Category Archives: Economics

Journal of Transport and Land Use: Vol 7, No 3 (2014)

Journal of Transport and Land Use: Vol 7, No 3 (2014)

Table of Contents

Residential self-selection in the relationships between the built environment and travel behavior: Introduction to the special issue PDF
Jason Cao 1-3
Residential self-selection, built environment, and travel behavior in the Chinese context PDF
Donggen Wang, Tao Lin 5-14
Residential self-selection in travel behavior: Towards an integration into mobility biographies PDF
Joachim Scheiner 15-28
Revisiting residential self-selection issues: A life-oriented approach PDF
Junyi Zhang 29-45
Estimating the effect of land use and transportation planning on travel patterns: Three problems in controlling for residential self-selection PDF
Daniel G. Chatman 47-56
Tempest in a teapot: The exaggerated problem of transport-related residential self-selection as a source of error in empirical studies PDF
Petter Naess 57-79
Reaction to the paper Tempest in a Teapot: The exaggerated problem of transport-related residential self-selection as a source of error in empirical studies PDF
Bert van Wee, Marlon Boarnet 81-86
Response to Van Wee and Boarnet PDF
Petter Naess 87-92
Satisfaction with travel and residential self-selection: How do preferences moderate the impact of the Hiawatha Light Rail Transit line? PDF
Jason Cao, Dick Ettema 93-108

Phantom Trips

Adam Millard-Ball has a nice article on Phantom Trips. in Access Magazine

Traffic lies at the heart of many fears about new urban development. In some cases, cities require developers to scale back housing or retail proposals to alleviate concerns about congestion. In other cases, cities widen roadways, add turn lanes, or lengthen signal cycles to accommodate projected traffic volumes.

In both instances, planners and engineers wield considerable influence through their predictions of the number of vehicle trips that a proposed development will generate. This seemingly mundane process—trip generation analysis—profoundly shapes the physical form and financial feasibility of urban development. Estimates of trip generation help shape the road infrastructure, determine the amount that developers must pay for new roads and greenhouse gas mitigation, and sway local support or opposition to proposed development. Trip generation practices also help determine how much urban space cities dedicate to cars; the viability and character of transit-oriented and infill development; and whether a project proceeds at all.

How do we predict how much more traffic there will be? In the United States, the Institute for Transportation Engineers’ (ITE) Trip Generation Manual, now in its 9th edition, is the standard reference. It provides data on the number of trips generated by 172 different land uses, from “Baby Superstore” to “Cemetery.” Some of the land-use categories are remarkably specific, such as “Batting Cage” or even “Coffee/Donut Shop with Drive-Through Window and No Indoor Seating.”

TripGenerationManual

Given the ubiquitous influence of the Trip Generation Manual on the built environment, it is important to understand the validity of its data and ITE’s recommended practices. Rather than accurately forecasting the impacts of new developments, I show in this article that ITE substantially overestimates trip generation rates. Moreover, I explain why ITE’s core premise, that development always generates new trips, is misleading in many circumstances. Because ITE rates do not fully consider how trips are reshuffled among destinations, they are often inappropriate for evaluating traffic, fiscal, and environmental impacts. In short, we are planning for “phantom trips” that never appear in reality.


This article is adapted from “Phantom Trips: Overestimating the Traffic Impacts of New Development,” originally published in the Journal of Transport and Land Use. [forthcoming 8(1)]


Adam Millard-Ball

adam millard ball

Assistant Professor in the Department of Environmental Studies at the University of California, Santa Cruz (adammb@ucsc.edu).

Autonomy Island

Ricardo Montalban and Herve Villechaize Fantasy Island (1977)
Ricardo Montalban and Herve Villechaize Fantasy Island (1977)

“Ze Car, Ze Car.”

“My dear guests, I am Mr. Roarke, your host. Welcome to Autonomy Island.”

Yes, here on Autonomy Island, all of the cars are autonomous. Your adventure will be to ride and drive in a place without fear of a human running you over.

When will an automaker (or collective of automakers, or government, or Google) buy all the cars on an island (and perhaps rent the government), replace them with new autonomous vehicles, and see what happens … to safety, to travel behavior, etc?

This is the kind of real world laboratory experiment that would be highly useful to understand the implications, the unintended side effects, the bugs and so on of robotic cars.

For instance, take the US Virgin Islands. St. Croix has a population of about 50,000 people. If it follows general US patterns, it has about 33,000 light vehicles. For about $1B [Less than the cost of a single NFL stadium] all of the cars could be replaced with autonomous vehicles at about $33,000 each. [This might be a stretch, but that would be a typical mass production cost.]

