In a recent post, Harriet questioned whether our business cases are being founded on a lie. That lie relates to the issue of travel time savings, which form the heart of the “cost benefit analysis process” that guides NZTA’s transport funding decisions.
At a simplistic level, travel time savings seem like an obvious benefit from a transport project.
- If I get from A to B quicker, there’s a benefit because I can now spend that time doing something else rather than travelling.
- Let’s say a new road or public transport project saves 5 minutes for 10,000 people a day, that’s over 800 hours of total savings per day – or 12,600 days of aggregate travel time savings per year.
- Even at a fairly low value of time, you can see how this could add up to a major benefit. Let’s say on average you value this time at $10 an hour (keeping in mind that most travel is for non-commercial purposes) you are creating around $3 million a year of benefit.
This type of benefit generally makes up the vast bulk of the economic justification for transport investment. NZTA themselves highlight that travel time savings dwarf other quantified benefits of investment like safety, environmental impacts and more:
Travel time savings account for the majority (typically around 80%) of ‘conventional’ economic benefits for most transport projects. Thus the unit value of time savings is one of the most important parameters in transport economics (for both demand forecasting and economic appraisal purposes).
So if our transport decision-making was solely guided by cost-benefit analysis, then basically all we would really be interested in is “for every dollar of spend on transport, how do we get the biggest travel time savings?” Or, put differently, how can we cheaply enable people to go faster? This is why projects like the proposed Lincoln Road upgrade, with its hugely wide intersections and horrific pedestrian environment, somehow ends up with a high cost-benefit ratio.
Obviously this immediately raises a bunch of issues, things like:
- What if “going faster” encourages more people to drive, which quickly means they’re no longer going faster?
- What if “going faster” undermines a whole pile of other outcomes we want from spending money on transport, like improved safety or encouraging more people to use sustainable transport options like walking, cycling and public transport?
As Harriet pointed out, these questions have been asked for a while and the data isn’t great in supporting travel time savings. Despite billions in investment largely justified by travel time savings, average travel times have actually stayed about the same.
This data makes the very large focus of cost-benefit analysis processes on travel time savings particularly problematic, as it seems these “savings” get quickly eliminated by what’s known as “induced demand”. We have been talking about induced demand since the very early days of this blog, highlighting how additional road capacity quickly gets filled up, and over time encourages a more dispersed urban form. This isn’t just because people might change the mode of transport they use, as in fact there are many different types of induced demand:
- Time-shift induced demand: This is when people may have previously taken their trip during an ‘off-peak’ or ‘shoulder-peak’ time, but shift to driving during peak hour because there is more capacity available and (at least initially) congestion during peak times has been reduced.
- Route-shift induced demand: This is when people may have previously taken a variety of different routes to get to their destination, but then shift to using the one that was previously congested. I do note that this type of induced demand is likely to benefit the roads that were previously being used, but it still contributes to more potentially unexpected traffic using the route in question.
- Mode-shift induced demand: This is when people who may have previously used public transport, or walked, or cycled the route switch to using their cars, because the reduced congestion has made that a more attractive option.
- Changed destination induced demand: This is a longer term effect, where people will potentially alter where they live or where they work to take advantage of the improvements to the corridor. They may not have previously used this road, but its initial benefits will attract people to locate their homes or jobs somewhere near that road.
- Change of trip frequency induced demand: This is when people might make trips along a certain corridor more often because of the improvements to that corridor. For example, someone may not worry about undertaking their necessary tasks in separate trips along an improved corridor, whereas previously they might have bundled them together into one trip.
Furthermore, such a big focus on travel time savings might actually be counter-productive – as discussed in this article (with a slightly awkward translation):
The experience shows that state-of-the-art practices on planning and project appraisal often result in contradictory conclusions when applied to sustainable mobility policies, particularly at the urban scale. Benefits associated with faster transport are central according to many standard cost-benefit guidelines, providing higher economic return than improving other social and environmental aspects of projects, which paradoxically have increasing social importance in more mature and advanced societies. Therefore, the time trap of standard CBA could support projects transferring public urban space from pedestrians back to car traffic, just because drivers could benefit from a few seconds of time savings. And this would happen despite the fact that European urban policies have decidedly and unanimously bet for car restrictions in city centres.
This fact results in great misunderstandings when CBA is used in public hearings and deliberations. Mobility and transport policies at both urban and interurban scales have today in Europe a comprehensive set of goals such as the improvement of accessibility, sustainability, liveability and affordability, well beyond achieving faster travel. The emergence of virtual technologies as well as the changing values of new generations makes evident the need to reconsider.
In short, focusing so much on travel time savings in the way we do cost-benefit analyses doesn’t really match up with the “broader outcomes” that most transport policies and strategies seek to achieve.
So how might we do things differently? In a way we already are, with cost-benefit analysis being generally less important than “results alignment” in NZTA’s investment assessment framework, which is used to rank projects for funding. This approach appears to be consistent with what happens throughout Europe, where Sustainable Urban Mobility Plans guide decision making. These are described here:
Partly in recognition of the problems with transport modelling, some European cities have changed the way the problem is framed – from meeting forecast travel demand, to achieving a number of social and economic objectives through transport investment. Through sustainable urban mobility plans, different types of projects are favoured. These include: better integrated bus networks, more bus lanes, safer cycling and walking routes, improved park and ride facilities, and traffic calming measures that redesign streetscapes and reduce speed limits to improve mobility for all road users.
Rather than facilitating the movement of motor vehicles, this process emphasises creating safe, reliable and affordable access with less travel and a reduced environmental footprint. It also requires that engineers, urban planners, economists and other specialists sit down with the business and community sectors to build a consensus on what needs to be done. This is in contrast to current engineering-dominated methods.
This doesn’t mean cost-benefit analyses for transport projects are irrelevant, but emphasises the need to do them better and to think about what we want the real, long-run benefits of transport expenditure to be. Is it really about shaving a few seconds off travel time? Is it about having more choice? Is it about safer streets? Less environmental impacts? How might we rank these different outcomes? Can we ever actually objectively put a dollar value on these wildly different outcomes?
