Scott Sumner  

Building more highways will reduce traffic congestion

The monetary economics of the ... Quickly Admitting You're Wrong...

Here is Kevin Drum:

This is not Econ 101, not by a mile. Just as building more highways attracts more cars and ultimately does nothing for traffic, building more housing attracts more people. We could make housing less expensive in Los Angeles--just as we could reduce traffic by building highways 40 lanes across--but the amount of new housing it would take to make a sizeable dent in prices is truly vast.

Don't believe it? Consider New York City. Sure, building stuff there is hard, but it's a city that's basically friendly to high rises--and it has been since the invention of the safety elevator. By American standards, it also has a uniquely effective mass transit system. And yet, New York City is an expensive place to live. It's been an expensive place to live for the past century. [See update below.] If you want cheap housing, this means you have to think beyond New York City. Whatever your plans are, they probably won't work unless you have denser development and better mass transit than New York. There is not a city in America that's within light years of this.

Actually, it is Econ 101, and unless I'm missing something Drum is wrong on this issue. It's true that there are examples of cities that both built more highways and suffered increased traffic congestion. But even in those cases, the highway construction reduced congestion, ceteris paribus.

It's also true that building more highways encourages more people to use the highway. Thus adding a lane to a LA freeway will cause more people to use that freeway. But it's not true that the traffic will be just as bad as before, ceteris paribus, because in that case you never would have gotten any additional people to use the freeway. The increased traffic occurs precisely because the cost (in time) is lower, as there is now less congestion.

Think of traffic congestion as the cost of using a freeway. Now think about the forces of supply and demand in a normal market. If you increase the supply of product X, more people will consume product X. But that's only because the price is now lower. It would be wrong to claim that the increased supply of product X caused so much more demand that the price rose right back up to the original level. Indeed "demand" doesn't increase at all, rather quantity demanded rises due to the lower price.

America has roughly 325 million people, mostly scattered across hundreds of cities in 50 states. We do not need to build lots more New York Cities to house these people adequately. We simply need to add some housing units in a few places that are highly popular, such as coastal California, Boston, New York, Seattle, etc. If we do this, it is very unlikely that all 325 million Americans will want to move to those hot spots. Lots of people are happy living in Chicago, Dallas, Salt Lake City, and Charlotte, as well as hundreds of other cities.

Again, this problem is not hard to solve. I am currently in Japan, where development is far denser. We can solve America's housing problems without making America anywhere near as dense as Japan. We simply need to make roughly 20% of America about 25% denser, and leave the rest of America unchanged.

Forget about dystopian visions of LA's San Fernando Valley turning into Manhattan. It wouldn't happen, even with Houston-style (non)zoning.

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CATEGORIES: Growth: Consequences

COMMENTS (18 to date)
Peter Gerdes writes:

One could easily think that the limiting factor preventing more people from moving to your city is largely the expense of housing. Thus, build more housing and the new equilibrium has only slightly lower housing prices.

While possible using this as an argument against YIMBYism is either deeply selfish or confused. I mean in order for this to be true it's got to be that there are lots of people who would love to move from wherever they are currently living to LA if only they could afford to do so.

So either the argument is selfish in the sense that it's designed to convince people who only care about having the social benefits of cheap housing nearby (so they have artists or character or something) and don't care about the welfare benefits offered to the new people who move in or it just fails to consider these factors.

ChargerCarl writes:

Kevin talks about New York being expensive, but its still considerably cheaper than the Bay Area.

Kevin Erdmann writes:

It's such a strange argument. Imagine, someone saying, "If we double the size of the Ivy League schools, do you think that is really going to solve the problem of access to education? There will be just as long a wait list as there is now."

"If we expand the growth of doctors and nurses, do you really think it will lead to empty waiting rooms? People will just seek more health care, and when the next flu outbreak happens, the waiting rooms are just going to fill up again."

What a strange political moment we are in where latent demand for something is a reason not to increase the supply. And where the solution to some of the problems is raising property taxes, which apparently only can be done in conservative states.

Various writes:

Thank you for writing this piece. I also saw Kevin Drum's article and was similarly perplexed. I believe he made a similar argument about housing, and that is that the construction of more housing leads to higher housing prices and more congestion. Ironically, I believe the photo he shows in his article is of Hong Kong, a place that I would suggest owed its explosive growth to those looking to escape or at least bridge to Communist China. In other words, more freedom an increased economic opportunity. Housing construction was obviously more of a result of economic activity and increased prices, not the cause.

Mark Z writes:

Drum’s argument seems particularly absurd applied to housing. A lot of people aren’t driving right now that could be, but virtually everyone lives somewhere, so by definition building new housing in one place diverts demand from somewhere else.

His claim regarding traffic is still pretty bizarre though. Does he think there’s a linear relationship between road capacity and amount of driving? If we expand road capacity by 10% then people drive 10% more? If that’s so then if we keep expanding road capacity enough then we’ll all spend our entire lives in traffic just to enjoy the surfeit of roads. No, it makes far more sense to assume a declining slope in road usage as a function of amount of roadage.

Maniel writes:

Prof. Sumner,
Congratulations on your Latin: “ceteris paribus” is not a trivial qualifier. For example, knowledge of a new or more convenient route from home to work is likely to influence choices of where to live. A freeway upgrade might appear to transform an insufferable commute into the justification for a more affordable home at a greater distance from work. Having learned my Latin on Google, allow me to offer, “mutatis mutandis;” traffic may eventually rise to meet the added capacity.