The USVI collectively has between 10 and 20 auto fatalities annually. At a $9.1 million value of life, that is at least $91M per year. In 11 years, the experiment would pay for itself if in fact it eliminates fatal crashes the way autonomous vehicles are expected to, leave aside any other potential benefits.

The advantages of an island are that it is a closed system, it can be fully mapped, no one can drive on or off. The advantages of a real island with real people are the ability to see how these interactions might actually occur in use.

Autonomous vehicles interacting with only autonomous vehicles should be much easier to design than autonomous vehicles in mixed traffic, as the environment is less variable. People, animals, weather, and so on are still potential confounding factors, but should be simpler to manage than a person in a car.

Are Transportation and Land Use Connections Strengthening or Weakening?

Many planners argue for greater integration of transportation and land use policy. In the US, many argue that separated policy realms contributed to the system of automobility and low density cities that exist, in part because transit investment isn’t able to capitalize real estate benefits. This is different than the historical connections between streetcar companies and real estate development in nascent suburbs. In recent years transport planning, and transit planning in particular, has attempted to reshape the urban landscape through new infrastructure investment. A common refrain is that real estate developers love the “permanence of rail” when it comes to making location decisions about where to build. Another way strong connections between transportation and land use are promoted are through value capture mechanisms for road or transit projects. Overall, the contemporary debates about infrastructure tend to revolve around “how much” change to the built environment will be caused by new investment. This assumes a strong and measurable relationship between transportation and land use. Better questions may be: 1) whether the relationship is strong enough to affect change at all, and 2) are the connections between transportation and land use strengthening or weakening?

Accessibility by Transit to jobs 2014 n New York City
Accessibility by Transit to jobs 2014 n New York City

A weakened connection between transportation and land use is not a new idea. Gen Giuliano, for one, wrote about it in the 1990s. Marlon Boarnet argued more recently that changes in transportation will be a much bigger deal than changes in density moving forward. In short the argument is that ubiquitous automobility has reduced the onetime spatial advantages due to proximity to a limited number of transit options. At present there are good reasons to improve our understanding of how transportation and land use interact. Broadly speaking, there are two current approaches to transportation. First, there is massive public investment in a limited number of infrastructure projects. Such projects—light rail, commuter rail, streetcars, road expansion, etc.—represent a form of spatial planning where favored locations are gifted desirable infrastructure as amenities, with some expected transportation improvement that is mostly measured in travel time. Second, there are countless private firms working on selling personalized mobility. Taxi companies, tech-taxi companies, private bus companies, commuter shuttle services, vanpools, shared vehicles and others are all competing for passenger travel business. These companies are reacting to existing land use development and taking advantage of existing infrastructure to improve access by personalizing mass transit. Plus existing and new automakers are adapting their cars and business models to current and future consumer preferences and trends, and of course self-driving cars are coming as well.

The public model of large investment in a limited space stands in contrast to the private model of many alternatives working to customize transit to maximize accessibility across regions. The public clearly believes that the transportation and land use connections are strengthening, and the private firms are indifferent or they see a weak connection moving forward, which is why “real time data” is so important to everyone. A weaker transportation and land use connection suggests that spatial planning through infrastructure (see here for an Australian report on this issue, though this applies globally) will be ineffective, which has implications for local land use policy and transportation finance.

That’s Transportainment

Transportation and entertainment are ever inter-twined.

Every movie is a road trip*, and not just the obvious ones, like Thelma and Louise or National Lampoon’s Vacation, or Apollo 13. The linear narrative of  movies is constrained to follow the single dimension of time, marching ever forward. While attempts at braking the strict linearity are possible (think about flashbacks, or Rashomon like stories, or Pulp Fiction) within those cul-de-sacs it remains a road trip.

Many stories star or feature transportation. Not just the obvious ones like the Faster and Furiouser series, or Gravity, but any story which involves motion and gadgets. In some cases they attain human-level personality. I have a long series of posts documenting the use of Anthropomorphic vehicles: automobiles, planes, helicopters, trains (1) (2), lorries, omnibuses, monorails, construction vehicles, and boats.

Outside of movies, sporting events too are about motion. Running of course is simply who can move the fastest (unaided, unhindered). Hurdles is who can move the fastest, with hindrances. American Football is about who can move a ball across about 90 meters of territory with a limited number of stops, ensuring at least steady progress.

