This thesis finds that where students live has economic benefits. It investigates areas with high student concentrations in the United States, otherwise known as college towns. The results of the analysis of 242 college towns in the United States finds that an increase in the student density by one percent, can lead to an increase in metropolitan patents by 42 percent. This was found to be more important than the quality of the university which led to a 33 percent increase in patents. Together, a one percent increase in student density, at a quality institution can affect patent outcomes by 75 percent. Further research is required to determine causality; however the results at this stage indicate that this is indeed a relationship worth exploring.
The argument for these results is that university college towns represent a unique type of place. It explains that due to the density of students in one location, the potential for interaction is enhanced, by some of the smartest people within a population – leading to the potential for creative ideas and innovations to come forward. This is because innovation is a fundamentally social process.
In network theory speak – the belief is that college towns act as ‘small worlds’ – a social network structure that is conducive to innovative outcomes. Furthermore, due to their particular size, this network has the ability to influence the population through the recently understood concept of the three degrees of influence. It argues that college towns have the ability to spread positive academic contagion through the network.