While I don’t have all the answers to these questions (arguably it’s impossible for anyone to have all these answers as they obviously vary from person to person), next time you see a transport cost-benefit analysis have a think about the different components of the project’s benefits and how these might have been quantified, or the impacts that might not have been quantified. As we learned through the Regional Land Transport Plan, ultimately you simply can’t delegate transport decision-making to a computer.
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Related to but separate to travel time savings is more people/vehicles through in a given time. If a road induces demand and travel time savings evaporate you’re still presumably left with more people able to travel. However PT and active projects offer this benefit too and more efficiently and sustainably… but independent of the time it seems like the throughput benefit needs to be recognized.
Dude, please explain how more cars stuck in congestion and belching out pollution is a “benefit”.
A good example of this, Simon, is in the increased capacity provided by the Victoria Park to Newmarket ‘improvements’. The post implementation review showed that the travel times ended up being the same, but there was increased traffic, particularly trucks.
Now, that traffic doesn’t evaporate as it hits the offramps. That traffic is increased throughout the local road network. It is reducing safety and walkability on local roads. Multiply this up by all the roading capacity additions, and you get increasing traffic throughout the city. With decreased safety and walkability.
This is not a benefit. This is a drawback. It was poor use of our money. And that’s not the sort of city I want the next generation to inherit.
Higher throughput – but at what cost?
In computer systems parlance, the road network could be described as having low “scalability” i.e. as volume grows, the cost to build increases much more rapidly than it does for other modes – primarily due to the amount of space each traveller needs.
The billions routinely bandied about for road upgrades are a strong indicator that roads have reached an intrinsic limit on their scalability.
Am I right the the cost side of the BCR only includes financial costs? If so this would be part of the problem, a widened road may have the additional ‘cost’ of making it harder for locals to get to shops, schools and other community facilities. This really should be included in any analysis.
No you are incorrect. Financial and economic costs are included.
The key question is whether the right costs are included. Amenity effects, for example, are modelled in a somewhat adhoc way.
As all twenty two of us huddled miserably in the dark under the poorly designed and hopelessly inadequate platform shelter in the driving rain as we awaited the arrival of the 5:51am service from Sunnyvale to Britomart I was given cause to reflect, yet again, that I am reasonably sure none of the senior leadership team of Auckland Transport have ever caught the 5:51am service from Sunnyvale to Britomart in the dark and in the rain.
It seems to me the ergonomics of station design, much neglected by AT, can drive patronage increases as much as frequency of service or dwell times or journey times. Safety, shelter, accessability. Let’s treat these things seriously.
AT Staff should be REQUIRED to use PT a minimum of 60% of the week.
Give them free travel and NO PARKING!
I do not believe that this is the case at this point in time.
Would this create some movement in thinking?
In fairness I have seen a couple of AT’s senior managers on the train regularly. However, I doubt they catch the train at Sunnyvale or Takanini so you are likely right that they have no idea of what it is like at some of our stations.
Some good news Sanctuary, there will be three less people commuting by train from Sunnyvale to Britomart early mornings. We have had enough of the completely inaedquate platform shelters, getting really cold and often very wet. For me the 400m walk was just about bearable, easy in summer, hell in bad weather. Now in winter with the added issue of significant numbers of cold and flu ridden train passengers coughing, spluttering and sneezing, the crowded slow train journey has become unbearable.
But thanks to AT, I met two other commuters and we have decided to car share as we all live within 200m of each other, pickup at home, left off outside office block, we share expenses. Just a tad less convenient when its my turn to drive. Road congestion no concern, i can still ipad my email, read news etc. No diseased passengers sharing the travel space, proper comfy seats, Yay!
We would probably have still been using the metro if there had been decent seating and shelter at Sunnyvale station.
I think a big part of the problem is that the so called planning process is just a method for choosing between apparently-competing projects. We might have a fantastic discussion about all the lofty goals, but then drop down to producing a ranked list of projects. All to keep the expansion machine happy. One year ARTA as it was then even honestly stated that keeping the engineers and contractors busy was an important goal. If instead the process was turned on its head, and the focus was really on making do with what we have got, and using it so much more wisely, recognizing that building more is not going to fix the problem or achieve the lofty goals, we might get a better overall outcome.
We don’t really have a planning process. We kind of do at the most senior level where someone puts some lines on a map of some projects they would like to achieve before they retire. But the rest of the process isn’t about planning. It is all about an administrative process and project management. There is no outside authority responsible for even checking if something is a good idea or not. Instead we have a hearing process where the panel can’t even require changes. they can only make a non-binding recommendation.
Maybe actually having a planning process would be helpful.
Good Lord. Miffy – best thing you’ve ever said. I totally agree with you.
The other big problem is what sort of projects we choose to dream up, analyse and compare. If you only compare road options you have pre-determined what you will build. We should be requiring consideration of PT alternatives for any major road project in a congested urban area, regardless of the analysis method.
The real question should be: we have a problem of how to move X people from A to B. What is thes best way to do it? Road, rail, bus or active transport?
But we do not think that way. We start with measures of congestion on the road network, then ask how do we fix that problem? Never mind why they are driving.
Actually I suspect sometimes we start with the problem: my road construction company/department is running out of work. What is the next big project I can build?
Yes. And I think the real question should actually be: “We have an unbalanced transport network. How can we shift the mode balance away from driving and towards PT and active modes?” The process gets a bit simplified then.
Part of the problem is that we don’t have strong minimum design requirements for pedestrians and cyclists.
We require a traffic lane for cars as a minimum design standard.
Therefore as a minimum design standard for safety grounds it should be required for active modes that:
a) all roads have footpaths on both sides of the road
b) all roads have flush medians & islands for pedestrians & cyclists to cross safely
c) all roads >30kmh have protected cycle lanes
This would force transport authorities to spend the whole transport budget for a couple of years just retrofitting the network and bringing it up to minimum design requirements.