NASCAR is even more obvious. A sport that emerged out of the use of cars during prohibition to avoid the law. Going around a racetrack in a vehicle 400 times is interesting enough to attract more than 145,000 people to attend an event at the Charlotte Motor Speedway and 7 million people to watch on TV. [Though apparently in-person attendance is dropping]. While we might complain about dozens of vehicles traversing 600 miles and doing no physical work (i.e. returning where they started), the more severe environmental consequences of the race are not due to the racers, but the fans, traveling hundreds of miles themselves.

Having now been to Charlotte, the Charlotte Motor Speedway, and the NASCAR Hall of Fame, I have first hand knowledge of the magnitude of racing in the local culture. You too can drive a car on a race track for a not inconsiderable piece of coin. You learn that people have purchased condominiums overlooking the race-track. You learn they are now “right-sizing”. You learn the stands are multi-colored so they look more full in ads even when they are not.

Charlotte Motor Speedway from the Infield
Charlotte Motor Speedway from the Infield

Not only is entertainment about transportation. Transportation has become about entertainment.

I am not talking just about the in-vehicle entertainment systems designed to entertain you while you travel, thereby making travel less onerous (and more frequent).

Many, if not most, of today’s transportation network investment decisions are made by people who won’t regularly use the thing they are deciding on.  In one sense, this must be true, there are many facilities, and only so much time in the day for decision-makers to travel, given our relative centralization of decision-making in the hands of government.

It is not only the specific links and segments of networks, but entire modes that go mis-understood. We have evidence this is true. Decision makers may try to imagine how they will use the facility, but cannot develop a full scenario where their home and workplace and other activities moving, which would enable them to see the package as a regular user. They are limited to envisioning their occasional interaction with the link or mode. In this sense, they are viewing the facility the way a tourist might, rather than an everyday user.

Fort Worth Pedal Pub
Fort Worth Pedal Pub

We posit the decision-makers (or anyone’s) view of the transportation modes, links, and vehicles that they don’t use is much as yours is at the amusement park or a place where you are a tourist: a ride, part of an urban entertainment package, an appendage to a game or concert or night-on-the-town wrapped up as an event.

These rides-cum-transportation are designed to lure people who have nothing better to do with their time than be entertained. If these projects were self-financing, more power to them [perhaps raising emotions of disdain for those who have nothing better to do with their time but spend it on a ride and trivial amusements, but not particularly impacting anyone else].

Unfortunately, these investments  are not self-financing, except in the fantasies of economic development analysts and perhaps in the special case of Pedal-Pubs [I don’t actually know the financial arrangement of Pedal-Pubs, but I assume, given their proliferation, they are profitable].

It’s heeding the cry of the child “I’m bored, Entertain me”.

The Georgetown Gondola http://dc.urbanturf.com/articles/blog/the_georgetown_gondola_gets_closer_to_reality/8064
The Georgetown Gondola http://dc.urbanturf.com/articles/blog/the_georgetown_gondola_gets_closer_to_reality/8064

It is fantastic that decision-makers believe our society has so much wealth and so many resources that there are no more important problems to solve, that we can build urban amusement park rides for the sake of the novelty-seeking joy-riders. That we can prioritize circuses over bread. That we can rise up the social Maslow Hierarchy of Needs from security and basic mobility to societal self-actualization and social entertainments. That we can fuse entertainment and transportation into a newly converged transportainment (hopefully obviating the need for entertainment on the subject).

Do they really believe that?

Certainly, most travel is not “work” travel [most people don’t have regular jobs], but much of it is productive (or re-productive). And if everyone had the opportunity to  simultaneously have adequate housing and adequate transportation, then public subsidy for transportation as entertainment (or housing as entertainment – which in the US is generally left to the private sector) would not be the worst way to spend our social surplus.

Yet I keep hearing that there is insufficient affordable housing, and more than a few people walk or ride bikes not out of choice but for lack of affordable faster modes, and many people ride on buses that take 2 to 3 to 4 to 5 times as long as cars for the same trip (not even considering schedule delays) because they cannot afford or otherwise cannot drive a car, AND because the transit system is so poorly designed it takes so long to get to many places.

Every 1.7 billion dollars spent as part of the urban transport-tainment system is 1.7 billion dollars that cannot be spent on more serious and economically productive urban needs of travelers without the luxury of time and choice, improving their safety and reducing their travel times, or just giving them the resources to make choices.

 


* A comment first noted by my wife, a lit-crit major in college.

Transportainment River is the appropriate name of a company that builds waterpark rides.

