich and egalitarian Nordics (Copenhagen, Helsinki, Oslo) and Germanics (Dusseldorf, Frankfurt, Munich, Vienna), rich and low-taxed Switzerland (Bern, Geneva, Zurich), rich and incredibly-orderly Japan (Kyoto, Osaka, Tokyo), rich and lower-cost Australia (Adelaide, Melbourne, Perth, Sydney) and Canada (Calgary, Toronto, Vancouver). So, is it really that simple: be wealthy, be happy? Sort of, answers Amlan Roy of Credit Suisse's Global Demographics team. Like anyone else, "wealthy people want to live in a clean, culturally stimulating environment that is not too polluted and has big parks. Wealthy people also like culturally diversified cities that offer art, museums, music, history as well as good morals, laws and customs." 

Yet There Are Up-and-Comers

A lack of riches keeps developing-country cities off the most-liveable lists. For now, that is. A number of wanna-bees are working their way up. For instance:

  • Brazil's Curitiba, which has defied the American model of poor public transport.
  • India's Hyderabad and Pune, which according to Mercer's "Quality of Living Ranking", have maintained living quality far better than their congested cousins, Delhi and Mumbai.
  • Poland's Wroclaw, with its educated population, beautiful countryside and good infrastructure, is becoming a leading location for outsourced IT and admin posts that could go anywhere. Over the past decade, blue-chips such as E&Y, HP, IBM, Microsoft and not least Credit Suisse have relocated tens of thousands of jobs to the area.

Dwelling Upon Dwelling Places: Who Cares?

Employers such as these are probably the most avid followers of city rankings. Because today's knowledge economy can be most anywhere there is broadband and coffee, they are keen not just to follow the money (for consumers) but to follow the brains (for employees). "Service companies want to be proximate to human capital – intelligent, motivated people," says Credit Suisse's Demographics team. "The most livable cities are attracting talent not only from neighboring countries but from around the world. So the most livable cities are also the most cosmopolitan, and they have the highest rankings in finance and higher education."

Also keen on rankings are metro leaders and planners. The 'best-lists' give them benchmarks for what to do right and not to do wrong. Finally, urbanites themselves are piqued as well. Especially with rankings like liveability that are "close to people's hearts," notes Jon Copestake, Editor of The Economist's "Global Liveability Ranking", "everyone has an opinion." To many, the most liveable place is the place they live most. For them, there's just no place like home.