The Density Paradox: Agglomeration Benefits and the Social Costs of Urbanization

Astana is one of the fastest-growing megacities in the post-Soviet space. Such growth is usually viewed through the lens of classical urban economics literature, where high population density is associated with significant agglomeration benefits: transaction costs fall, labor-market specialization intensifies, and knowledge and innovation spread faster (Duranton & Puga, 2004; Rosenthal & Strange, 2004). In this model, the city is treated as a mechanism for maximizing productivity.

However, rapid urban growth can also generate social costs. Recent empirical research in spatial economics reveals a paradoxical negative relationship between population density and residents' subjective well-being. An equally significant consequence of accelerated urbanization is the gap between the stated goals of urban planning and their actual implementation: green and recreational areas are systematically giving way to commercial and transport infrastructure, while social facilities remain underfunded. This review discusses two key papers addressing different sides of this problem, and examines the price of accelerated urbanization that Astana is paying.

In a paper published in npj Urban Sustainability, Lenzi and Perucca (2023) analyze data from more than 50,000 respondents across 83 major European cities. The authors set out to determine what, in respondents' own assessments, constitutes the “urban well-being paradox”: despite higher incomes, people living in megacities can be less satisfied with their lives than residents of smaller towns and rural areas.

The authors' central finding is that population density itself does not make people less happy – rather, it is the socio-economic inequality that is closely correlated with density. The authors show that the previously observed paradox arose from a misspecified regression model that frequently omitted the inequality variable. As a result, coefficient estimates were biased: the missing variable pulled the numbers away from their true values, incorrectly pointing to a negative effect of density on life satisfaction.

The negative effect of the “urban effect” on happiness disappears entirely once researchers include an income-inequality variable in the regression model. The researchers attribute this to two main economic mechanisms. The first is the effect of relative deprivation, which arises from constant contact between people from different social groups. Comparing themselves to wealthier city-dwellers, a person begins to feel subjectively poorer.

The second is the uneven distribution of agglomeration benefits: the economic gains from denser development mainly accrue to a small group of affluent residents, while most of the population bears the costs of rapidly rising housing prices, an overloaded transport network, and environmental stress.

This pattern is confirmed by Kazakhstan data as well – not through the lens of income inequality, but through housing affordability. According to calculations by a World Bank economist (Seitz, 2018), the cost of living in Almaty and Astana is 190% and 240% higher, respectively, than the national average, and between 2001 and 2015, inflation-adjusted housing prices roughly tripled in Astana and quadrupled in Almaty. The “median multiple” indicator (the ratio of median housing price to median annual household income) reaches 11.8 in Astana – higher than in San Francisco (9.2), and on par with Vancouver, one of the least affordable housing markets in the world. According to the same study, more than 66% of households in Astana and 77% in Almaty spend at least 30% of their budget on housing. At such a cost of living, rural and low-income households have virtually no chance of moving to cities with better economic opportunities – the housing market effectively excludes them, reproducing the very asymmetry of access to agglomeration benefits documented by the European study.

Table 1. Median multiple housing affordability measures for Kazakhstani and global cities

Source: Seitz (2018)

Researcher Almagul Mussina (IFEAC) describes the division of the capital into a “left” (“new”) and “right” (“old”) bank not only geographically, but also in residents' own perceptions. The label “prestigious address,” applied to housing on the left bank, today serves as a strong market signal of social status, while the new pattern of high-rise development serves as a means of reinforcing social stratification. This is also confirmed quantitatively: comparing air-pollution levels from Astana's TPS-2 power plant with the distribution of urban recreational areas, Mussabayev and co-authors (2026) found that the districts whose residents had the lowest average incomes and were exposed to the highest levels of air pollution had the poorest access to parks and public gardens, while the district with the cleanest air and the highest average income among citizens has the largest number of green spaces. In other words, the benefits and costs of agglomeration are distributed unevenly across the city – precisely the mechanism of relative deprivation that Lenzi and Perucca (2023) describe as a key source of unhappiness in megacities.

While Lenzi and Perucca (2023) examined the psychological and economic dimensions of this paradox, focusing on subjective perception, Atakhanova and Baigaliyeva (2025) shift the analysis to the institutional level. In their article published in Urban Science (MDPI), they examine the issue from an urban planning perspective.

The authors closely analyze the implementation of major state programs (“Nurly Zhol,” preparations for EXPO-2017), comparing declared goals with actual outcomes. The benchmark for this comparison is Astana's original master plan, which Kisho Kurokawa developed around the ideas of “symbiosis” and “metabolism” – the city as a single living organism growing around the Esil River, with wide green corridors and a social environment that fosters human interaction.

Atakhanova and Baigaliyeva (2025), comparing satellite imagery of Astana from 2000, 2014, and 2023 (see Figure 1), show how far the city's actual development has drifted from that plan. The share of built-up area grew from 9% of the city's territory in 2000 to over 30% in 2023 – a threefold increase – while green space shrank by 30% and wetlands by 23%. The total vegetated area formally remained almost unchanged, but only because of costly artificial afforestation in outlying districts – per-capita spending on forestry there is 2–2.5 times the national average – even as natural greenery along the Esil floodplain disappeared. The most representative case is the Taldykol lakes: despite studies of their ecological value dating back to 2012, and calculations showing that the benefits of preserving the wetlands outweighed the costs of development, their draining began in 2020, triggering protests over the lack of transparency in the decision.

