Alice Wang showed the most convincing evidence I’ve read on net costs of urban highways, using Seattle data. Smartphone data reveals that people avoid trips that either cross or use a highway. She estimates that replacing highways with surface roads would increase welfare by a massive 9%. Most of the gain is from improved access to urban destinations. But the suburbs would be a bit worse off. (One weakness: she doesn’t reckon with capacity constraints, so she’s probably missing low on the traffic costs).

Interestingly, burying the highways has basically the same result. That’s because the suburbs’ loss is mostly a function of the redistribution of businesses.

Railroads and highways have equally large effects in terms of neighborhood fragmentation (Vikram Maheshri & Kenneth Whaley).

Can we integrate these types of barriers into spatial social science? Evan Mast has built a new neighborhood/district geography that usually lines up with highways, rails, and rivers. But the basis for his new geography isn’t trips or maps, it’s moves. I didn’t realize many people move within a neighborhood, but it’s apparently quite common.

Seth Chizeck won the student prize for research showing that free transit vouchers didn’t help outcomes for beneficiaries much.

Urbanites save more of their money than suburbanites with equal incomes and demographic profiles. Daniel Murphy showed that city dwellers spend more on housing and eating out, but so much less on durable goods, maintenance, and utilities that they end up with a higher rate of savings. One possible explanation is that suburbanites own more land, which is a form of savings. But that doesn’t explain why urban renters save more than similar suburban renters.

Murphy’s explanation is home size, which correlates with savings rates across countries…

…and across time:

I will confess I had no idea that U.S. density had grown so much from 2010-2020.

HISDAC-US is an impressive dataset. It provides an estimate of built-up density nationwide at a 250 meter grid from 1810-2015, based on Zillow’s ZTRAX records. The estimates are from work by Stefan Leyk & Johannes Uhl.

Texas counties that lost more soldiers in the Civil War had more urbanization from 1870-1900. (Phil Hoxie and Beatrice Lee).

Joshua Coven looks at the entry of institutional investors into Georgia’s housing market. They crowd out small investors, induce more construction, and decrease homeownership. The result is slightly higher prices, slightly lower rents, and more diversity in single-family neighborhoods.

In Colorado, water impact fees are a significant cost attached to every new home. Benji Edelstein showed how a shift from one-size-fits-all pricing to contextual pricing changed construction patterns. This research (not public yet) is well-timed: the Supreme Court’s Sheetz decision will make it hard to sustain flat pricing models when better data is readily available.

Raheem Chaudhry and Amanda Eng study children who grow up in NYCHA public housing – the largest and among the best-run in America. Children who move into NYCHA projects are more often than not moving from a worse neighborhood. And among children who live in NYCHA, those with more years are better off as adults.

Hector Blanco and Noémie Sportiche investigate Massachusetts’ “Chapter 40B” housing law, which allows mixed-income developments to bypass local zoning (after a tortuous process). Hector’s presentation interpreted the data in a YIMBY-friendly way: for most houses around most 40B sites, there is no measurable effect on prices or migration.

But you could flip it around: there is a large and significant loss of value for the immediate neighbors (up to 0.1 mile) of large 40B developments. And it makes renters, at least, more likely to move away.

By contrast, Joe Gyourko and Sean McCulloch reported a strong “Distaste for Density” using bordering municipalities (here’s an earlier version). Numerically, the distaste for neighbors’ density might be comparable to what Blanco and Sportiche found. But the authors framed it in the opposite way.

Each real estate listing belongs to one Multiple Listing Service (MLS) or another, sometimes with overlapping territory. When a sharing agreement between the Miami and Beaches MLS’s broke down, homes and buyers matched more slowly and prices fell. (Walter D’Lima presented this multi-author paper).

Rebecca Diamond’s keynote was a reminder that modeling choices matter. She thinks of permit process as a fixed cost that doesn’t vary with project size, an approach which yields predictably meh results.

Gordon Hanson’s keynote dealt with place-based policies. The most salient takeaway is that non-place-based policies, like Social Security and Medicaid, are more targeted to the poorest, neediest regions than the explicitly placed-based policies like tax incentives.

