ENVIROSILLINESS:Roads and sprawl boost costs - STPP

February 15, 2001
By Peter Samuel

ENVIROSILLINESS:Roads and sprawl boost costs - STPP

Originally published in issue 53 of Tollroads Newsletter, which came out in Jan 2001.

Page:28

Subjects:envirosilliness Driven to spend

Agencies:STPP

Sources:O’Toole

“The average American family living in a highly sprawling area pays roughly $1,300 more per year in transp expenses.” (p6) In some areas the ‘costs of getting around’ are twice that of other areas.

Government spending capital and operations on surface transp in the US in 1998 was $125b but that number pales by comparison with the $675b spent by households, the great bulk of it on owning and operating automobiles. Almost 18c in the household spending budget goes for transp outmatched only by housing 19c and well beyond food 14c, various forms of insurance including pension contributions 10c, utilities 7c healthcare, clothing, and entertainment, each 5c etc. The 18c represents $6312/household/yr of which $6200 goes for the dread private vehicles, the $112 for transit and taxi fares, bicycles etc. The poorest spend the highest proportion of their incomes on surface transp: households <$12k 36%, $12k to $23k 27%, $30k to $60k 19% and those over $60k 14%. The car is a ‘necessity.’

STPP discerns a “disturbing trend” – that in the 1990s the proportion of spending on transp grew and could surpass spending housing (called ‘shelter.’) In several areas this disturbing crossover has occurred. In Houston, Dallas, Pittsburgh, Atlanta, St Louis, Minneapolis-St Paul and Kansas City the citizenry are already more heavily ‘carred’ than housed. And we Americans spend a lot more on getting around than those better organized Europeans and developed Asians, STPP reports. We spent over 13% GNP on transp in 1990 vs Europe 8%, Asia 5%. Within the US household spending in the 28 areas studied varied from the $8k to $9k/yr range for Houston, Atlanta, Minneapolis-StP, Anchorage, and Dallas through to the $6k and less which were New York, Baltimore, Chicago, Boston, Milwaukee, Tampa. The differences in transit spending only slightly offset these differences, STPP claims. Government spending on transit was $655/household compared to $250 in Houston making private plus public transp costs in the gulf city $9090 ($8,840 private) vs $6,611 ($5,956 priv). People living near-in such as downtown San Francisco or the center of Silicon Valley spend $5k or less on transp whereas people in the outer band of counties like Sonoma, Napa, Contra Costa, Santa Clare and San Mateo spend over $6.8k, the STPP shows in bright multicolored maps.

One-eyed cost seers

It is possible to accept all this data and draw the opposite conclusions from the STPP. People voluntarily spend this money on transp because they perceive benefits from so doing in excess of the costs they incur. STPP’s authors talk almost exclusively of transp as a cost and a burden. If it were just that no rational human being would incur the cost. They incur the cost because if they spend $9,090 in Houston, they must find the services they receive to be worth at least $9,090, or more.

From voluntary transactions by sentient consenting adults there come transactions with net benefits. The whole economy is built on this idea, but it has not penetrated the walls of the STPP.

Of course the same bunch of economically illiterate liberals were telling us all the same things about American spending on health being too high – back in 1993. Hilary Clinton led a great crusade in the new administration to reduce health spending to the levels of the Canadians and Europeans. The politicians soon heard from the people that they valued the right to choose what they spent on health and wouldn’t tolerate a government scheme that treated health spending as just some cost, which needed to be reduced. This kind of one-eyed thinking never made it to the Congress, it is so at odds with commonsense.

In places where people spend more on transp than other places they must receive more value from their driving. One value may be to access the same facilities and jobs but live in more economical or less crowded housing. The people living in the trendy downtown areas like the city of San Francisco may very well be able to live more of their lives in that limited neighborhood and travel less. But they probably pay a lot more for housing and other goods and services than people on the fringes. The fringe dwellers pay more for transport, sure, but think that extra spending is of value because they can access a larger portion of the metro area and embrace a wider range of opportunities.

STPP’s tract dwells interminably on the differences in cost of transp, but has hardly an allusion to the benefits of getting around, the reason people make these outlays.

The hermit – living a solitary life all by himself and going nowhere – should be STPP’s hero, their posterchild. Zero transp cost. Even better the corpse in a grave.

Investment

The next STPP argument is that housing is a better investment than a car, because it holds its value better. But cars, and houses too, are not investment instruments like stocks, bonds, or mutual funds. People buy them principally for the consumer services they provide - services of getting you around, and providing a home, respectively. How long they last matters too of course. But if maintaining capital value were the test of spending you’d recommend less spent on food and more on cars, since cars last longer than food. And rather than invest in houses which depreciate, you’d recommend they buy the land alone.

“Driven to Drive” is, in the end, just stupid stuff, so stupid it is hardly worthy of review. Are the people who write it just stupid people? Or are they smart people writing to manipulate stupid people. (“Driven to Spend” is available for download at the STPP website www.transact.org)

Commentary by Randal O’Toole

This is another report blaming transportation problems on the suburbs. “Driven to Spend” claims that low-density suburbs (“sprawl”) make people poor because it forces them to spend more of their incomes on transportation.

“Transportation is a big expense for America’s families, and it is getting bigger,” says the report. “This study finds that a major factor in driving up transportation costs is sprawling development.”

The study relies on very limited data to prove its point. It compares the percentage of personal income that people in 28 metropolitan areas spend on transportation with the “sprawl factor” of those areas - essentially a measure of whether an urban area fits the 19th century pattern of development (high-density, concentrate downtown) or the twentieth-century pattern (lower-density, widely distributed employment).