Extrapolations in Traffic vs. Reality

There seems to be a global patterns among the Anglo-Saxon nations (and perhaps others). If you have more graphs like this for other places, please send them along via the Comments, and I will update this post. New Zealand:

Figure 2: Historic New Zealand light vehicle traffic forecasts vs actual growth Source: http://www.transport.govt.nz/ourwork/keystrategiesandplans/strategic-policy-programme/future-demand/
Figure 2: Historic New Zealand light vehicle traffic forecasts vs actual growth Source: http://www.transport.govt.nz/ourwork/keystrategiesandplans/strategic-policy-programme/future-demand/

United States:

U.S. DOT highway travel demand estimates continue to overshoot reality (SST By Eric SundquistI) http://www.ssti.us/2014/03/u-s-dot-highway-travel-demand-estimates-continue-to-overshoot-reality/
U.S. DOT highway travel demand estimates continue to overshoot reality (SST By Eric SundquistI) http://www.ssti.us/2014/03/u-s-dot-highway-travel-demand-estimates-continue-to-overshoot-reality/

United Kingdom:

UK  National Transport Model consistently overestimates future car use  Source: http://road.cc/content/news/137057-cycling-revolution-rolling-backwards’-according-figures-–-car-use-rise-still
UK National Transport Model consistently overestimates future car use
Source: http://road.cc/content/news/137057-cycling-revolution-rolling-backwards’-according-figures-–-car-use-rise-still

Some additional forecasts and/or trends from the comments and elsewhere … Australia:

Are Australians driving more (or a lot less?) via Alan Davies
Are Australians driving more (or a lot less?) via Alan Davies

Portugal:

Source: http://www.estradasdeportugal.pt/index.php/pt/informacoes/estudos/871-concessoes-rodoviarias-um-novo-paradigma-operacional (Portuguese) via Marcos Paulo Schlickmann
Source: http://www.estradasdeportugal.pt/index.php/pt/informacoes/estudos/871-concessoes-rodoviarias-um-novo-paradigma-operacional (Portuguese) via Marcos Paulo Schlickmann

In other fields

Forecasts of Treasury Yields vs. reality.
Forecasts of Treasury Yields vs. reality.
Delphi Energy Forecast
Delphi Energy Forecast
Jevons Coal Forecast
Jevons Coal Forecast
Past Economic Outlook projections of euro area GDP
Past Economic Outlook projections of euro area GDP

It’s a small market, after all. Es gibt einen kleinen Markt, uber alles.

The taxi industry, berated as “Big Taxi” by Uber and its allies, is in many cities a vested cartel with medallions limiting entry. The nominal economic reason for the medallions are (1) too many taxis roaming the streets creates congestion (since roads are unpriced), and (2) too many taxis drives down wages, and (3) regulation is important for public safety. Limiting medallions of course has the happy side effect (for the taxi industry) of limiting competition.

In the early 2010s a new breed of taxi provider, ignoring the law, insurance regulations, safety, and in some cases, common decency, entered the market with a technological advantage: an app, and a new source of supply: regular cars and their otherwise underemployed drivers. Backed by oodles of venture capital money subsidizing rates, they have entered the market in many cities worldwide.

Observation 1: The new taxi providers own very few assets. They don’t own cars, for instance. Uber is under-insured. Drivers of so-called Transportation Network Companies (TNC) using their own car (UberX) almost assuredly are not paying insurance rates that would be charged for someone carrying passengers for hire, or driving so many miles per year (insurance forms typically ask for miles per year, but this is lagging and voluntarily supplied). They are operating without authorization in many places.

Observation 2: The app (and back end server) is easily replicable (evidenced by the fact that it has been replicated dozens of times: Lyft, Gett, Curb, Hailo, Blacklane, Sidecar, Zimride, iHail, Flywheel, etc.). Fixed costs are not a major issue in this market.

Observation 3: The new taxi providers are very highly valued by VCs (Uber is being valued at $40B),  who believe there is a first mover advantage not only in this taxi market, but in related markets for delivery and logistics which the new firms will capture.

Observation 4: This belief is likely due to the belief there are network externalities in two-sided “matching” markets, so that riders will go with the app with the most drivers, and drivers will go with the app with the most riders. This is the eBay logic essentially. eBay is at the time of this writing capitalized at $68B. This will drop once PayPal is split off.

Observation 5: While riders will only use one app per trip. There is nothing preventing drivers from using multiple apps.  Most of the drivers I have seen have multiple phones going, one mounted for GPS, one for other transactions.  This is fairly trivial and very low cost. Unless a driver is completely utilized by a particular service (and that is the best-paying service), the driver has no reason NOT to use multiple apps. This differs from eBay in that sellers are only selling a particular commodity on one auction at a time (otherwise risk not being able to deliver) [update: though vendors may have identical goods listed in multiple marketplaces], while buyers can search multiple sites before bidding, but will not generally bid simultaneously on the same good for fear of winning them (someone with eBay knowledge can perhaps determine how often people simultaneously bid).