There would be howls of protest for all the parking that needs to be removed but the safety of transport users is more important.
Yes, it’s some major retrofit programme like that that we need.
Kiwi Overseas I agree. I recommend people look at Dutch, French (both available in english) and German road design standards. They have features like those you mention, plus others like guidance for shared spaces, minimum footpath widths, maximum pavement widths before pedestrian refuges or medians are required, and better delineation of pedestrian crossings. Those nice walkable pedestrian zones in European cities do not happen by accident. They have design rules.
Within reason keeping contractors in work is a sensible goal – within reason.
There are two benefits:
1. A steady flow of business maintains capacity and capability in the locality and/or the country. If you have fluctuations, that capacity goes offshore (literally: Australia is hiring), and you pay a whole lot more to bring it back because suddenly you need to offer international prices.
2. When (not if) emergencies happen, you have skilled people – with working equipment who know the area – available to get on and deal with the issue.
The discipline in developing a pipeline of investments is in not padding it out with vanity projects and useless crap. Hence why all the concerns raised in these posts about the quality of the planning system have real validity (even though they are a little unfair in some ways: i.e. the impact of politics on what planners are allowed to pursue).
That is true, but with a little retraining we could keep contractors in steady work building systems we need, rather than eyesores that damage the city. Rail and road projects are both basic civil engineering. No need for them to change profession, just learn new skills.
Good question Harriet. Travel time savings are real, but their valuation in cost benefit terms is not. I suggest that we should only be counting travel time savings when they are for freight or commercial vehicle trips where the driver is being paid a wage to drive – those costs are real. But for commuter travel time measuring accessibility against a travel time budget approach better matches reality. That way it still matters if we can speed up public transport, but not just to spread out urban sprawl further.
The other component of conventional transport cost benefit, vehicle operating costs, should still be counted. Interestingly it is often a negative result for road projects that speed up traffic but result in more driving distance travelled as traffic redistributes across the network. So this approach would better expose the projects that do more harm than goid.
If someone takes 45 minutes to get to work and they start at 8 but then though less congestion they can cut the travel time down to 30 minutes, are they more likely to; a) leave home 15 minutes later to spend more time wiht their family; or b) get to work earlier to take advantage of the extra productivity?
c) get to work earlier and leave earlier after putting in the same number of hours.
d) Sleep in 15 mins more
e) grab a coffee on the way, make that habit, then get stressed when the 30 minutes turns back into 45 minutes AND they have to stop dropping the kids off because they’re not happy with the amount of traffic now on the local roads…
Vehicle operating costs raise a real and important issue in transport modelling.
Forecast increased vehicle ownership is often just assumed as a given in the transport economic analysis, however this is a real cost to society which is being ignored.
The true forecast do minimum would be to assume no vehicle ownership growth so that the true costs of more PT/cycle/walk vs more vehicle ownership could be compared. (note: some models assume no vehicle ownership change by default as they only do the analysis using base year configurations).
I may be wrong, and will no doubt be corrected if I am, but my understanding is that NZTA only view congestion as being congestion when it is holding up work related vehicles. For instance, during the Basin Bridge debacle in Wellington a couple of years ago, the NZTA designers would not factor in traffic on a Sunday, as it was “not work related” and therefore no cost was apportioned to it – and no cost savings apportioned to removing it. Effectively, you had to be driving a truck, a van, or a company car for this to be considered a saving that could be made. Obviously, people on bicycles or on foot were similarly not counted, as they couldn’t possibly be working. The fact that the worst traffic congestion of all was on a Sunday appeared to be of no consequence to them.
Almost but not quite. NZTA only view it as congestion if it causes delays to traffic already on a state highway. Hence ramp signalling. The idea is to cause massive delays to traffic trying to access a state highway and even delays to traffic just trying to cross an interchange and in return they get a minor reduction in delay to traffic already on the state highway.
Thanks again Miffy – really useful to know that.
AH I am being fairly strong on argument there and maybe not setting out how NZTA see it.
Thanks for the post, Matt. There are a few other forms of induced demand too. I’m sure you were wanting to keep it simple, but I’ll add them in here:
-Reduced travel choice. Due to the mode-shift to driving, less demand for PT leads to reduced service, reducing attraction of PT and further mode-shift. Similarly, less suitable conditions for walking and cycling lead to fewer people walking and cycling, which leads to less political will to provide good conditions for walking and cycling, etc.
-Different types of destination changes – those where land-use remains as it is, and those that involve a change over time in land use.
-Increased trips that are not on the new or widened road corridor. People shifting onto the ‘improved’ road corridor create an initial freedom in the local road network which is then filled with people taking new trips there.
-Synergistic effects of increased automobile oriented land use and transport system. That is, car dependency.
I mention these because NZTA will try to say they include induced demand, but they only include traffic shifting from different times, different routes and different destinations (but without land-use changes). They notably do not include the big ones I’ve listed here.
Although the GPS prioritises safety and access over value-for money, and this is partly reflected in the Investment Assessment Framework, I note that:
A project that only gets a “low” rating will get funding priority over the projects rated high or medium if its BCR is high enough. Similarly, a project rated “medium” will have priority over one rated “high” if its BCR is high enough.
I have suggested they work backwards from projects they want to prioritise and see if under this system they would get priority. For example, will rolling out protected cycleways across the city get priority over Mill Rd? 🙂
At a certain point these things run into the legislation, which talks about the importance of value for money and conflates it to some extent with financial efficiency, not least the duties of the NZTA Board. The GPS doesn’t have ‘Henry VIII’ powers to push back against requirements set in primary legislation.
Also, the draft GPS text acts on the idea of high BCR projects languishing because pet projects push them back, which has been a consistent concern of MOT, at least since work started on GPS 2015, and frequently in Auckland-related discussions – I think signal optimisation in Auckland was the oft cited example a few years back.
Yes, I wondered that. Which is another reason NZTA need to start modelling correctly, thus feeding in correct data to the business cases.