Because it has high densities, Los Angeles has one of the lowest sprawl factors of the 28 areas – a result not commented on by the report’s writers. Typically, the report includes no actual data so none of its conclusions can easily be checked. Nor can a statistical analysis be performed to see whether there is any significance to the report’s conclusions. However, we can look at other data to check the reports claims. First, is transportation getting more expensive? And second, is low-density development making it more expensive?

The best way to answer these questions is not to compare a small number of urban areas for a single point or short period in time. Instead, it is to compare data over a long period of time. “National Transportation Statistics,” an annual report published by the Bureau of Transportation Statistics, contains transportation costs data extending back to 1960 (http://www.bts.gov/ntda/nts/NTS99/data/NTS99.xls.zip). While it would be nice to go further back, this is sufficient since sprawl-opponents claim we have suffered lots of sprawl since then.

These data show that: (1) the cost of transportation as a share of gross domestic product is falling; (2) the cost of driving as a share of personal income is also falling; (3) the cost of driving each mile is also falling; (4) the cost of transit is rising.

As a result, people drive more yet spend less on transportation. But

the Surface Transportation Policy Project’s study ignores the rising cost of transit because most transit costs are paid by taxes, and their study counts only costs paid by consumers.

1. THE COST OF TRANSPORTATION AS SHARE OF GDP

In 1960, all freight and passenger transportation costs in the US amounted to 20.6% of the nation’s gross domestic product (GDP). Due to high fuel prices, his briefly shot up to 28.6% in 1975. But it has been declining ever since, and in 1997 amounted to just 16.1% of GDP. This hardly makes it appear that sprawl since 1960 has led to rising transportation costs.

2. THE COST OF DRIVING AS SHARE OF PERSONAL DISPOSABLE INCOME

The Surface Transportation Policy Project’s report looked at personal costs, not costs to the total economy. So let’s consider the cost of driving since 1960.

In 1960, the average American spent 15% of his or her disposable income on buying, operating, and maintaining automobiles. Again, in 1975 this briefly spiked to nearly 20%. But by 1980 it had fallen to 14%; by 1990 to 12%; and today it is around 11%. This is a decrease of 24% since 1960.

This decline is in spite of the fact that we drive much more today than in 1960. In 1960, autos carried the average American about 6,300 passenger miles/year. Today they carry Americans more than 14,000 passenger mi/yr, an increase of about 124%. Despite this huge increase, the share of personal income spent on driving fell by 24%.

3. THE COST OF DRIVING PER MILE

One reason people drive more is the cost of driving has decreased. In 1960, Americans spent an average of 23.5c/mile (in 1997$s) to drive their cars and light trucks. Today this has fallen 26% to just 17.4c/mi, no doubt largely because of more fuel-efficient cars. Another reason people drive more is that they make more money. In 1960, disposable personal income averaged $9,900 (again, after adjusting for inflation). Today it is around $22,000. This represents a 118% increase. A 118% increase in income combined with a 26% decrease in the cost of driving each mile makes it possible for Americans to

drive 124% more yet spent a significantly smaller portion of their income on autos than they did in 1960.

The STPP argues that people drive more because they are forced to by sprawl and that this extra driving imposes a costly burden on Americans. The reality is that people drive more because they can afford to do so, and this has given them

the opportunity to move to the lower-density areas in which they prefer to live.

4. THE COST OF TRANSIT

The Surface Transportation Policy Project looked at the cost of transportation as a share of people’s personal incomes. But in transit-dependent cities, such as New York, much of the cost of transportation is not paid out of personal incomes. Instead, it is paid out of taxes. In 1960, when most transit companies were private and not subsidized, the cost of transit averaged 18 cents per passenger mile (in 1997$s), a little less than the cost of driving. By 1975, when virtually all transit agencies were publicly owned and heavily subsidized, the cost per passenger mile reached 44c – most of which was paid by taxpayers, not transit riders. Today transit costs exceed 50c/passenger-mile. This is three times as great as the cost of driving a private car per passenger mile.

Auto drivers get subsidies too. But as explained in The Vanishing Auto (p380-383), subsidies to highways average around 0.2c passenger-mile. Even if all social costs, such as air pollution, are counted, subsidies are less than 7c/passenger-mile.

STPP exactly wrong

For most of the past fifty years, the cost of driving has steadily fallen while personal incomes have steadily risen. This makes it cost less and less to drive more and more each year. Americans have responded: they drive more. Of course, people don’t drive more simply because they can afford to do so. They drive more because driving gives them opportunities for better jobs, better schools, better housing, and better quality and more affordable consumer goods.

Even Americans in dense cities with low “sprawl factors” drive more than they used to drive. But most Americans have elected to live in areas compatible with their transportation.But for whatever reasons people drive, the STPP’s claim that transportation costs are rising is simply wrong. Instead, costs are falling. Their claim that rising costs are caused by urban sprawl is doubly wrong. Instead, what they call sprawl is the result of falling costs giving people the opportunity to live the way they want.Opponents of the suburbs would like to deny that opportunity to future Americans. We have to make sure they fail. [Randal O’Toole runs the Thoreau Institute in Brandon OR, is a visiting lecturer at Berkeley, Yale and other fine universities and is a premier researcher and critic of the environmental movement. He played a major role in getting anti-roads groups defunded during the Clinton administration by exposing their activities. He recently published “The Vanishing Automobile and Other Urban Myths,” a 545-page book about how smart growth will harm American cities. It is available for $14.95 plus $4 shipping in the US. rot@ti.org www.ti.org]

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