That’s a question we have to ask ourselves all the time. It struck the Antiplanner as I was grating Parmigiano-Reggiano cheese for my home-made Neapolitan pizza. Those little wedges of parmesan cheese you can buy at any supermarket cost about $10 a pound. But genuine Parmigiano-Reggiano, aged 18 months, typically costs $15 (though I get it at Costco for about $11). Many people probably couldn’t tell the difference after the cheese has melted on the pizza, but the flavors seem very different to me, and it is worth a little extra to have the genuine stuff.
In this case, I am paying 10 percent more for something that seems to me to be twice as good. Is it ever worth paying ten times as much for something that is only 10 percent better — or even 1 percent better? That’s a question I sometimes think about when I am cycling on my 2001 Trek 5200 bike with its Ultegra components.
Bikies will recognize the 5200 as one of the first popular all-carbon frames, now replaced by the Madone 5.2. Meanwhile, Ultegra is Shimano’s second-best component line. Shimano’s top-of-the-line components, known as Dura-Ace, came with the Trek 5500, now replaced by the Madone 6.5, which costs about 70 percent more. The price spread was about the same for the 5200 and 5500 even though the frames were identical.
No one believes that Dura-Ace is worth 70 percent more than Ultegra. In fact, the differences in weight and performance may be only a couple of percent. For a recreation rider like me, Dura-Ace is not worth the extra cost. But if I were a professional racer in day-long events that are won by a few seconds, getting an extra percent of performance could be worth tens of thousands of dollars.
In a sense, this pricing system is a scam. My previous bike had Dura-Ace, and the one before that had Campagnolo Record (which at the time I bought it was rated even higher than Dura-Ace). But bike companies figured out that people are willing to pay a premium for top-of-the-line components.
Every lock has its age and it can viagra properien heritageihc.com happen to men in any age and any time in your life. The study findings, Sommer free viagra prescription and colleagues note that there are many treatments available for men who are suffering with erectile dysfunction. But, what if you become incapable of fulfilling yours as well as your partner’s needs? It cipla tadalafil sure is tragic. Joint replacement procedures are designed to replace the damaged joints with metal and plastic components which are included in the pill are excellent which hence forth makes it easy buy viagra italy for people to enjoy best erections. Racers aren’t the only ones who buy Dura-Ace and Campagnolo Record. I might buy them if I were so rich that the $3,000-$5,000 difference in price wouldn’t make a dent in my wallet.
So how much is quality worth? It is definitely worth a little more if the difference in quality seems big. It can be worth a lot more even if the difference is small if that small difference can make the difference between success and failure. And it can be worth a lot if that extra premium is relatively tiny compared with your wealth or income.
So how much is rail transit worth over bus transit? For the sake of argument, let’s grant that rail transit is slightly better than bus transit. Maybe it attracts a few more riders. Maybe it gets those riders to their destinations slightly faster than bus-rapid transit would do. Maybe it creates a slightly more elegant atmosphere for urban businesses than ordinary buses.
Realistically, however, the differences — if they exist at all — are slight. The Portland and Seattle urban areas are pretty similar, yet the 2000 census found that Seattle was able to attract 7.9 percent of commuters to its buses while Portland could only attract 7.8 percent of commuters to its buses and light rail combined. (By 2007, according to the American Community Survey, Seattle was up to 8.7 percent while Portland was down to 6.5.) Meanwhile, the cost differences are huge: the capital cost of rail is roughly 50 times the capital cost of buses. On comparable routes, rail operating costs are also greater than buses.
So what makes rail worth 4900 percent more than buses? It is clearly not the quality difference. Nor are transit agencies running some race that will earn them billions of dollars if they win by a few seconds. Nor are they so awash with money that they can sniff at the difference in price.
In the case of rail transit, what makes it worth the extra cost is one thing and one thing only: someone else is paying for it, so neither transit agencies nor riders have to count the extra cost. In which case, I’ll take a Madone 6.9 with Campagnolo Super Record components. That’s at least six times the cost of my current bike, but if someone else is paying for it, it is definitely worth it.
