New Concept: Compare Benefits with Costs

The San Francisco Bay Area Metropolitan Transportation Commission (MTC) is considering the possibility of using benefit-cost analyses to decide how to spend federal and state taxpayer dollars. This “new” technology dates back to 1848, so you can see why regional planners might be just discovering it now.

As presented in the San Jose Mercury-News, benefit-cost analysis sounds very objective and scientific. The problem, however, is that most of the “benefits” in the analysis, including such things as “Road fatalities and injuries, emissions reductions, the cost of owning and operating a car and even the health effects of physical inactivity,” are almost completely speculative. How do you put a price on those things? How do you measure the effect of building a BART line vs. building a HOT lane on physical inactivity? The answers to these questions will be as political as any other decision, meaning the benefit-cost analysis will be just as politicized as whatever previously passed for analysis at the MTC.


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For example, the Merc-News says that the MTC estimates $5 in benefits will be returned from each $1 in cost of building a BART line to San Jose. Color me incredulous, as the environmental impact report for that line predicted that it would have zero effect on congestion (see pp. 26 through 29). For this project, I would estimate that any benefit-cost ratio greater than 0.2 is evidence that someone is fabricating data.

The good news is that the MTC estimates that the planned BART to Livermore line is a big loser, as is further expansion of the San Jose light-rail lines. Don’t be surprised, however, if the MTC decides to fund those projects anyway. Despite the best intentions of planners who delude themselves into thinking they know the unknowable, any government process that decides how to spend billions of dollars will be based mainly on political grounds such as who has the power and who contributed to the right campaigns.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

4 Responses to New Concept: Compare Benefits with Costs

  1. sprawl says:

    My daughter has been riding transit and a school shuttle for about three months. The ride is about a hour and a half each way, for a trip that takes about 20 minutes (each way) by car. She has a very limited window to use the service and is a slave to the transit schedule.

    That is if she doesn’t miss a connection, like she did one time and the trip took a extra 2 hours.

    She has done the cost benefit for herself and is looking for a car. She believes her time is worth something and it will also give her more freedom to visit friends, family and go to school on her schedule, not the transit schedule.

    She is not a fan of standing in the cold, rain or the dark or dealing with some of the obnoxious tranist users.

    She has a part time job and is useing her money, to buy the car and insurance.

  2. Dan says:

    so you can see why regional planners might be just discovering it now.

    and

    How do you put a price on those things

    Pssst…by referring to “new” technology that’s been around for years.

    If you are blatantly mischaracterizing to make a point, you’ve failed is what I always say.

    This is not to be argued that my pointing out flawed argumentation is tacit support for the standard ideological dislike.

    DS

  3. C. P. Zilliacus says:

    The Antiplanner wrote:

    As presented in the San Jose Mercury-News, benefit-cost analysis sounds very objective and scientific. The problem, however, is that most of the “benefits” in the analysis, including such things as “Road fatalities and injuries, emissions reductions, the cost of owning and operating a car and even the health effects of physical inactivity,” are almost completely speculative.

    From reading the above, it seems reasonable to ask why we are improving any of the transportation system that runs on wheels.

    My “modest proposal” is this: the population would suffer much less from physical inactivity if everyone was required to walk or run to all destinations – no motorized vehicles, no aircraft, no bikes, no horses or horse-drawn carriages or wagons allowed.

    Of course, the economy would suffer greatly under such a proposal.

  4. the highwayman says:

    sprawl said: My daughter has been riding transit and a school shuttle for about three months. The ride is about a hour and a half each way, for a trip that takes about 20 minutes (each way) by car. She has a very limited window to use the service and is a slave to the transit schedule.

    THWM: Sounds like you and her are both in a Catch 22.

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