Capstone Project — Build an Economic Analysis of Your City

The book's final and most ambitious assignment.

You have spent forty chapters learning to think like an economist. The capstone is where you stop being a reader and start being an analyst. Your job is to take everything you have learned and apply it to a real place you know — your hometown, your college town, the place you grew up, the place you live now, the place you want to live next — and produce a 20–30 page economic analysis of that place.

This is not a make-work assignment. It is a piece of genuine applied economics that you will actually finish, that you can put on your résumé, and that you can show to other people as evidence that you understand how economic thinking applies to the real world. We have built the project to be doable across a single semester (with realistic time budgets), challenging enough to be worthwhile, and concrete enough to have a clear endpoint. The Millbrook example threaded through the textbook is your model. Your deliverable will be a real city analyzed with the same tools.

What you produce

A 20–30 page (single-spaced) document covering the following:

  1. Profile of the city (2–3 pages). Population, demographics, geography, history, major employers, headline economic indicators (median income, unemployment rate, poverty rate). Tone: descriptive, data-grounded, reasonably comprehensive. This is the foundation that the rest of the document builds on.
  2. Microeconomic analysis (5–7 pages). Apply Parts I–IV of the book to one or more specific markets in your city. Recommended: pick a market you actually understand — housing, the local labor market, the food industry, healthcare, education, or another sector that matters to your city — and analyze it with supply and demand, elasticity, market failure framing, and (where relevant) firm behavior and labor market analysis.
  3. Macroeconomic analysis (5–7 pages). Apply Parts V–VII to your city's exposure to national and global economic forces. How does your city's economy fit into the broader US economy? What does its industrial mix make it sensitive to? How did it experience the 2008 recession, the COVID recession, the 2021–23 inflation surge? What is its current macroeconomic situation?
  4. Contemporary issues (3–5 pages). Apply Part VIII to one or two contemporary issues facing your city. Housing affordability? Student debt? Technology disruption of a key industry? Climate vulnerability? Inequality?
  5. Policy recommendation (3–5 pages). The synthesis. What should the city's leaders be focused on, and why? This is where you make a defensible argument grounded in everything that came before. Be honest about tradeoffs. Be specific about what your recommendation would cost, who would benefit, and who would bear costs.

How the project unfolds across the textbook

The capstone is designed to be done across the semester rather than packed into the last week. The four files in part-10-capstone/ walk you through it:

  • capstone-project-01.md — Microeconomic analysis (do this as you finish Part IV)
  • capstone-project-02.md — Macroeconomic analysis (do this as you finish Part VII)
  • capstone-project-03.md — Synthesis and policy recommendation (do this as you finish Part IX)
  • capstone-rubric.md — the deliverable rubric

If you are a self-learner, the recommended pace is one section per major part. If you are in a course, your instructor's syllabus probably has explicit dates for each section. Either way, the goal is to spread the work out so that the analysis develops alongside your understanding.

Choosing your city

Pick a city you actually know. The best capstone projects come from students who can answer the question "what is going on in your city?" without looking it up. Your hometown, your college town, the place your parents grew up, the city you want to move to next year — any of these works.

The city should be at least 25,000 people (small enough that you can know it, large enough that real economic data exists for it). Federal data sources (BLS, Census, BEA) have data for every metropolitan and micropolitan statistical area in the US. International students: pick a city in your home country. The data sources will be different (national statistical offices, the World Bank's city-level data, the OECD's metro data) but the analytical framework is the same.

Avoid:

  • A city you have never visited.
  • A city you researched only on Wikipedia.
  • A city with so much going on (New York, Los Angeles, Chicago, London, Tokyo) that you cannot do it justice in 30 pages.

What the Millbrook example gives you

Throughout the textbook, you have seen Millbrook used as a recurring example. Millbrook is fictional — but everything about Millbrook is built from real data about real Midwestern college towns. You should treat the Millbrook examples in Chapters 5, 7, 9, 11, 12, 13, 17, 21, 23, 32, 35, and 36 as a worked example of how to do the capstone project. When you sit down to write your own analysis, use the Millbrook treatments as templates — not for your conclusions (your city will be different), but for the kind of analysis you should be doing and the kind of evidence you should be marshaling.

What success looks like

A successful capstone project will demonstrate four things:

  1. Real engagement with real data. You used FRED, BLS, Census, BEA, or comparable sources for your city. You looked at numbers, not just impressions. You can cite where each number came from.
  2. Correct application of economic concepts. You used the right model for the right question. Supply and demand for the housing market. Externalities for pollution. Comparative advantage for the trade exposure of a major industry. AS-AD for the macro shock analysis.
  3. Honesty about uncertainty. Where the data is messy or the answers are contested, you said so. You did not pretend to know things you didn't know.
  4. Real policy thinking. Your final recommendation is specific, defensible, and honest about tradeoffs. It is not a list of platitudes. It is a real argument that a real city official could read and respond to.

A final thought

The hardest thing about the capstone is starting. Pick your city now — before you start Chapter 1, if you can — and let it shape your reading of the rest of the book. Every time the textbook explains a concept, ask yourself: how does this apply to my city? What would I write in my analysis if I had to address this concept right now?

By the time you finish Chapter 40, you will have an answer to almost every one of those questions. The capstone is just the place where you write the answers down.

Now go pick your city.

Chapters in This Part