NCPA - National Center for Policy Analysis

Traffic Congestion and the Economic Decline of Cities

January 12, 2012

Despite public frustration with traffic, a growing group of urban planners is vocalizing support for traffic congestion, citing it as a symptom of economic success.  In fact, cities are now voluntarily opting to slow themselves down by embracing congestion. writer Will Doig notes that cities are doing this by encouraging non-automobile transportation modes such as bicycling, slowing cars with "traffic calming" devices, adopting "slow zones," and encouraging "walkability."  However, this new trend toward intentional congestion ignores the economic repercussions of traffic, says Samuel Staley, a research fellow at the Reason Foundation.

  • Longer commutes inhibit the efficiency of labor markets, as workers are indirectly encouraged to accept suboptimal jobs in order to avoid long commutes.
  • Fear of traffic makes major metropolitan areas look less attractive for potential residents, discouraging migration.
  • Time wasted in traffic is time spent unproductively, as it contributes neither to a person's work nor that person's desired free-time activities.

The aggregate economic impacts of these factors were flushed out in a recent study of 85 major metropolitan areas across the United States between 1990 and 2003:

  • A 50 percent reduction in congestion could boost employment by 10 to 30 percent in America's top 10 most congested cities.
  • For Los Angeles, the most congested city in the United States by several measures, a 10 percent increase in regional congestion reduced employment growth by 4 percent.
  • For many of the larger cities, a 10 percent reduction in travel times could boost production of goods and services by 1 percent, leading to tens of billions of dollars in higher income and output for those cities.

Urban planners that take these economic costs into account acknowledge that certain traffic situations are not nearly as costly and therefore do not warrant the same response as others.  For example, destination traffic, in which congestion increases as drivers all attempt to get to a specific, local location (e.g., sports arena), is hardly the same, dire economic loss mentioned above, as it affects relatively few drivers (most of whom voluntarily participate).  Rather, policy should focus on congestion in through-traffic areas, as this has the largest impacts on the city's aggregate production.

Source: Samuel Staley, "Traffic Congestion and the Economic Decline of Cities," Reason Foundation, January 5, 2012.

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