Urban economics is a rapidly growing discipline. Top students who wouldn’t have given it a thought twenty years ago are flooding into the discipline to take advantage of new data, powerful computers, and the gnarly-but-solvable public policy questions that 21st century cities present.

The post Hot takes and pensées, #UEA2024 appeared first on Market Urbanism.

Getting There: The Epic Struggle between Road and Rail in the American Century

Seeing to advance these watershed ideas, yet wary of the power of the highway coalition, FDR set up the urban-oriented Interregional Highway Committee (IHC) in 1941. He borugh traditional engineers and visionaries together and named his osmetime-nemesis MacDonald its chair. Its mix of disciplines led the IHC to the pregnant conclusion that highway building was not merely an end in itself but a way to mold the declining American city while reviving it. At the core of the concept was a twofer: by cutting a selective swath through “cramped, crowded and depreciated” cities and routing downtown highways along river valleys, Washington could eradicate “a long-standing eyesore and blight” while easing gridlock. The autobahns may have inspired the interregional highways, but on one element they differed fundamentally: the German roads sought to serve the cities, while the American roads aimed to change them. The variance would become startingly apparent a generation later.

To the highwaymen, the Roosevelt administration’s visionary proposals were anathema. Michigan Representative Jesse P. Wolcott warned that a “small coterie of individuals who would socialize America” were taking control of American highway policy. A member of the House Roads Committee decried the NRPB’s “cradle to the grave” recommendations, under which Americans’ lives were “mapped out, and planned and controlled and regimented.”

Of course, the old highwaymen were themselves practicing a brand of socialism – the roads they built might have taken in small user fees in the form of gas taxes, vehicle registration fees, and the capital costs of owning an automobile, but they were (and indeed still are) relieved of general tax obligations and much of the land costs, so say nothing of being insulated from the competitive pressures of of opportunity costs by virtue of their socialist allocation.

But the idea of one highway advocate accusing another of socialism reminds me very much of today’s road advocates at places like Cato and the Reason Foundation, who levy the charge of statism (essentially a less politically charged accusation of socialism, or general state interventionism) at New Urbanists and smart growth-inclined planners, while at the same time holding up places like Houston as a paragon of free market urbanism and refusing to acknowledge the massive state intervention in favor of the automobile. Of course, that doesn’t mean the New Urbanists and liberally-inclined planners in general aren’t guilty of much of what they’re accused of – after all, their designs may be different than what we have now, but they’re no less totalitarian.

The post Socialism and the roads, then and now appeared first on Market Urbanism.

As Tyler Cowen wrote the entry on Public Goods at The Concise Library of Economics:

Public goods have two distinct aspects: nonexcludability and nonrivalrous consumption. “Nonexcludability” means that the cost of keeping nonpayers from enjoying the benefits of the good or service is prohibitive.

And nonrivalrous consumption means that one consumer’s use does not inhibit the consumption by others.  A clear example being that when I look at a star, it doesn’t prevent others from seeing the same star.

Back when I took Microeconomics at a respectable university in preparation for grad school, I was taught that in some cases roads are public goods.  We used Greg Mankiw’s book, “Principles of Economics” which states the following on page 234:

If a road is not congested, then one person’s use does not effect anyone else. In this case, use is not rival in consumption, and the road is a public good. Yet if a road is congested, then use of that road yields a negative externality. When one person drives on the road, it becomes more crowded, and other people must drive more slowly. In this case, the road is a common resource.

This explanation made sense, but I was skeptical – something didn’t sit right with me.  Let’s take a closer look.

First, Mankiw uses his assertion as an example of rivalrous vs nonrivalrous consumption, while not addressing the question of excludability.  Roads are easily excludable through gates or any other mechanism that could restrict access.

Furthermore, Mankiw’s assertion that an uncongested road is nonrivalrous is simply confusing rivalrousness with the fact that the road is under-utilized and/or over-supplied at certain times.

For a silly example: if the government literally manufactured mountains of marshmallows free for the taking, Mankiw would have to consider marshmallows equally as non-rivalrous and non-excludable as uncongested roads in the US.  Would he then call marshmallows a public good?