Observation 6: All companies want monopolies (See Thiel, or Marx, or Pixar). No capitalist wants a free and fair and competitive market for themselves (though they do want it for their vendors and customers). If there are to be rules, they want to make sure they are not disadvantaged.

Observation 7: The reason there are not monopolies in the rail and aviation sectors in the US is because of antitrust law. The reason there are not monopolies in cell phones is because of antitrust law and initial auctions of spectrum which constructed the markets. None of these markets is a “natural monopoly” though. While there are of course economies of scale, returns also diminish with scale, so that at the margins, a larger firm does not produce at substantially less cost than current sized firms. There are fixed costs, but they are limited.

Observation 8: The basic reason there are monopolies in wired utilities (phone, cable … though note this is breaking down), electricity, natural gas is because of the high fixed cost of running infrastructure to every home, which could not be recovered if people subscribed to different utilities (reducing the base over which the fixed costs can be spread). Moreover, the public does not want duplicative services tearing up the streets, etc. Roads themselves are a natural monopoly at the local level, we don’t have competing streets.

Observation 9: Taxis are not natural monopolies, and in most markets, the places where you summon taxis (as opposed to hailing them on the street … i.e. everywhere except downtown), there are loads of local firms willing to provide the service. Look up “taxi” in your local yellow pages. (Or should I say Google it … ). Yelp gives me 22 pages of taxis in Minneapolis, of which 18 firms have at least 1 rating. Uber is at the top of the list, with 25 reviews, but only 3 stars. People seem (a) to be confused between Uber Black Cabs and Uber X and (b) not like surge pricing.

Observation 10: Most places are not downtown.

Observation 11: Most people in the US and globally don’t live in places where you hail cabs. If you want a taxi, you request it by phone or app.

Observation 12: Most people care as much about reliability as about travel time.

Observation 13: A 5 or 10 minute delay from calling the cab is not terribly important so long as the taxi in fact does arrive. The nice features of apps with built in GPS is you can see the taxi approaching you, so people have trust in the app-based system, but this is transferable between apps, not a function of the particular app vendor, since the apps are undifferentiated.

Observation 14: The number of taxis within 10 minutes is a function of 100*pi, while taxis within 5 minutes is a function of 25*pi (remember Area = pi*r^2), so there are 4 times as many taxis within 10 minutes as within 5 minutes. Very few people who are very concerned about the last 5 minutes of travel time don’t have a car already or won’t plan ahead a few minutes before departing their previous destination. Smart phones enable the last 5 minutes to be useful enough if you are not doing something at the current place. All TNC users are smart phone users. They are not sending telegrams or couriers to request hackneys.

Observation 15: Most people in the US have cars. Certainly this is peaking, and changing with all of the factors affecting peak travel.

Observation 16: Alcohol use is declining among youth. Among everyone, beer is down, wine is up (NIH: PDF). Certainly increased convenience from taxis may increase public drunkenness, but one of the best market for taxis (taking drunk people around on weekend evenings) is on the decline. Airports (another great taxi market) have peaked as well.

Observation 17: UPS and FedEx have great logistics systems and know what they are doing. Amateurs taking packages around is certainly feasible, but not terribly efficient, given economies of scale in national shipping.

Observation 18: Local purchases may be a possible source of delivery, but this is a fairly small market in most places (if it is local, aside from food, why would you order online, most online orders are going to  be national vendors due to economies of scale trumping the need for instantaneous delivery). Really, I can wait 2 days for most things. Restaurants and supermarkets have their own logistics systems that cannot be easily defeated by amateurs (restaurants are more easily switchers than supermarkets perhaps, since the organizations are much smaller, but that is what Takeout Taxi etc. are for). Really, there are special skills in transport and delivery for specialized goods, that someone who does it only once in a while won’t get. Only a macro-economist would not realize that.

Observation 19: Uber provokes hatred unlike most internet companies. See #baduber.

Observation 20: Apple  could easily place an app for an Uber competitor or competitors on the home screen, or embed it in maps, if it is concerned about Uber getting too powerful.  ApplePay is already built in. Google with Android could as well, but they won’t since they invest in Uber. There is nothing more convenient than already on the home screen.

To quote Paul Gigot “Free riding is not socialism”. Uber is exploiting the existing system as they should as putative monopolists. Lawmakers and Prosecutors are ineffective in keeping them in check.

The debate over Uber is complicated.

 

 

a blog about Networks and Places

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