Grants

National Bureau of Economic Research, Inc.

To study transportation infrastructure challenges in the United States, including project selection, financing strategies, and procurement practices

  • Amount $815,854
  • City Cambridge, MA
  • Investigator Edward Glaeser
  • Year 2024
  • Program Research
  • Sub-program Economics

Compared with the United States, it is noticeably easier in Europe, Japan, and some other countries to get people or products from one place to another. Speculation about why is easy. Serious diagnoses and practical remedies are much harder since these should rely on models, data, and analysis. Recently organized to address such challenges, the Transportation Infrastructure Procurement and Financing Project (TIPFP) is a research effort based at NBER that is mobilizing a variety of experts, institutions, and approaches. TIPFP is laser-focused on the problem of transportation infrastructure. Roads, bridges, ports, and transit systems cost trillions of dollars annually and play a critical role both in the U.S. economy and in the world’s trading network. TIPFP leaders Ed Glaeser of Harvard and Jim Poterba of MIT plan to investigate three specific questions that have emerged as having the greatest promise and priority: Are we choosing the right transportation projects to fund? Cost-benefit analysis (CBA) of some sort always accompanies such decisions, but it is often perfunctory and incomplete. Infrastructure projects require large up-front fixed costs and deliver benefits over long periods of time. So there can be significant uncertainty about the rate of return on new projects, not to mention sensitivity to assumed discount rates and long-term growth rates. These are, moreover, just complications when evaluating one project at a time. What people really care about is how well the whole transportation system performs. TIPFP will provide decision-makers with better tools, especially since one of the defining properties of infrastructure is that it is very hard to change once built. Why do such infrastructure projects cost so much? By many estimates, similar transportation projects are three times as expensive in the United States as in other countries. Costs also vary dramatically from one U.S. state to another, as do procurement processes, renegotiation procedures, and regulations of all sorts. TIPFP will systematically compile and compare data about all these variations to inform its analyses. One hypothesis to test is that “state capacity” really matters, i.e., the technocratic expertise that government officials can bring to bear when managing how construction contractors approach everything from auction bidding through project completion. How should we fund transportation infrastructure projects? Gasoline taxes currently contribute over $40 billion annually to the federal government’s Highway Trust Fund, for example. These contributions will dry up as Electric Vehicles (EVs) become more prevalent. Other sources have been proposed, but perhaps much more important is the possibility of also instituting new rules for determining how those new funds will be distributed. Current mechanisms for subsidizing projects provide poor incentives to control costs or maximize benefits. Again, TIPFP will compile and compare information about alternative allocation methods, including case studies from other countries for publication in a conference volume.

Back to grants database
We use cookies to analyze our traffic. Please decide if you are willing to accept cookies from our website.