I’m not sure I’m totally on board with blaming everything on induced demand. I think a lot of the predicted travel time savings don’t eventuate due to population growth which is running much higher than the business cases would have predicted. Had some of the better road projects such as the South Western motorway widening and extensions not been built, Auckland would be at a complete standstill. Can you imagine the southwestern motorway having only 2 lanes each direction over the Manukau?
Flat line travel time per person over the last decade is nothing short of amazing considering the population growth and increased sprawl.
I’m not pro road by any means, I’d rather they spent most of the money on PT, but blaming induced demand on everything seems a bit OTT
Chicken and egg, Jimbo. Think what intensity and urban form we could have had road building not ruined the possibility.
Yeah, AT don’t like intensification though. More houses generate more traffic – therefore adverse traffic effects on already congested intersections. Build out in the wops though where you only have 200vpd and there’s no traffic effects apparently…
If a second Auckland Harbour Bridge had been built 15 years ago what would have happened? It could be traffic worse than today especially if the induced demand killed off the Northern busway. (And everyone saying thank heavens they built a second harbour crossing.
The irony in some of this discussion is that the outputs of the existing BCR methodology have been happily used by many here to criticise the RONS, while the government of that day leaned more on its planning rationale of intended network function and resilience.
Just saying.
Travel time predictability and reliability are intuitively more useful things than straight time savings.
Lack of predictability and reliability lead people to build in greater margins. Because of employer power, that usually means any time saving benefit on the way to work goes to the employer, while any additional time cost on the way home comes from private time: so forced choices and losses at both ends for the individual.
If time savings are to continue to be used, a great deal more sophistication is needed. Two thoughts:
A. Perhaps, there should be differentiation according to average individual time saving – i.e. not a linear escalation per second or minute, but recognition that some individual savings (less than a minute?) are basically useless, on average, individually and in aggregate, whereas others take on progressively greater value (more than 5 minutes?)…
B. Similarly, perhaps there should be differentiation according to socio-economic status, with value applied on a decay curve that privileges the time of lower income persons/households/neighbourhoods. Why them? Two reasons:
(1) time use has greater existential significance at the poorer end since more of it is consumed producing the basics;
(2) higher income people with higher hourly rates of return also have more options for using their time, including flexi-time, working remotely, and being driven while working, for example.
Neither A nor B is beyond the ability of contemporary modelling to handle. B already has a huge body of comparative deprivation analysis to work off, some of which has already been put into scales to support income support rate analysis and setting and can be run using Census household data.
These could be useful additions, but since the modellers don’t get the basics right, I am worried about the complexity these additions would bring. The more complex the model, the more the experts are the only ones who know how it works. This has excluded understanding amongst public, politicians and even NZTA and AT staff. I note that a submitter who raised valid concerns at the BOI for the WC (and whose predictions have been borne out) had his concerns dismissed:
“although apparently researched with care, we need to remember [X]’s lack of specialist qualifications”…
It can get even worse: One person commenting on a highway project in Oregon (US) was actually prosecuted for the unlicenced practice of engineering, since he was not a registered professional engineer.
True. I know from my own work how hard it is to get given the time to develop complex ideas well enough to be able to present them simply and clearly for non-experts.
I guess the dream is that we pare out enough of the unhelpful projects so that governors have a clear view on the important ones. Then they can require and encourage the experts to develop the decision-support material using better models and taking the time to develop digestable explanations.
Still even other experts have trouble breaking into the club. I was at a public hearing on a petition about Warkworth intersections and the submitters, all qualified and experienced, had done excellent work. But they were still very much on the back foot since, as the one seeking change, the onus was on them to present everything while the NZTA could hand back and deflect the discussion back into there own processes.
This presentation puts the point of view forward that travel time considerations should be removed from road safety project evaluation.
https://viastrada.nz/safe-efficient
Thanks Axel. Finally looked at that; it’s very good. Interesting that travel times are not a consideration in Germany for anything other than state highway-equivalent roads.
Also interesting how the roundabouts in Germany reduce from two lanes (each direction) down to one to slow the traffic before the roundabout, before increasing to two afterwards again. We seem to do the opposite – a one lane per direction road splays out to two at that roundabout, then back to one afterwards. Which must be a huge contributor to our accident rate being so much higher at roundabouts than in Germany.
There is no reason at all to stop using travel time as a means to estimate economic benefits. But there is every reason to stop assuming the quantity of people travelling isn’t going to increase as a result of the new road, rail service or cycleway.
It is just a little bit harder if you use a variable demand model but it can be done. You are supposed to reduce the benefit you claim from ‘new’ trips. I think the manual still says use half the value for them. The technical reason is that benefits are the area under a compensated or Hicksian demand curve. The existing trips are the rectangular bit so the benefit from them is quantity times price. But the new trips are the triangular bit below the top part of the demand curve (assuming the curve is a straight line) so the benefits are 1/2 the base times height or 1/2 x quantity travelling x price.
The problem is not ‘induced demand’ (or as most economists would call it ‘demand’), the problem is the assessment assumption of a constant flow rather than the more accurate assumption of more people travelling.
In part, this old assumption creates bias for roads, and against rail because for roads the marginal cost of travel increases (volume capacity curves slope up) and over the short run rail marginal costs slope down (economies of scale). Of course eventually even rail lines hit capacity and you have to build a whole new one so economies of scale result in big bumps or a saw tooth supply curve for rail systems.
+1. Recognising the value of increased capacity makes a lot of sense, as does making realistic predictions of reduced travel time when the inevitable induced demand shows up.
Seems to be a rational explanation…and not a hint of sarcasm. What’s going on?
Definitely way more funding is needed for PT. That said you do still need capacity improvements on certain roads simply due to the fact that there are a whole lot more people living here now due to the reckless immigration policies of the previous government. Even if by some miracle 80% of them ended up on PT/Active you still have 20% adding to traffic in this city.
Projects like the NEX show how you can better utilise infrastructure (Harbour Bridge) you still have to build the rest of it.
