It is widely believed that intellectual productivity is tied to location. That is, if you work in a basement at Harvard like Walter Bishop in the TV show Fringe, you’ll be far more brilliant than if you do the same work in a FBI laboratory.
Of course, for most people it is the access to people that matters, not location. There is nothing in the water in Silicon Valley that makes engineers smart.
The practical question is whether you should move to be closer to the smart people. For example, are you more likely to get a Nobel prize if you move from Montreal to the Silicon Valley?
There is evidence that location is overrated:
“We study the location-specific component in research productivity of economics and finance faculty who have ever been affiliated with the top 25 universities in the last three decades. We find that there was a positive effect of being affiliated with an elite university in the 1970s; this effect weakened in the 1980s and disappeared in the 1990s. We decompose this university fixed effect and find that its decline is due to the reduced importance of physical access to productive research colleagues.”(Han Kim, Morse, Zingales, 2006)
“There is no evidence for localized peer effects, as neither department level (e.g. the physics department) nor specialization level (e.g. all theoretical physicists in the department) peers affect a researcher’s productivity. Among co-authors, however, there is strong and significant evidence that peer quality affects a researcher’s productivity.” (Waldinger, 2009)
“(…) international collaboration can be considered a substitute for emigration, and reducing collaboration costs may be one strategy for preventing brain drain while increasing researcher productivity.” (Ganguli, 2011)
“We find a small, but meaningful relationship between the number of Nobel laureates in a person’s field that he or she is around and his or her probability of starting doing Nobel Prize-winning work, but no relationship between the probability of actually doing Nobel Prize-winning work and the number of Nobel Laureates present. Insofar as our estimates do not completely address causality, even our small spillovers might be overstated somewhat.” (Ham and Weinberg, 2007)