Thus we can clearly see that all roads (when done right) are neither nonrival nor non-excludable.   We can use the diagram below (from Living Economics) to see that a congested (or tolled to prevent congestion) road is a private good, and in the case that a roadway is oversupplied, it is simply a “low-congestion good”, often called a “club good.”

I found this diagram at a very helpful site: livingeconomics.com

Roads are the more commonly misused example of a public good, but we can apply the same logic to transit.  First, most transit operations in the US already use a method of exclusions: the turnstyle.  Second, we can see that non-rivalrousness is simply a function of over-supply in the case of the subway car that isn’t full to capacity.

As economist, Don Boudreaux puts it :

So I’m more than sympathetic to the claim that government provision of roads, bridges, and highways distorted Americans’ decisions over the years to drive and live in suburbs.  But my sympathy for this claim comes from my rejection of the classic, naive case for government provision of public goods — and once that case is rejected, it cannot then be used to argue for government provision of, say, light-rail transport.

Does this alone prove that roads should be privatized? No, but the fact roads are either private goods or grossly oversupplied help weaken anyone’s case that transportation is government’s business in the first place.

I should warn you, if your Microeconomics professor teaches you this misconception unchallenged (perhaps using the Mankiw book), and gives you a true/false exam question of whether an uncongested road is a Public Good, you may want to answer “true”, or else be prepared to dispute your grade.  (And feel free to send your professor a link to this post.)

Next time you catch a commenter repeating this Urban[ism] Legend (like Jeremy H. did), refer them to this post.  Here are a few other links to back you up:

Are Roads Public Goods, Club Goods, Private Goods, or Common Pools? by Bruce Benson, Floria State University

Privatizing Roads by Tim Haab, “Environmental Economics” (blog)

Public Goods and Externalities: The Case of Roads by Walter Block, Loyola University

Highways Are Not (Economic) Public Goods by Rob Pitingolo, “Extraordinary Observations” (blog)

Public Goods from an Austrian Economics perspective

The post Urban[ism] Legend: Transportation is a Public Good appeared first on Market Urbanism.

Maryland is considering raising its gas tax. This long-overdue measure would allow some of the general revenues now subsidizing highways to go to the Purple Line, the Baltimore Red Line, and MARC expansion instead.

This need has unfortunately gotten mixed up with a proposal, originating mostly from the highway lobby and its supporters, to put transportation money into a “lockbox.” The concept is to amend the state constitution to forbid transfers from the trust fund into the general fund.

However, there’s a big hole in the bottom of the “lockbox.” Contrary to what some say, the money in the transportation trust fund mostly come from revenue sources that would have otherwise have gone into the state’s general fund, where it wouldn’t be locked.

If I buy a bicycle in Maryland, I pay 6% sales tax and the money goes into the general fund where it pays for education, public safety, the governor’s salary, and other state expenses. Cars and gasoline are exempt from the sales tax.

Instead, if I buy a car, I pay the same 6%. but it’s called “titling tax” and the money goes into a separate trust fund that is used only for transportation. It’s essentially the same when I buy gasoline, where the tax rate of 23½ cents a gallon comes to a little over 8% of the pretax price. […]

The idea behind the lockbox amendment is that drivers pay for the roads they drive on. This idea is mistaken, but it’s widely held, and it’s an enormous obstacle to sensible transportation planning. The danger lurking in the lockbox is that this damaging misconception could be reinforced, making it even harder to correct failed transportation policies.

Does anybody know how widespread this is? (It sounds like it happens in most states.) I’m curious as to what my fellow libertarian urbanists have to say about this – if there’s no sales tax on gasoline and cars, then are these really user fees?

The post When are user fees just redirected sales taxes? appeared first on Market Urbanism.

My friends and I just presented this paper at the Transportation Research Board meetings in Washington DC. We tested the effects of tolling Los Angeles’ freeways in the peak hours (we tested 10 cents and 30 cents per mile). It’s a simulation on a real network and many substitutions occur. As expected, peak-hour freeway speeds increase, some people switch to surface streets and that traffic slows, some switch to off-peak hours and some (very few) travel less. And politicians take in a lot of money! That’s for the 10-cent toll. The 30-cent toll overloads the surface streets. Many other options can be tested, including only tolling some of the freeways. Planners have voiced concern that tolling the freeways would overload surface streets. There is probably a “sweet spot” that can easily be found. We also plan to look for effects on freight travel as well as travel by income groups.