I’ll paraphrase Milton Freidman.
When you buy something for yourself with your own money, you are concerned about both price and quality. When you bu something for yourself with someone elses money you are concerned primarily with quality. When you buy something for someone else with your money, you are primarily concerned about price. When you buy something for someone else with someone elses money there is no incentive to care about price or quality.
Antiplanner,
Your friends and your opponents both know that you are a connoisseur of Nealpolitan pizza and that you are knowledgeable about bicycles. The concepts that you bring up today, in the framework of economics, are called Utility. In particular, your zest for wanting to have a particular kind of cheese with your pizza would be addressed under the concept of marginal utility.
The same goes for bikes. You would be happy with a certain bicycle, but a professional bicycle rider would not because his / her athletic career at least partially depends on obtaining the best equipment, for which they are willing to pay substantial sums of money to acquire, would mean that professional bike riders derive substantial marginal utility from paying all that extra money to obtain that expensive bicycle that will give them that extra edge in the Tour de France.
Based on my studies, and on my FOIA requests, of my local transit agency’s bus routes, our lone rail line runs at an average of about 14 mph in dedicated lanes, while the buses run at an average of 10 – 13 mph in mixed traffic. Much of the remaining speed differential can be explained by the fact that the buses stop on an average of once every quarter mile, while the rail line stops every half mile or more. My belief is that if you were to run buses in dedicated bus lanes, or were to run rapid buses that stop only once per mile or so, that buses would be faster than a rail line.
My thoughts are that the biggest factors that drive trip mode decisions are wait times, then reliability, then speed. Flexibility also helps.
Lower marginal utility derivation (aka “satisfaction”) on trips come from issues like comfort or luxury. Climate control is a big issue here. Do you get to enjoy air conditioning or heating on your trip? Lesser issues are questions such as whether you get to sit down while traveling or do you stand? Do you get to listen to your favorite music or read while traveling? Does it really matter to you what kind of material the seats are made of?
At the end of the day, what really matters is whether you can reliably get to where you are going at a pace that is satisfactory to you, that won’t leave you sweating up a storm, freezing, or soaked in rain.
I like riding my old 1970 Schwinn La Tour. I don’t care if it is heavy by today’s standards, because I’m riding it for exercise. And I don’t ride in the rain anymore.
Regarding rail (and in particular rail vehicles), the Washington, D.C. and its suburbs have built a large heavy rail system since the late 1960’s (largely courtesy of federal taxpayers).
And there have been plenty of railcars purchased – from an assortment of vendors: Rohr, Breda, CAF and Alstom. Some of the Bredas have been through a mid-life overhaul at Alstom’s shops.
There have been many problems with the CAF railcars – and the overhauled Bredas that have come back from Alstom have not exactly been trouble-free.
As best as I can tell, the Bredas have been the most reliable of the bunch (at least when they were new), yet when it came time for the transit authority to order new ones, they had to go with lowest bid (per Federal Transit Administration rules), which meant CAF and then Alstom, even though this meant additional parts for these new types of railcars. Lifecycle cost and the additional cost of servicing and maintaining additional types of railcars could apparently not be considered.
“but if someone else is paying for it, it is definitely worth it.”
That should be the libertarian party slogan. Ron Paul 2012!
If as Gleaser argues in Superstar Cities the top ten expensive metro areas are self-selecting wealthy families, what’s the issue with them taxing themselves for a luxury item? Now Houston, Tucson, Phoenix…these are cities where there’s a utility argument to be made. But Portland? Seattle? They’re luxury cities. Let them eat cake.
You forgot to mention that Seattle spends way more in operational costs per year than Portland (like a lot more). Yes, LR has a higher capital cost, but buses are not paying any share in road construction and maintenance. They also cost more to run and don’t last as long as LR vehicles.
Factor in the saving per year in operation costs, and the high up front capital cost can be offset to a reasonable level.
Antiplanner wrote:
“But bike companies figured out that people are willing to pay a premium for top-of-the-line components.”