Population increases do not require an increase in road capacity in a city over-supplied with road capacity as Auckland is. Seattle grew 21.3% in population since 2006, traffic volumes decreased by 3.3%, and transit ridership increased by 41.8%. It’s just about good planning.
Each new bit of road capacity expansion is exacerbating the problem. We have 40 km of road being added each year. What we need is road contraction to achieve traffic evaporation. I agree we need more funding for PT. The less we spend on roads, the less we’ll need to spend on PT and active modes just to keep our heads above water.
Except we aren’t over supplied with roads. We are over supplied with cars sure but compared to what is often considered the worlds most liveable city – Vancouver and many others we aren’t. Go to Vancouver and you will see grid pattern streets that are typically all 4 lanes wide if not 6. I’m not saying that’s what Auckland needs (although all new developments should be grid pattern) but it goes to show how a city widely praised has much more roading than us. About the only difference they have that is lacking (which can be a plus) is their motorways don’t go into the city centre.
Unlock land use opportunities is one of the benefit and extra property tax can be captured.
Social benefit cost analysis should include all relevant economic costs (which are often called “disbenefits”).
So, no, you’re not right on a conceptual level: SBCA of transport projects is not limited to just financial costs.
On the other hand, there’s valid questions to be asked about whether the right benefits and costs are being included.
One gets the feeling that amenity effects, like the ones you discuss, should be in there.
Indeed! And I would add that there’s a rich economic literature on valuing those amenity effects, which could easily be brought into cost benefit analysis practice.
Having looked at this quite a lot in a practical setting, the only major category of benefit that I suspect we have a good way of addressing is safety and perceived safety, especially for people on foot or bike. There are some tedious statistical reasons for that suspicion.
Now you’re just trolling me, Matt! Good discussion to have, though. I’d suggest that there’s a subtle but important distinction between two critiques of current CBA practices:
1. Travel time impacts of projects are being modelled inaccurately, due to insufficient consideration to induced demand (and its inverse, vanishing traffic)
2. Reduced travel time is the wrong measure of benefits to transport users, eg because they end up ‘cashing in’ faster travel to obtain other benefits, like a nicer / cheaper home.
The two have very different implications for how we might reform transport appraisal methods.
On the second point, note NZTA’s remark that: “Travel time savings account for the majority (typically around 80%) of ‘conventional’ economic benefits for most transport projects.”
If we simply discounted travel time savings as meaningless, the immediate result would be a large reduction in the BCR for *almost all* transport projects. (Except for walking and cycling projects, where most benefits relate to health benefits of increased physical activity.) This would in turn imply that we should spend a lot less on transport in general, including public transport.
Before looking for an alternative measure of transport user benefits, it would be useful to ask whether we’re confident that an alternative measure would actually result in a higher (or meaningfully different) estimate of benefits than the current approach. We could easily land in perverse consequences territory!
Peter, if we discounted travel time savings as meaningless, and were more careful with including social and environmental benefits and costs, wouldn’t PT projects that involve road reallocation get good BCR’s? Once you include benefits of:
-removing traffic and its attendant air and water pollution, carbon emissions, restrictions on active mode access, DSI and perceived danger, poor urban form;
-adding in public transport and its attendant benefits of real access, social health, mental health, agglomeration
then I would have thought the analysis would be pretty favourable. Or is it that people haven’t attempted to quantify some of these costs and benefits?
I don’t think so, no. When I’ve done CBAs for public transport projects, I’ve generally tried to include as many benefits as possible, including benefits from reduced air and carbon pollution, increased physical activity from walking to PT stations, and agglomeration and other wider economic benefits. You still need travel time savings, or some other way of valuing faster/more convenient journeys, to get BCRs over one.
For instance, here’s the summary of the CRL business case (full disclosure: I worked on this project): https://at.govt.nz/media/1770701/crl-business-case-summary.pdf
Page 7 shows the breakdown of benefits. Travel time reductions for PT users make up around half of the total benefits. The BCR for the project was 1.5, so if you excluded travel time benefits entirely you’d be looking at a BCR of 0.7-0.8. In my view, that would be a less realistic picture of the benefits of the project, rather than a more realistic one.
The CRL was an extreme case, though. What carbon emission values did you use? How did you work out the increase in mental health from better access?
Has anyone looked at it economically in a very different way: Map out a vast PT scenario that doesn’t just add in mode choice, but reduces vkt to a third, say, of what it is. Work out the benefits of this in terms of lowered carbon emissions, fuel costs. vehicle operating costs, water pollution, public health costs. Also work out the benefits in terms of social health, less depression, more access, more land for other uses.
And then split those benefits to each of the works required to achieve it. So even if the whole scenario isn’t implemented (being as likely as a not very likely thing) each individual contribution can be valued for what it could be in a good plan.
I think this is the only way to fully value PT projects. No-one can visualise their true benefits simply because they’re only treading water. Each new road built, with its increased vkt, simply undermines the PT projects.
In my experience, CRL’s a pretty typical case. You get a similar breakdown of benefits for most PT projects.
Playing with parameter values and adding in additional (more speculative, in my view) benefit measures only moves things at the margins. For instance, I’d argue that the carbon emission reduction benefits should probably be 5-10 times higher, ie using a social cost of carbon of $200-400/tonne rather than $40/tonne as prescribed by the manual. But that might only add ~$50m to benefits.
Your suggestion to test the aggregate impacts of a mode shift scenario has a lot of merit. The challenge is that to map out a path from here to there we need to be able to lay out a set of specific steps we can take, and forecast or otherwise estimate their effects. Otherwise it’s difficult to match benefits to policies.
Fundamentally, if we want a big mode shift to PT we’ll have to make the buses and trains faster. (And more reliable, comfortable, accessible via walking, etc.) Which in turn brings us back to the world of modelling (or otherwise estimating) the impacts of specific projects on journey times!
Thanks. Yes, I agree that if you’re going to be doing an in-depth economic analysis, travel times are important. And I suppose that brings us back to the accuracy of the modelling. If induced demand and traffic evaporation were modelled properly, and if ridership numbers due to PT provision were modelled properly, wouldn’t many of the benefits of the CRL have been much larger?
