What Are the Economic Effects of Investing in Transportation Infrastructure?

The government has, at times, premised investment in highway infrastructure on the belief that it contributes to economic growth. But the economic effects of highway infrastructure remain a matter of debate. A RAND report informs the debate by reviewing the literature on the economic effects of highway infrastructure and drawing conclusions from this evidence about the future federal role in highway policy.

The study found that highway infrastructure varies greatly in its economic effects and that these effects can be highly context-specific. The economic benefits and costs of highway investments can and often do spill over into jurisdictions different from those in which the infrastructure is located. Because transportation networks are provided and renewed to link populations and economic activities separated by distance, highway infrastructure is likely to bring benefits and costs to communities other than those in which it is located. But because of how highways are financed, projects that allocate differential benefits and costs over multiple political jurisdictions--such as across state lines--may have political difficulty achieving support.

Given these factors and constrained federal budgets, the RAND report argues that the federal government should concentrate its support on projects that produce a net economic gain across a wide geographic area or the nation as a whole, rather than on projects with limited or only local economic effects. Although entirely local investments can produce substantial net benefits, it is hard to argue that there is a national interest in projects for which benefits accrue entirely within a local jurisdiction, especially when the jurisdiction could bear all costs.

READ THE REPORT: Highway Infrastructure and the Economy: Implications for Federal Policy

INTERVIEW

How Can We Improve Air Travel Security? An Interview with Jack Riley

Jack Riley, vice president and director of the RAND National Security Research Division (NSRD), has conducted extensive work on homeland security, border security, and law enforcement and crime control, including assessments of passenger rail and airport security. He has testified before Congress on multiple occasions on transportation security and border security. His most recent work is an essay called Air Travel Security Since 9/11. He has a Ph.D. in public policy from the Pardee RAND Graduate School.

How has 9/11 affected airport security?

We've geared security efforts around preventing another 9/11-type attack and have significantly reduced the likelihood of such an attack in the future by doing such things as reinforcing cockpit doors, increasing passenger and crew knowledge of the need to intervene, and improving the visa process that helps prevent terrorists from getting permission to fly to the United States.

But what about the more recent security measures?

The security measures imposed after the so-called "Underwear Bomber" tried to detonate plastic explosives en route to Detroit have provoked considerable outcry. The use of whole body scanners raises a number of issues, such as 4th-Amendment concerns about unreasonable searches, speed of processing, and false alarms that require a patdown--the alternative--which is no more popular and is, in some ways, more problematic because it involves intimate contact between government representatives and passengers.

Is this level of security really needed?

The key is that such extensive security measures are not needed for all U.S. plane passengers. They impose significant deadweight losses on all travelers, but we know enough from people's travel profiles, security clearances, etc., to be able to trust some people and focus on those we don't know. A missed opportunity is the development of a trusted traveler program.

How would such a program work?

Interestingly, we have what amounts to a pilot program in place. At many airports, TSA personnel, airport personnel, and aircrews are not screened at all and are certainly not screened the same way passengers are. This shows that it is possible--and desirable--to treat certain low-risk populations differently to concentrate resources where they are needed. The concept should be extended to travelers.

Would such a program be burdensome to implement?

Not really. DHS already uses programs like Global Entry (GE), NEXUS, and SENTRI to expedite movement across borders. I just used my GE membership to fly from Korea to San Francisco. In Korea, I went through a walk-through metal detector and put my carry-on bag through X-ray. At SFO, I used a GE kiosk to give my flight details and customs declaration and then used my fingerprints to confirm my identity. In three minutes, I was free to enter the country without any additional inspection. That trusted status--backed by an already-paid-for extensive background investigation and biometric confirmation of identity--can easily be extended to airports.

What other steps could be taken?

The TSA should be required to analyze proposed security measures and regulations using clear, transparent risk-management principles. One reason we've ended up in the current situation is that security measures are grafted or layered on in response to specific incidents, with little regard to an integrated assessment of cost, effectiveness, or impact on risk. An important role for Congress is to help DHS/TSA set up a framework that measures the full costs (lost time, etc.) of security measures and to determine whether imposing new security measures achieves reductions in terrorism risk commensurate with the costs incurred.

RESEARCHER PROFILE

Nidhi Kalra

Nidhi Kalra is an information scientist at RAND. Her research focuses on planning and operational strategies that agencies can use (1) to reduce greenhouse-gas emissions, (2) to respond to and manage the effects of climate change and other uncertainties, and (3) to make better use of technological advancements. She has addressed these issues in a number of transportation contexts, including recent work reviewing greenhouse-gas mitigation strategies available to state departments of transportation and metropolitan planning organizations. She is currently conducting work to improve how these agencies can make better use of advanced technologies to enhance transportation system performance. Kalra received her Ph.D. in robotics from Carnegie Mellon University.

RAND CONGRESSIONAL RESOURCES STAFF

Lindsey Kozberg
Vice President, Office of External Affairs

Winfield Boerckel
Director, Office of Congressional Relations

Matthew Dicker
Transportation and Infrastructure Legislative Analyst

RAND Office of Congressional Relations
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