The issue with highways is that (in the US) users are not charged for them. Seems like an awful example to give of "markets not working".

Mike Sproul writes:

Drum has apparently learned just enough about Frank Knight's road problem to be dangerous. What is it with progressives and high density development? Do they not see that dense cities are an easy target for terrorists? Or that kids do better with back yards than with balconies?

MikeP writes:

I'll quote what I recall writing nine years ago:

My issue is with the entire "building new roads does not alleviate congestion" argument. That argument weighs a second order bad (congestion) higher than a first order good (people going where they want to go). In fact, with a myopic silliness, some making that argument actually have the gall to claim that more people will be in the same congestion, so the situation is worse.

The metric we should be concerned with is not congestion. It is exactly passenger-miles transported door-to-door. The second metric we should be concerned with is time per passenger-mile door-to-door.

In all but the most compact of cities, which do not include Los Angeles or the Bay Area, roads completely outclass any existing or proposed mass transit. Indeed, even on the second metric, I will venture that many if not most prefer to spend 5 more minutes in stopped traffic listening to the radio than walking from their transit stop to their door.

Alan Goldhammer writes:

MikeP wrote:

I will venture that many if not most prefer to spend 5 more minutes in stopped traffic listening to the radio than walking from their transit stop to their door.
Not me!!! I spent 26 years working in downtown Washington DC and I can count the # of times I drove into work on the digits of my hands and feet. I much preferred my walk to the Metro station, about 18 minutes, and a smooth ride (most of the time) down to my office which was about 18 or so minutes. I used this time for reading books so I had about 40 minutes of uninterrupted reading a day. Washington traffic is maddening and no way did I want to drive to work.

I remember a discussion session from many years ago when we were studying fluid dynamics in intro physics. The TA compared it to the building of new highways. The highway gets built with the idea of alleviating traffic but just as in the case of adding a new pipe branch, it quickly becomes overwhelmed. Highway design has gone on for years and traffic congestion never seems to be a solvable problem.

Scott Sumner writes:

Maniel, Yes, but it won't rise to the original level because of the new capacity.

BC writes:

@Kevin Erdmann: "What a strange political moment we are in where latent demand for something is a reason not to increase the supply."

I actually LOL'd when reading this.

The demand for housing (highways) is either steep, flat, or in between. If steep, then building more housing (highways) will dramatically reduce prices (commute times). If flat, as Drum seems to believe, then building more housing (highways) will allow many more people to live in cities (to commute) *without* increasing housing prices (commute times).

Josue Emanuel Garcia writes:

So I've watched a few videos on roads and city planning there's the basic ideology of road space, living space and walking space which each with I believe comes to this topic. In major cities like NYC, everyone is living in apartments with are usually high rise. They are also working in large buildings. What these buildings have in common is that they each are three-dimensional spaces where people travel to and fro. That's where I think a major key element is missing with highways and transportation. There is a necessity for an underground tunnel system that exponentially increases the space we have to drive in (yes this is similar to the boring company). One of the major reason that merely building wider freeways is ineffective is because the entry points are the one causing all of the traffic. If there was a way to link all of the cars so that their speeds would integrate together better that would solve our problem. The problem is simply supply and demand there is no supply for road space and there is a high demand for it during commuters hours. Additionally, the area now occupied by roads used to belong to pedestrians. If we move cars or limit them from the roads of the inner city then (to the tunnels) then that frees up space for pedestrians to walk more freely, to ride their bikes and it will promote a cleaner lifestyle. Furthermore, this change of how we interact with our city is directly related to how the demand for space will change over time in cities.

Michael writes:

I think you're missing something: political context. No one sells highway schemes as provision for more people to drive. They are demanded, and promoted, as solutions to congestion: making it faster for current users. More construction fails to deliver that.

There's another problem. Adding extra users on one bit of highway creates bottlenecks elsewhere. An important one is parking, which forces yet lower density development. Low densities make it harder to provide good options except private cars, so choice is actually constrained.

Chris writes:

Kevin's article struck me as the rough equivalent of:
SB827 is likely to work:
a) Making CA cities more populous is bad for the Democratic Party
b) Making CA cities more populous necessarily means those cities would change and there are lots of people that don't like change so we shouldn't make them.

There are some hand-hearted hand waving attempts to refute that the measures would work, but they aren't intended to convince anyone other than those that already want to believe.

Tom DeMeo writes:

@Kevin Erdmann

The reason to not increase the supply is that these places are working better than anywhere else the way they are. The natural political equilibrium on density for these places may very well be an important factor in their success.

Kevin Erdmann writes:

Tom DeMeo,

How would you determine whether more density would be better or worse?

Many new units in these cities are obstructed because they are claimed to be luxury units that don't help with affordability. Is that a sign that the addition of new units is lowering the value of the city?

Millions of households with low incomes have had to flood out of those cities over the past 20 years or so because of the lack of housing. Where do they factor into the political equilibrium?

Savva Shanaev writes:

Drum may be indirectly referring to the Braess's paradox stating that building additional roads may increase congestion as individual drivers choose most quick routes to get to their destination and that it may lead to inferior equilibrium outcomes for drivers as a whole (classical game-theoretic caveat). However, this paradox, as many others, is far from a general case and to avoid it just requires some rough estimations of current traffic flows before planning the expansion of the road network.


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