He’s established that “very few” people lessen their travel. And if the the number of people who switch to off-peak hours is small compared to the number of people who move to surface streets (and judging from my very cursory perusal of the paper, it seems like this is the case), then tolling is just shifting the burden from highways to local roads. This could be a problem since local roads, unlike highways, are paid for almost entirely out of general revenue, not user fees. It seems like the rational thing to do at this point is to argue for tolling local surface streets as well, perhaps through a congestion charge. Maybe I missed it (like I said, I didn’t read the presentation paper thoroughly), but his talk of a “sweet spot” in the summary makes me think he didn’t consider tolling local roads to be an option.

The post If highways push traffic onto local roads, why not toll them too? appeared first on Market Urbanism.

Paving the Way: New York Road Building and the American State, 1880-1956

Engineers framed their decisions in the language of scientific rationality and professional expertise. But these were merely forms of political expression that advanced their traffic-service vision of highway planning. Though New York’s road-building program predated mass automobility, engineers quickly seized on the phenomenon as a means of cementing their political legitimacy. Traffic censuses became the main foundational beam to engineers’ authority, a scientific measurement of public demand for highways that was difficult to contest [ed. note: reminds me of the Texas Transportation Institute]. As long as state highway construction focused on the improvement of existing roads, dissent was weakly expressed. As engineering projects increased in scale, impact, and potential for controversy, resistance spiked. It was in the process of responding to increased opposition that strong tensions developed between engineers’ service to their professional agenda (building a better highway system) and their responsibility to the public (balancing highway construction with other aspects of social development). These interests, once operating in tandem and instrumental to the engineers’ rise to power, began over time to feed conflict and meet with cross-purposes. The engineers’ solution to this problem was to stop treating motorists as citizens and start treating them as consumers, who paid “user fees” through motor fuel taxes and registration fees that were then dedicated toward the maintenance and expansion of the highway system. The adoption of this “motorist-consumer” logic suggests the extent to which highway engineers sought to crowd out dissenting political voices, diminishing the public nature of highways whilte interpreting the simple act of driving as an unqualified endorsement of the highway program.

Has anyone else ever read this book, or otherwise have anything to say about it? Is the author overstating the purpose of user fees?

The post The origin of user fees? appeared first on Market Urbanism.

The letter starts off with this stunningly ignorant comparison to highway building in the 1950s:

If President Dwight D. Eisenhower had waited until he had all the cash on hand, all the lines drawn on a map and all the naysayers on board, America wouldn’t have an interstate highway system.

And if it didn’t have an interstate highway system, maybe rail transportation wouldn’t have died out in the first place!

We also learn that “put[ting] Californians back to work” is “perhaps [the] most important” goal of the project – a candid admission that this project is more about making work for union workers than it is about transportation. This was obvious beforehand – we will, after all, pay double for the HSR trains due to procurement protectionism – but it’s nice to see LaHood finally admit it.

And just in case we still harbored any delusions about LaHood’s reasoning skills, he rounds the letter out with this blatant tautology:

Focusing the total sum of our federal dollars in one project, as The Post suggests, is a poor strategy that will not serve our long-term goal of creating a national high-speed rail network.

The post LaHood’s revealingly stupid reply to the WaPo’s HSR criticism appeared first on Market Urbanism.

2. Philadelphia and Washington, DC try (and mostly fail) to account for and sell off their vacant plots.

3. While DC’s “impervious area charge” that finances for the sewer system makes sense in theory, it does seem a bit inefficient to mandate that people and businesses build parking, and then charge them a fee on something they might not even have wanted to build in the first place. I guess it’s better than California’s solution.

4. NYT architecture critic Nicholas Ouroussoff rails against the NYC Planning Department’s decision to cap Jean Nouvel’s planned Midtown skyscraper at 1,050 feet (he wanted to build it 200 feet higher) and what he views as a mentality that “risks transforming a living city into an urban mausoleum.” According to the planning commissioner, the design was rejected since it failed to live up to the Empire State Building’s grandeur, which it would have rivaled in size.

The post Sunday links appeared first on Market Urbanism.