Economics of Transportation in the 21st Century

Economics of Transportation in the 21st Century

An NBER conference on Economics in Transportation in the 21 Century took place online October 9. Research Associates Edward L. Glaeser of Harvard University, James M. Poterba of MIT and Stephen J. Redding of Princeton University organized the meeting, sponsored by U.S. Department of Transportation. These researchers' papers were presented and discussed:

Treb Allen, Dartmouth College and NBER, and Costas Arkolakis, Yale University and NBER

Traffic in the City: The Impact of Infrastructure Improvements in the Presence of Endogenous Traffic Congestion (slides)

Neil Mehrotra, Federal Reserve Bank of New York; Matthew Turner, Brown University and NBER; and Juan Pablo Uribe, Brown University

Does the US have an Infrastructure Cost Problem? Evidence from the Interstate Highway System (slides)

Between 1990 and 2008 the cost to construct a lane mile of interstate increased five-fold while the cost of resurfacing doubled. We consider four explanations for these increases: composition; changes in pavement durability; the institutional and regulatory environment; and input prices. Only changes in input prices explain the increase in resurfacing costs. None of the explanations is clearly responsible for the increase in the cost of new construction, but the data suggest hard to observe changes in how highways are built. This suggests a that a cost disease affects at most the 34% of the interstate highway budget devoted to construction. A calibrated model of optimal highway capital accumulation does not suggest a dramatic increase in the user cost of interstate capital per vehicle mile travelled.

Prottoy Akbar, University of Pittsburgh; Victor Couture, University of British Columbia; Gilles Duranton, University of Pennsylvania and NBER; and Adam Storeygard, Tufts University and NBER

Mobility and Congestion in World Cities: Evidence from Google Maps

Caitlin S. Gorback, NBER

Transportation Data Collection Initiative

Nicholas Buchholz, Princeton University; Laura Doval, California Institute of Technology; Jakub Kastl, Princeton University and NBER; and Tobias Salz, MIT and NBER

The Value of Time: Evidence from Auctioned Cab Rides (NBER Working Paper 27087)

Buchholz, Doval, Kastl, and Salz recover valuations of time using detailed data from a large ride-hail platform, where drivers bid on trips and consumers choose between a set of rides with different prices and waiting times. They estimate demand as a function of prices and waiting times and find that price elasticities are substantially higher than waiting-time elasticities. The researches show how these estimates can be mapped into values of time that vary by place, person, and time of day. Buchholz, Doval, Kastl, and Salz find that the value of time during non-work hours is 16%lower than during work hours. Most of the heterogeneity in the value of time, however, is explained by individual differences. They apply our estimates to study optimal time incentives in highway procurement. Standard industry practices, which set incentives based on a uniform value of time, lead to mis-priced time costs by up to ninety percent.

Brad R. Humphreys, Margaret C. Bock, and Alexander J. Cardazzi, West Virginia University

Effects of Pavement Roughness on Traffic Outcomes: Evidence from California (slides)

Jonathan Hall, University of Toronto, and Joshua Madsen, University of Minnesota

Can Behavioral Interventions Be Too Salient? Evidence From Traffic Safety Messages

Behavioral interventions are a popular tool for encouraging socially desirable behavior and are expressly designed to seize people's attention. However, little consideration has been given to the costs of seizing attention. Hall and Madsen estimate these costs in the context of an increasingly common highway traffic safety campaign that displays roadside fatality counts on highway dynamic message signs (DMSs). They exploit detailed data on DMS and crash locations, DMS log files, and a unique setting in Texas where fatality messages are shown only during one week each month. Hall and Madsen find that this behavioral intervention significantly increases the number of traffic crashes. The increase in crashes is immediate, dissipates over longer distances, and increases with the displayed fatality count. Furthermore, drivers do not habituate to these messages, even after five years, and the effects do not persist beyond the treated weeks. Crashes increase statewide during treated weeks, inconsistent with any benefits. Their results show that behavioral interventions, designed to be salient, can crowd out more important considerations, causing interventions to backfire with costly consequences.