Imagine all the cars on the road today, doubled. That’s what the World Economic Forum predicts will happen by 2040 on our current course. Americans already spend more than an average work week stuck in traffic each year. If something is not done about congestion, we could be sitting bumper to bumper for the rest of our lives. The solution is to expand our highways, add more lanes, roads, and exits to account for the influx of new cars, right?
Despite being intuitive, decades of research, dating back to the early 60s, shows that highways eventually become more congested despite lane expansions. This is due to the principle of induced demand.
Put simply, if a good is made more available, more people will want it. In this case, if room on the highway is made more available (by way of extra lanes) more people will use these lanes. People who may have used public transit, bikes, or other routes will start to use the highway since there is more room right away. Drivers may switch their commute from the 405 to the 5 if they hear the 5 has new lanes. In the immediate short term, congestion will seem to be lessened. However, depending on how receptive people are to these new lanes, this congestion could shoot up in as little as 2 years (metropolitan areas have it the worst). Many studies in the U.K. have shown that congestion can reach up to 1.7x the original amount after adding extra lanes.
In most cases, an increase in demand is a good thing for the producer of a given good. If you make office chairs, it would be in your best interest to induce as much demand as possible so that more people buy your chairs. However, because highways are common goods, demand increases are not necessarily beneficial. In economic terms, common goods are those that are non-excludable and rivalrous. Put simply, this means that you cannot exclude someone from using the good (i.e. anyone can drive on the highway; there’s no direct price) but that there is a limited amount of consumption available (e.g. space on the highway). This is bad news, economically, as common goods are typically overconsumed unless there are restrictions–whether they be legal, fiscal, or cultural–put in place. Besides highways, other examples are fish in the ocean, oil under the ground, and lounging space on a beach.
How do we make sure transportation doesn’t experience the tragedy of the commons?
The Victoria Institute states that, using data from all of the reviewed literature, investments in mass public transit are the best way to ameliorate congestion. Public transit can handle more people more efficiently than cars on the highway, especially at higher speeds, without needing to exclude anyone. If mass transit infrastructure is expanded, more people will use it rather than the highways. This too induces demand, yet an increased demand in public transit, as opposed to driving on the highway, leads to more efficient, safer, and less congested travel. Even those who prefer to stay in their cars would see the benefits of increased demand for public transit as there would be less people on the highway and thus less rivalry on the road.
Hyperloop is a real mass transportation system. Our system can transport tens of thousands of passengers per hour per direction. With increased carrying capacity comes decreased rivalry in consumption. That is to say, because we can handle so many people at once, will we rarely, if ever, run out of tickets. The consumption of one person does not impact the consumption of another.
The following graph conveys that, in the long term, public transit investments create the most benefits to both consumer experience and net societal gain.
The costs here come in the form of time wasted in traffic, money spent travelling, pollution costs, increased rate of accidents, etc. The benefits represent the inverse–time saved, money saved, less pollution, fewer accidents, etc. For example, KPMG and Systra found that for every $1 invested in a hyperloop route from Pune to Mumbai, society would receive $10 in economic benefits.
In other words, the more people who use public transit, the higher benefit to society. We want to induce demand so that more people ride hyperloop and experience getting from Nashville to Atlanta in 20 minutes. A few of our engineers and business strategists, in collaboration with the transportation research board, created a method to predict induced traffic demand for a transportation method like hyperloop. In this paper, induced demand was defined as the ridership generated by an improved level of service. They found that the implementation of a hyperloop system would induce enough demand to expand the existing market by 88% on the Dallas – San Antonio route. Not only can we handle this increase in market size, but we welcome it. More people would be using our system, meaning more people could access jobs, relationships, educational opportunities, etc. in completely different cities.
Next time you’re sitting bumper to bumper, think back to the data that shows the long-term costs of lane expansion and the long-term benefit of transit investment. If you really want to reduce highway traffic, support building a hyperloop.