I’ve heard that paying more than £500 for a bicycle produces greatly diminishing returns. I bought a bicycle recently for £700, with straight handlebars, narrow tyres, and carbon fibre forks & seat-stay. It is very lively, and more bicycle than I’ll be every able to use, although very nice.
It is a pity then, that the local council has not provided secure parking in the city centre. They are obsessed with their new BRT scheme, which runs one bus every ten minutes down an expensive track. Is that BRT?
Cyclists tend to get cycle lanes and cycle paths instead. Neither are particularly helpful, and in most cases are more dangerous than cycling on the road. Then the councillors are surprised at the low level of cycling.
At far as transit goes, there is some useful information here:
http://www.transportpolicy.org.uk/PublicTransport/AdvancedBuses/AdvancedBuses.htm
Figure 2 shows how operation costs decrease for LRT with increasing numbers of passengers, and increase with buses, which is one reason why people buy LRT. Other reasons are that LRT is safer in pedestrian areas than buses, and produce much less emissions than diesel buses. Figure 3 shows how bad diesel buses are by comparison to cars.
The problem with buses is getting the transit company or organisation to splash out on better buses (as shown in the link given above). Diesel buses thus win out without much thought being given to anything.
ws said: You forgot to mention that Seattle spends way more in operational costs per year than Portland (like a lot more). Yes, LR has a higher capital cost, but buses are not paying any share in road construction and maintenance. They also cost more to run and don’t last as long as LR vehicles.
Factor in the saving per year in operation costs, and the high up front capital cost can be offset to a reasonable level.
Well: If you want to be fair with Seattle then capital costs of tram track should also be spread back over the past 70 years of system neglect.
jwetmore said: I’ll paraphrase Milton Freidman.
When you buy something for yourself with your own money, you are concerned about both price and quality. When you bu something for yourself with someone elses money you are concerned primarily with quality. When you buy something for someone else with your money, you are primarily concerned about price. When you buy something for someone else with someone elses money there is no incentive to care about price or quality.
THWM: For that matter I have little faith in both public & private sectors.
Randal fantasized:
Realistically, however, the differences  if they exist at all  are slight.
Tell that to all the people who don’t want to ride the bus but will ride the train. Social status, perception, all that. All your auto-dependency wishes won’t make them ride that horse.
DS
If the Trains are so great, why are the users unwilling to pay the full cost of riding on it?
If cars are so great, why do users not pay full cost of driving?
DS
sprawl said: If the Trains are so great, why are the users unwilling to pay the full cost of riding on it?
THWM: ROTFLMAO!
sprawl:“If the Trains are so great, why are the users unwilling to pay the full cost of riding on it?”
ws: If highways are so great, why don’t we tax every mile of them like we do the railroads? Highway users pay a fee for maintenance and construction, and the ROW’s of highways are TAX FREE – unlike the private railway companies.
Antiplanner,
Finally, a chance to comment on something I think is interesting — bicycles! Consider the aforementioned Tour de France racer. Previous commentators believe this iconic cyclist buys his own mucho-expensive carbon fiber steed. Nothing could be further from the truth. His team sponsor gives him the bike for free. Even higher-level amateur racers get their bikes for free. Why? Advertising value. The sponsor believes the expensive bike is worth buying because the racer will bring attention to something the purchaser wants to sell, e.g., bikes.
Might advertising value explain some part of why so many civic leaders (sic) spend tax dollars so profligately on light rail? Is light rail the Olympics of transit? By any standard accounting method, Olympics are hosted at a phenomenal cost compared to the direct financial return. So why is there such a long line to host the Olympics? Advertising value.
Trek — the brand of bicycle the Antiplanner rides — enjoyed explosive growth in sales as a direct consequence of its sponsorship of Lance Armstrong. Lance didn’t pay a penny for his Trek bikes. In fact, it cost Trek millions to sponsor Lance. And Trek didn’t get a single penny back from Lance’s race winnings. What Trek got was both more valuable and less tangible. Legions of wanna-be-like-Lance cyclists went out and bought Trek bikes.
Trek took a big risk underwriting Lance. He might have broken his collarbone before winning 7 Tours, not after. The return on its investment could have been zilch; instead Trek now sells over half-a-billion dollars in bikes annually. It would not have happened but for Trek’s investment in Lance.