Calculated values, that is.
What I take from these comments is that, if you excluded travel time savings, you go almost all the way back to a social rather than economic investment rationale for land transport. I.e.
1. the community making a social choice about rights of way (recognising the value of land and land use),
2. then the market making commercial investment decisions on enhancing rights of way and/or delivering transport services along them,
3. then the community directing state investment to address market failures, be it through regulation, pricing and compensating, and/or direct provision.
Of late I have been mulling over the whole idea of rights of way and network optimisation.
It seems clear that a certain level of forming and paving of rights of way benefits every class of road user, but beyond a certain point optimisation excludes certain legitimate road users in order to privilege the access of others. Motorways arethe extreme real world example, since they only count as roads for certain purposes and are actually ‘motorist club’ rights of way, not truly public ones.
As such, walking and cycling infrastructure are not ‘unfunded’ privileges for these two classes of road user, but necessary compensation for the suppression of their rights of way within car-centric road networks.
I want to clarrify, that the actual output per hour worked is about 37USD in this country according to Eurostat, which is basically the EUs version of Stats NZ. So from a macroeconomic argument, there is a good case to use that figure for commuting to and from work, on the basis that getting to and from work is part of the working day, and that workers could work that extra amount of time instead of commuting.
Now the average worker isn’t getting 36USD an hour, some of that goes to the government in taxes, and some goes to business owners and property owners, that is just the average output per hour worked for the whole economy. Now at the median salary for full-time employees (according to stats nz) of 25NZD, that equates to $20 takehome pay per hour. So if the bus adds an hour (total including waiting at bus stand, and arriving early to work) each day, then the automobile as an option can cost $100 more a week before your worse off..
If we take a bus trip from Henderson to Aotea square for instance, it costs $4.80 to the user, the council also pays about that much, so overall the real cost is about $10 each way, or $20 a day, or $100 a week ($50 to the user). If we take the IRD milage reimbursement rates as true (for the sake of argument), then we get a cost of $120 a week and $85 a week for parking (11 month subscription to downtown carpark), so $205 per week for the driver vs $50 out of the commuters pocket for bus fare, $50 out of ratepayer and fuel tax for the fare, and $100 a week of lost labour at $20 per hour, 1 hour per day in extra time it takes to commute by bus.
So the costs for the end-user are about the same once subsidies are taken out if you work in the CBD, if not PT isn’t an option anyway. In real terms for the entire economy, it actually looses the economy money at that 37usd hour figure by Eurostat. Suffice to say, I doubt many workers in the CBD are on only $25 an hour, perhaps the majority in hospitality and retail.. And the higher your take home wages, the less sense PT stgarts making.
So to support PT, you also need to support a Low-Wage economy, because beyond a low-wage economy, the PT option actually becomes more expensive when time is taken into consideration. If parking was a not a factor, for instance if PT was a viable option to commute to say Manakau or the factories around the airport, then even on a low-wage its a toss-up, probably in favour of the car.
So its a toss-up, you could use Median-Takehome Wages to calculate time benefits, but the Int$ real output per hour worked is a better societal measure for central planners to use, and also regardless of which method you use, for any long-term plan, you absoloutely need to factor in real-gdp per capita, per hour worked growth.
And the further in the future you look, the more time that has passed with rising worker productivity, the harder it is for any nominal upfront monetary savings of PT to exceed the forsaken income that one could have earned if they worked that extra time it took to use PT which is slower and pricate transport instead.
There is a really, really good argument, and I mean a mathematic argument, not feelings, not emotions, not left-wing identity politics and the glorification of shared and communal transport over the individualistic nature of cars, which symbolize freedom and everything, that actually the maths is against PT, and PT decreases living standards. But that is just maths, and maths is racist and all that right?
“There is a really, really good argument, and I mean a mathematic argument… that actually the maths is against PT, and PT decreases living standards.”
Speaking as an economist, and as someone who has a degree in maths, this is factually incorrect.
At present, almost half the people who work in the Auckland city centre get there on public transport. A smaller but non-zero share of people who work in other locations travel by PT. All those people had a choice about how to travel (and where to work).
It is very difficult to reduce people’s living standards by giving them more choices. Furthermore, if people choose PT over driving, when both choices are available, it stands to reason that they have chosen PT because it raises their living standards.
Asserting otherwise requires us to disregard those people’s decisions in favour of the quasi-totalitarian assumption that they don’t *really* know what’s good for them.
Now, it’s valid to ask whether the marginal transport dollar should be spent on A or B, and whether some PT operating subsidies should be diverted to other uses. But that’s a very different issue than your blanket assertion that “PT decreases living standards”.
It should say “…Car pricing and speed differential where he on a micro-economic level is arguable BETTER of from PT.”
As an economist I see very little in the way of your refutation about the mathematics of PT decreasing standards of living, involving well, mathematics, surely an argument against mathematics can not be based off of rhetoric.
If your asking me how it decreases standard of living, it’s simple, the actual GDP PPP Output in NZD per hour worked is $54, by spending an hour each day on PT from Henderson to the CBD (above what it would take you to get there by car) you spend $20 (ignoring the subsidies) on the bus, as opposed to $40 by car. You are saving $20, but you destroy $54 of economic output.
That PT option decreases GDP PPP by $34 per day, per worker in that scenario. Another way of explaining it to you Peter is that even if people are rational (which they are not) and take into account the time value of their labour (which is not everyone), then subsidies on PT hide the real cost. The fact is that regardless of the number, the fact that PT is slower means that at some point, and this can be calculated with Mathematics, that an individual will be worse off at a given wage by catching PT, than working that extra time instead.
Ofcourse the ‘individual’ on a microeconomic perspective doesn’t need to be ‘worse off’ for their to be a macroeconomic effect from an aggregate of people. The marginal effect from a single person taking PT as opposed to car and then working the difference is non-existent on a macro-level. So out of that macroeconomic figure of national output in this country being 54NZD GDP PPP per hour, some of that goes to the government, some to asset holders like share holders and property holders and IP holders, that one individual might be producing 54NZD of GDP PPP per hour worked.
