The Political Economy of Transportation Investment
Will politics lead to over-building or under-building of transportation projects? In this paper, we develop a model of infrastructure policy in which politicians overdo things that have hidden costs and underperform tasks whose costs voters readily perceive. Consequently, national funding of transportation leads to overspending, since voters more readily perceive the upside of new projects than the future taxes that will be paid for distant highways. Yet when local voters are well-informed, the highly salient nuisances of local construction, including land taking and noise, lead to under-building. This framework explains the decline of urban mega-projects in the US (Altshuler and Luberoff 2003) as the result of increasingly educated and organized urban voters. Our framework also predicts more per capita transportation spending in low-density and less educated areas, which seems to be empirically correct.
We thank Kevin Chen for excellent research assistance, and Stephen Coate, Gilles Duranton and seminar participants at the NBER Summer Institute for helpful comments. We acknowledge financial support from the Taubman Center for State and Local Government, the European Research Council under the European Union's Horizon 2020 research and innovation program (grant agreement n. 714905), the Spanish Ministry of Economy and Competitiveness (grants RYC-2013-13838 and SEV-2015-0563), and the Government of Catalonia (CERCA program and grant 2014 SGR 830). The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Edward L. Glaeser
I have received speaking fees from organizations that organize members that invest in real estate markets, including the National Association of Real Estate Investment Managers and the Pension Real Estate Association.
Edward L. Glaeser & Giacomo A.M. Ponzetto, 2017. "The political economy of transportation investment," Economics of Transportation, . citation courtesy of