Economics as a Tool for Transportation Decision Making
travel time savings to job creation (both direct and
indirect), income growth to property value changes, motor
vehicle crashes to air quality and noise impacts, and
microeconomic choices to macroeconomic shifts,
transportation policies and investments carry great weight. This
Reference was designed to introduce transportation
practitioners to the underlying economic realities of their
profession. Ultimately, "good engineering judgment," which
is vital to defensible and optimal decision-making, depends
in large part on good economic judgment.
"I am an engineer, so I never use economics -- do I?"
common for transportation planners and engineers to feel
unfamiliar with economic principles, and some assume that
economics does not apply to their job duties. In practice,
most transportation professionals can regularly employ
economic concepts and techniques for decision-making -- and
many do, albeit unconsciously. Due to a variety of time and
data constraints, many transportation practitioners'
decision-making processes are not formally documented and
emerge via "engineering judgment." However casual in nature,
the wisdom behind such judgment comes from past experiences,
which is rarely without economic considerations and
consequences (e.g., whether to install an asphalt or
cement-based pavements or a rural two-lane highway).
Table of Contents
Introduction and Overview
Microeconomics of Transportation
Costs and Benefits of Transportation
Pricing of Transportation Services
Regulation and Competition
Transportation Planning and Policy
Transportation, Movement, and Location
Investment and Financing
Methods for Analysis
Economic Impact Analysis
of Transportation Investments and
Econometrics for Data Analysis
Example Questions Addressed
in this Reference
- How much should contractors be charged for project schedule delays?
- Should DOTs prioritize capacity-expansion projects over maintenance
- What is better for DOT budgets, the environment, and
travelers: gas taxes, VMT fees, or variable tolls?
- Should a new highway
include or exclude frontage roads? What are the monetary and other
costs associated with constructing these frontage roads relative to the
benefits they provide?
- Should a speed limit be raised (to save
travel time) or lowered (to guard against severe crashes)? What speed
changes (and times savings) can we expect from drivers, and how do all costs
and benefits compare?
- If adding a relief route attracts a new
big-box retailer to the bypass frontage, but the
competition closes several smaller shops in the city's historic downtown, what is the overall economic
impact to the city? And to the region?
- Should right-of-way (ROW)
acquisition for a new-build project include room for a future passenger
These are just a few of the questions where successful
solutions require an economic understanding. In reality,
transportation is essential to regional and national
economies, impacting almost every facet of human life,
directly or indirectly.
Citing this Reference &
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Reference is copyrighted to
Professor of Transportation Engineering
Kockelman and associated contributors, and is
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referenced. We look forward to hearing your
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