Economics of Transportation in the 21st Century Fall 2020

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.

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.

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.