Does Portland enjoy advertising/marketing benefits from its investment in light rail? I suggest it does. Those benefits are surely difficult to quantify, but that does not make them worthless.
ws–> I actually view the lack of paying extra for roads as a plus for buses. It’s hard to be efficient when you have redundancy. Although I’d be curious as to what they do pay. I’d assume MTC, RTD or whatever transit agency has to pay for state licenses for their buses. Do those vehicle fees reflect their costs?
Also the day to day operating costs seem to have little if any difference. IIRC BRT vs LRT on the Central Corridor when studied a few years ago would both have $38 million / year in operating costs.
I just ran into the issue the original blog post addresses about an hour ago. I’m taking a class this spring quarter and got a $200 book voucher for it. So I’ve got a “free” $200 (had to pay for the class though) that I can use to get books for the class but that anything left over won’t be coming back to may account. So instead of the usual regular S&H, I “spent” something like 40% more to expedite it. And that expedition gets it here a whole day earlier (oh boy!). I was well under the voucher limit so it wasn’t coming directly from my pocket so why not? But it wasn’t just the S&H aspect, me just buying the book is an example of caring less when it’s not my money. This is technology related class and most of the time in the past I’ve been able to do these courses without buying any of the books. I just borrow similar ones from the library or find the information on the internet. If it wasn’t for someone else’s money I probably wouldn’t have bought it (from the syllabus it doesn’t look like I need the book for any specific work). Worst case scenario is that in the first week of class I realize I need the book because we have specific problems assigned from it (and I can’t find someone to take me up on the offer of $15 to photo copy those problem sets for me), so I just order it and get it as quickly as possible. The risk of spending an extra $10 (and the hassles) is more than offset by the number of times I’ve saved $100-200 by not buying any of the books. Yeah for other peoples money!
prk166: “Also the day to day operating costs seem to have little if any difference. IIRC BRT vs LRT on the Central Corridor when studied a few years ago would both have $38 million / year in operating costs.”
ws: Operating costs are in issue if you consider 30 years down the road. Buses don’t last as long, you need more paid drivers to operate them, and you need more buses to move as many people.
prk166 said: Worst case scenario is that in the first week of class I realize I need the book because we have specific problems assigned from it (and I can’t find someone to take me up on the offer of $15 to photo copy those problem sets for me)…
THWM: So, in other words what you’d rather do is a form of theft?
The link to the 2007 “American Survey” is a bit off. The “urbanized areas” for Portland and Seattle are way bigger than what it’s showing, right?
ws said: If highways are so great, why don’t we tax every mile of them like we do the railroads? Highway users pay a fee for maintenance and construction, and the ROW’s of highways are TAX FREE – unlike the private railway companies.
THWM: Then why not then make railroad land property tax exempt and have a more level economic playing field?
Dunno, then that means private companies like BNSF and Union Pacific, two private companies, would be getting tax free status. Then other private companies outside the transportation market would want tax free exemption as well.
Then public utilities in general shouldn’t pay property taxes.
“THWM: So, in other words what you’d rather do is a form of theft?”
Hmmmm…. good question. Do the copyright laws mean that I can’t copy the whole book, just the problems being assigned? In this case I’m not looking for the content of the book overall. Not how it teaches data structures or how it describes mixins but just what problems 3, 7 and 12 are at the end of the chapter. Probably still not legal… but eh, a man’s gotta have a little money left over for some good beer right? 😉
“ws: Operating costs are in issue if you consider 30 years down the road. Buses don’t last as long, you need more paid drivers to operate them, and you need more buses to move as many people.”
Which is where the $38 million comes into play…. that is measuring the operating costs. Even with those ongoing costs and less revenue from having @25% less ridership, the cost to the tax payers was the same either way. Keep in mind that if properly done, the costs for maintaining the rail cars or buses would be included whether they need to be replaced every 10 years or every 30. Is i5t a factor? Sure, but it’s far from the only cost at play. I would assume in this case the much lower up front costs of the buses offsets the higher ongoing maintenance costs. Plus it’s not as though rail cars require no maintenance. At least in that case, it appears to be a wash.