Figure 1. Land use and land cover (LULC) maps of Astana for selected years.

Source: Atakhanova and Baigaliyeva (2025)

Yet the return on this investment remains questionable: per-capita state investment in Astana's construction exceeded the national average by a factor of 12 in 2000 and by a factor of 4.5 in 2022, but the city's per-capita GRP declined between 2014 and 2022, according to the authors – likely due to a combination of two factors: the inefficiency of part of the state investment, and demographic pressure, with the population growing faster than the real sector of the economy not tied to construction and the public sector. Social infrastructure, meanwhile, systematically lagged behind residential construction: according to a study of new housing built under the “Nurly Zher” program, cited by the authors, key facilities – schools, clinics, pharmacies, public-transport stops – were located no less than 1 km from most new homes on the city's outskirts.

The commercialization of Astana's urban environment is eroding what sociologist Ray Oldenburg (1989) called “third places” – spaces beyond the home and workplace, such as courtyards, public libraries, and community gardens. It is precisely in these places that “weak ties” emerge and society's social capital is built.

The prevailing image of Astana's Left Bank – gated residential complexes, cafés, and shopping-and-entertainment centers – monetizes or restricts nearly all forms of contact, replacing them with transactions. The absence of “third places” is directly linked to social isolation and loneliness, which, according to a 2025 WHO report, cause 871,000 deaths per year worldwide and have been recognized as an official threat to public health.

A second key problem undermining social capital in the capital megacity is unplanned suburban expansion – a process that, by its very logic, is the opposite of the densification of the Left Bank: whereas in the central districts the cost stems from excessive density without a commensurate growth in infrastructure, on the periphery, conversely, insufficient building density makes extending infrastructure economically unviable. Suburban sprawl is largely driven by the limited affordability of housing within the city. According to the Bureau of National Statistics of the Republic of Kazakhstan, in early 2026, the average rent for a 50-sq. m apartment in Astana amounted to 45% of the average wage. In Almaty and Shymkent, the figure was even higher – 51% and 61%, respectively. It is precisely this economic pressure that is pushing the least well-off segments of the population out to the city's outskirts.

An example of this is the settlement of Koyandy, whose population grew 90-fold and area 18-fold over 20 years (K. Medeuova, 2019). Yet this growth was uncoordinated: centralized water supply, sewage systems, and social infrastructure were all absent. Land management was also inefficient: under state programs providing free plots for individual housing construction, land was allocated without utility connections and located tens of kilometers from the city – amounting to a systemic failure in land management.

As a result, suburban residents must spend up to three hours a day commuting to and from Astana. Such time costs amount to a direct “tax” on social capital: people simply lack the time and energy to maintain family, neighborhood, and friendship ties.

These trends are not unique to Astana. In Almaty, the monocentric model produces similar difficulties: the transport infrastructure development master plan (through 2030) records significant commuter flows from the agglomeration's suburban districts, pointing to the need for a shift toward a polycentric model. This kind of suburban chaos is a typical marker of urban development across Central Asian megacities (Bissenova, 2012; Buchli, 2007), where, after 1991, systemic state planning gave way to unplanned development driven by private developers.

The authors of the papers reviewed here, Lenzi and Perucca (2023) and Atakhanova and Baigaliyeva (2025), provide a classic case of the “density paradox” in Astana. The city is addressing quantitative challenges, such as the growth of GRP, the absorption of migrants, and the provision of millions of square meters of housing. Yet the qualitative components of the urban environment – affordable housing, inclusive public space, and the social integration of new residents – are still lacking.

At the same time, Astana remains one of the few cities in the country where people keep migrating, which is an example of the fact that, for many residents, the benefits of agglomeration (access to the labor market, quality education, access to healthcare) outweigh the disadvantages described above.

Kazakhstan's urban policy needs to move beyond an approach focused solely on construction and economic indicators and begin measuring and managing the social dimensions of the urban environment. As with leading global cities (Melbourne, for instance) and in line with the OECD (2024) framework, Astana should regularly track an index of social cohesion and residents' subjective well-being. But monitoring alone is not enough: since the diagnosis offered by both studies is institutional in nature, the remedies must be institutional as well – prioritizing social infrastructure in land allocation decisions, mandatory public review of projects affecting green and water areas (as in the case of Taldykol), and subordinating urban development decisions to a long-term plan rather than to the pace of budget disbursement.

As Jane Jacobs argued, a city is fundamentally a challenge of organizing the diversity and complexity of urban life rather than simply a matter of increasing building density. To remain a leading destination for human capital over the next three decades, Astana must rethink its model of urban governance by shifting its focus from constructing monumental concrete structures to creating the conditions for a resilient urban community built on mutual trust.

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* AI tools were used to create the image: ChatGPT (OpenAI)