Tuesday, November 22, 2011

The Opportunity Costs of Public Transportation

Tickets are the worst.  On the plus side though...my online traffic school shared a plethora of statistics on public transportation.  Based on these statistics, we can clearly see that public transportation truly is a public good.  Therefore, Elizabeth Warren was correct when she said that business owners have an obligation to "pay it forward".

That being said, Warren was incorrect for failing to mention that no two public goods provide the exact same benefit to society as a whole.  This disparity in benefits was the point of my entry on the Opportunity Cost of War and my entry on the Opportunity Costs of Public Goods and my entry on the Ostrich Response to Pragmatarianism.

You might not be familiar with the term "opportunity cost" but everybody intuitively understands this concept.  This concept is embodied in the common saying that you can't have your cake and eat it too.  Your decision to either have or eat your cake reflects your values.  The problem with the current system is that congress has no idea what our values are.  Without knowing society's true values it's impossible for planners to accurately determine the best possible use of public funds.

The only way to guarantee the best possible use of public funds would be to allow each and every taxpayer to directly allocate their individual taxes.  This would force them to consider the opportunity costs of their tax allocation decisions.  Each and every taxpayer would intuitively understand that the money they spent on one public good could not be spent on other public goods.  This intuitive realization would force them to prioritize which public goods they valued most.  This process of millions and millions of taxpayers prioritizing their tax spending decisions is known in economic terms as the "Invisible Hand".

Elizabeth Warren was right that business owners should "pay it forward"...but she neglected to share an equally important point.  Each and every taxpayer should have the freedom to directly allocate their taxes among the various government organizations.  This would allow the demand for public goods to determine the supply of public goods.

Here are the statistics on public transportation.  It might seem like a huge responsibility for taxpayers to have to consider all the statistics of the various public goods...but in reality taxpayers would allocate their taxes to try and address shortages of the public goods that they valued the most.  Just like there's a donor division of labor in the non-profit sector so too would there be a taxpayer division of labor in the public sector.  The huge tax allocation responsibility that congress currently shoulders would be distributed among millions and millions of taxpayers.  Of course, in a pragmatarian system any taxpayers that weren't interested in directly allocating their taxes could still just give all their taxes to congress.

Public Transportation Statistics

According to National Highway Traffic Safety Administration...

Public transportation is a $35 billion industry that employs more than 350,000 people.

Public Support

Three-quarter of Americans support the use of public funds for the expansion and improvement of public transportation.


New urban expressways cost up to $100 million per mile while rail and bike facilities cost on average $15 million and $.1 million, respectively.

Federal transportation grants for State and local governments totaled $4.4 billion for transit or 14% of all transportation grants in 2000.

Economic Benefits

Business output is positively affected by transit investment.

Almost half of all Fortune 500 companies, representing over $2 trillion in annual revenue, are headquartered in America’s transit-intensive metropolitan areas.

A $10 million investment in public transportation results in a $30 million gain in sales for local businesses.

For every passenger mile traveled, public transportation is twice as fuel-efficient as private automobiles, sport-utility vehicles, and light trucks.

In Los Angeles alone, $0.80 of every $1.00 spent on public transport gets re-circulated in the local area, translating into $3.80 in goods and services.

A study on U.S. government spending and its impact on worker productivity estimated that a 10 year $100 billion increase in public transport spending would boost worker output by $521 billion, compared with $237 billion for the same spending on highways.

In a recent study conducted it was found that 40 hours are spent in traffic that is NOT moving in 1/3 of the United States cities

22 billion dollars are saved each year by Americans using public transportation if they live in transit-intensive areas.

Every dollar a taxpayer invests in public transportation can potentially have a return of $6 dollars or more regarding an economic return.

For every passenger mile traveled, public transportation is twice as fuel-efficient as private automobiles, sport-utility vehicles, and light trucks.


$50,000 is the average annual income of a rail commuter who owns at least 2 automobiles.

Approximately 94% of people on welfare are choosing to use public transportation when trying to find employment in the workforce.

The poorest quintile of American households spend 36% of their budgets on transportation, while the richest fifth spend only 14%.


37,261 highway fatalities were recorded in the year 2008.

In 2008 13,846 people were killed in accidents involving alcohol.

Public transportation helps to keep dangerous drivers off the road by providing a needed transportation choice.

The National Safety Council estimates that riding the bus is over 170 times safer than automobile travel.


If one in five Americans used public transportation daily, carbon monoxide pollution would decrease by more than all the emissions from the entire chemical manufacturing industry and all metal processing plants in the U.S.

In comparison with private vehicles, public transportation generates 95% less carbon monoxide, 92% less in volatile organic compounds, and about half as much carbon dioxide and nitrogen oxide per passenger mile.


Public transportation rider-ship increased 22% in the last 6 years.

In the last 5 years, public transit use has increased faster than any other mode of transportation.

From 1985 to 2001, the percentage of people driving to work alone increased by 5.8% to represent 78.2% of all means of commuting.

During 1985 to 2001 carpooling declined by 4.4%, public transportation by 0.4% and the percentage of people working at home declined by 0.2%

In 2000, Americans took 9.4 billion trips using public transportation, an increase of 3.5% from the previous year the equivalent of more than one million new trips each day.

In the year 2000, ridership grew twice as fast as the U.S. population and outpaced growth in other travel modes.

Approximately 14 million people in the U.S. choose to use public transportation on weekdays. In addition, 25 million choose to use public transportation less frequently but on a regular basis.

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