That’s still doesn’t add up.
Andy Stahl,
Light rail does advertise something about a city. It says, “We are rich enough to flush hundreds of millions of dollars down the toilet.” Or, for the naive, it says, “We care more about image than reality, and light rail has the image of being environmentally sensitive even though it is not.”
The Antiplanner[sic]said: Light rail does advertise something about a city. It says, “We are rich enough to flush hundreds of millions of dollars down the toilet.†Or, for the naive, it says, “We care more about image than reality, and light rail has the image of being environmentally sensitive even though it is not.â€Â
THWM: If you design a gold plated system then things are going to be expensive, if you don’t then then the price range is quite reasonable and you’ll have a good civc investment.
Remember Mr.Stahl, Mr. O’Toole gets paid by people that don’t really want you to have a choice of mobility. Mr.O’Toole’s comments on railroads/transit make just as much sense as comments from KKK memebers on interracial marriage.
That’s why almost what ever Mr.O’Toole or Mr.Cox write isn’t based on being reasonable, it’s based on fear & hate.
So fearful and hateful that comments like that are allowed on the blog?
Charming yet alarming!
Also just so you know I’m not anti-auto, though I have pissed off anti-auto people in the past too;-)
Some times I wonder what’s the whole the point of the Thoreau Institute, the Public Purpose, the American Dream Coalition? Like why spend so much time, money & energy to panic over nothing?
The people paying Mr.O’Toole’s & Mr.Cox’s bills have an agenda, what scares them enough to do such things, is it losing control over people?
Highwayman is, as always, contributing little to nothing. I will point out to him that where cars to pay their way, that is, in places where fuel taxes and road user charges are so high that cars and trucks do in fact pay the full cost of the roads they drive on, rail can still be completely uneconomic. New Zealand road users pay the full cost of the road network through petrol tax and road user charges, yet the NZ government has somehow seen fit to spend NZ$4 billion subsidising its rail network over the past 5 years. In America that translates to about US$150 billion scaling up for population. An enormous amount. The NZ government has recently starting paying companies to move their goods on rail. The next step is compulsory use of rail over certain distances.
The idea that rail succeeds only because of the subsidy given to road is bullshit.
Remember Mr.Stahl, Mr. O’Toole gets paid by people that don’t really want you to have a choice of mobility. Mr.O’Toole’s comments on railroads/transit make just as much sense as comments from KKK memebers on interracial marriage.
Idiot.
mattb02 said:
Remember Mr.Stahl, Mr. O’Toole gets paid by people that don’t really want you to have a choice of mobility. Mr.O’Toole’s comments on railroads/transit make just as much sense as comments from KKK memebers on interracial marriage.
Idiot.
THWM: I don’t think you’re an idiot, I think you’re a bigot!
It’s ludicrous, to say the least, to equate someone’s research transportation related issues with racism. I’m used to seeing highwayman make little if any contribution to the public discourse with flippant comments on these subjects. But racism?
It’s the same kind of logic as racism, if you can’t see that I’m sorry.
mattb02 said:
Highwayman is, as always, contributing little to nothing. I will point out to him that where cars to pay their way, that is, in places where fuel taxes and road user charges are so high that cars and trucks do in fact pay the full cost of the roads they drive on, rail can still be completely uneconomic. New Zealand road users pay the full cost of the road network through petrol tax and road user charges, yet the NZ government has somehow seen fit to spend NZ$4 billion subsidising its rail network over the past 5 years. In America that translates to about US$150 billion scaling up for population. An enormous amount. The NZ government has recently starting paying companies to move their goods on rail. The next step is compulsory use of rail over certain distances.
THWM: Roads don’t have to pay their way & I’m fine with that. I wouldn’t want the street infront of my house closed due to some thing like a lack of auto traffic.
“It’s the same kind of logic as racism, if you can’t see that I’m sorry.” – highwayman
How exactly is it the same type of logic?
Like I said, if you can’t(or don’t want to) see it, I’m sorry.