But after everyone gets their cut, he definitely takes home far less than that. The residual take-home earnings could be such that there is some combination of PT and Car pricing and speed differential where he on a micro-economic level is arguable worse of from PT. But on a macro-economic level 1,000s or 10,000s of people doing this, and taking the difference between their take-home pay and their actual output, out of the economy will have a difference.
You call this totalitarianism, no that is the taxes, subsidies, diversion of NLTF funds all of which mask the true cost of PT and bias people to one mode of transit over another.
Nobody pays you more for a shorter commute, and nobody works longer hours from a shorter commute.
All of this discussion is certainly interesting, just have a few comments / questions:
1/ The assumption that time saved from a commute would equate to a linear model of value confuses me as there are diminishing returns on output over time (mixture of physical limitations to what people can do and the psychological element of people not wanting to spend more time working than they have to)
2/ How are the compounding effects calculated? Or is this scenario assessing an individual in a vacuum?
3/ For balance have you considered any car vs PT cases where the PT option took the same amount of time or was faster (e.g. PT stop could be just outside workplace, while the affordable parking you mentioned might require additional travel to get from carpark to workplace).
4/ PT options like trains (or dedicated busways) could offer more certainty over departure and arrival times which also has a value that I’m sure you could attempt to mathematically quantify as that allows more productive work scheduling versus the car which has less certainty given the car cannot control the traffic it will encounter on any given day. (In fairness you can have certainty over your departure time in a car, but arrival time will vary)
Curious to hear any thoughts on points above but glad to have read some challenging ideas…
1/ yes luke that is the case, you are not going to get the same output per hour worked for all professions nor do all professions output at the same rate, then if you take all the people who catch the bus and put them all in cars, perhaps that creates more demand, congests the network, and eliminates this effect. At which point your not just looking at the cost differential for PT and cars, and whether or not the output that could have been generated for the additional time is simply larger than that, you also need to adjust for the required and additional investment into the roading infrastructure.
So you could literally do a cross-disciplinary thesis on this with traffic engineers and other such people. But for the scope of this internet blog you have to limit yourself.
2/ I am not quiet sure what you mean by compounding effects, if you mean induced congestion from switching mode of transit see 1/ otherwise in terms of a macroeconomic perspective, you can scale that single individual up over the population of the ridership and make generalizations as to the fact that economic output could potentially be lower than otherwise is.
3/The preface that there is a combination of speed differential of the two transit options, and a wage at which for that given speed and cost differential it is better to work for that extra time actually requires one of the options to be both cheaper and slower.
For instance if cars were more expensive and slower, you would not have saved time that you could work to offset the cost of the bus right. Of course I know that some people if they could be bothered to read this would respond with statements that in some cases PT is quicker than the car, it is, whether that is by lack of investment or not, and whether there is an economic case to invest in that infrastructure are separate.
And there will be cases like that, for instance when I went to uni I could park in Kingsland, there was a bus every 2-3 minutes, it was like a minute to park and a minute to walk to the stop, and a percentage of times I could get a bus immediately, and sometimes they were full, point is it was quicker to drive to kingsland and park than bus, then when there is traffic, it is quicker to go on the bus, in the bus lanes, and then the bus stops outside the university. So in that case the most effective solution was to take a combination of both options. It was maybe marginally more expensive than the bus, way cheaper than paying for parking, and much quicker than the car in traffic.
4/ Yes trains are better scheduled, but the collection areas are small, the most effective metro system in my opinion is Paris although everyone likes London for some reason. Paris has somewhat smaller spacings between stations, this increases cost of construction because more terminals are needed, and it also decreases average speed of the network. But the network is almost as fast, but much quicker for the commuter when the peripheries of the collection areas are taken into consideration.
Regardless even a metro like paris (incompatible for auckland) moves at a speed of about 30kph, A flat city with good street structure can realistically approach 100Kph.
5/ I think a big part of the solution for transit is around more flexibility of working hours i.e. flexistart-stop times, I know that is difficult for many businesses, also things like on-demand lanes since travel is directional during rush-hour would help. There are some little things like that. We also need to increase speeds across the network for both PT and private cars, regardless of what is an isn’t better the average person in West, North and South Auckland are probably actually working a 50 hour week with congestion added, but are only producing the output of a 40 hour week.
In that case Auckland could move to a 50 hour week and cut 25% of the year out, and still have the same economic standard of living, work the same hours (if the 50 hours is true), and you could have 12 additional weeks off. Its not a serious suggestion, just a point to emphasize the problem of congestion for some people in Auckland. I think that is a bit of an absurd notion, but I know of people who live in west Auckland and spend well over an hour commuting by car. I have also seen the traffic.
“Ofcourse the ‘individual’ on a microeconomic perspective doesn’t need to be ‘worse off’ for their to be a macroeconomic effect from an aggregate of people.”
I see what you’re getting at, but this is not a good argument.
First of all, the effect you’re talking about – ie a wedge between pre- and post-tax earnings leading to individual behaviour that is sub-optimal from a social perspective – is already captured in transport appraisal procedures. See Kernohan and Rognlien, 2011, for a description. So on a factual basis, I disagree that the externalities you describe are un-measured or not taken into account in transport decision-making.
Second, with the exception of the Waiheke ferry commute, there are no places in Auckland where PT is available but driving is not. Thus it is logically impossible that output is being “destroyed” as a result of people choosing to take public transport. If someone chooses to spend more time on the bus, as opposed to a faster car commute, it stands to reason that they are doing so because they get more value out of that choice.
Lastly, we can and should *speed up* the buses and trains. There’s a lot of scope for improvement here.
It certainly is a strong argument, if you understand the fundamental concepts, and if not poorly delivered.
You see you have two cases, firstly the microeconomic case of an Individual, it is possible given the time and cost differential between the two options, that there is some level of take-home pay where that individual is better off working the extra time it would have taken him for the PT option to chose the NPT (non-public transit option, which obviously includes working for the amount of extra time PT takes to make up the PT cost differential).
Simultaneously from a macroeconomic perspective real gdp ppp per hour worked is separate and distinct to that individuals take home pay. The real output per hour worked is not take-home pay plus taxes, it is take home pay, plus taxes, plus the cut that management and administration, shareholders, creditors, ip licensors, equipment rental agents, etc..etc.. So the tax-wedge is not what I am talking about.
The individual however only sees the takehome pay and the direct taxes on take-home pay, and the indirect taxes on bus usage, and perhaps also if he is well educated and informed, he can also determine what the subsidies are for his bus trip, however in terms of the Microeconomic situation of that individual we are only interested in maximizing his standard of living, so we are not concerned with the portion of income/output forsaken by choosing the PT option that is not attributable to take-home pay. In other words the individual only cares about his take home pay.
For the macroeconomic perspective we understand that takehome pay is irrelevant, that is just the portion of output per hour that the individual gets to keep, just because he does not get to keep a portion of his output does not mean it does not exist and that we should ignore it when calculating which option maximizes said output, take that individual and multiply it out, you get a macro economic perspective.
Given the difference between Take-home pay per hour, and real output per hour, it is possible for a given differential in commuting times and cost between the two options, that the take home pay could be low enough that the individual from a micro-economic perspective wanting to maximize his individual standard of living would choose to take PT, but the associated real output per hour may be at a level sufficently high, that from a macroeconomic perspective, even if he is individually financially worse off, we would want him to take the car and work the difference in time.
Whether or not the fact that the option to take the car is there alongside subsidised public transit has no real bearing on this (other than such distortions creating an illusion of value that could bias consumption in an inefficient manner), and the assumption that everyone is a rational individual with perfect knowledge, that is going to draw up accounting statements for both options and optimize from the microeconomic perspective the option is also invalid. Its not going to happened because most people aren’t accountants, or economists. Nor is it relevant to maxamizing macroeconomic output.
And you can speed up busses and trams, you can speed up cars as well, a well laid out grid city can have commute speeds of ~120kph for cars, I don’t think there is any city that has these speeds but it could. Likewise paris metro has a speed of about 30kph for its trams, then you add in walking speed, with electromagnetic trains and faster escalators and whatnot maybe you could raise this to 50kph. These are all arguments that you can make. With the exception of trams in a densely populated pre-automobile urban core you are going to have long delays simply from the scheduled and infrequent nature of mass transit. Infact there was a serious proposal to replace subways in various cities with moving walkways which were estimated to have both higher throughput and quicker transit speeds (although cost enormously in maintenance.
Furthermore I think that the types of drone based aerial transit being trialed in Dubai will with the maturation of battery technology become widespread, cheap and much more capable. Such an aerial drone could potentially travel say ~250kph, a larger more capable version could approach a few hundred kph with propellers. Even if the capital cost is higher than that of a car, due to the lack of infrastructure requirements and the better fuel efficiency of aerial transit, the actual cost is likely to be lower. Also real output per worker will continue to rise with automation.
This makes mass transit like buses an increasingly less effective policy by the year.
Generally speaking, surveys show that people value travel time savings, including for commuting, at a discount relative to the wage rate. So the social opportunity cost of travel time is smaller than you suggest. On average, it’s probably 40-60% of the hourly wage, not 100%.
This is intuitively sensible – look at people’s behaviour in other areas of life. For instance, let’s say that someone spends half an hour making dinner for themselves. If the ingredients cost $10 and their work time is valued at ~NZ$50/hour (per your figures), then this would suggest that their dinner ‘cost’ them $35. You can get a pretty nice meal at a restaurant for less than that, so why did they cook for themselves? Probably because they don’t value their non-work time at $50/hour.
I need to eat to survive. A commute is dead time lost to the ages. I don’t need that to survive. My non-work time is even more valuable to me than my work time.
Then why do people cook for themselves when the cost of going out for dinner is lower than the ‘cost’ of their time valued at average wage rates? What’s the difference between 10 minutes spent driving and 10 minutes spent cleaning up the kitchen?
The classic quote is “if time savings are so important then why isn’t the Government buying everyone a dishwasher”.
https://www.greaterauckland.org.nz/2011/01/14/why-not-just-buy-them-a-dishwasher/
Ten minutes? Maybe if I lived in Grey Lynn. The differential between by commutes in the morning vs the evening tends to be an extra 50 minutes.
You definitely should be given a dishwasher.
Good post Matt. Peter I remember modelling for the Waterview tunnel showed that even a nominal toll of $2 on the tunnel for a travel time saving of 10 – 15 minutes would mean that 50% of the traffic would divert to avoid the toll. This seems to contradict the high value placed on travel time savings in traditional BCR analysis.
On the cost side of the BCR equation, it’s my understanding that only public agency costs are included for roading projects. Private costs of car ownership operating costs are ignored since the assumption is that road users already own a car. The fact that people are forced to by a car to use the roading system is ignored. Contrast that with public transport projects where vehicle ownership and operating costs are a significant part of the equation.
I suspect, that if the speed limit was removed or increased more reasonably to like 120, which most people would be fine with, that the difference between traveling at 30kph (on average through traffic lights) and 120kph would be worth the $2. I also think that people would pay it even at 80kph..
But its for precisely reasons like this, that some degree of marketization, i.e. market pricing, i.e. a proportion of toll funding, should be included in motorway projects like this. It ensures that in addition to the fact that people are generally willing to pay an amount of money in excess to the cost of owning and operating a motorvehicle, in the form of a fuel levy to use the roads in general, that people also place a value on that new route.
Now if that was a requirement, then I think in order to maxamize the value, then projects like this wouldn’t have the speed arbitrarily limited to some absurdly low amount. It’s a perfectly good route, the lanes are a bit narrow, but most people would have no problem doing 120..
Most people are deluded about their driving skills, and it is the absolute and proportionate size of ‘the few’ that is the risk. What good a ‘fast road’ that is constantly closed for crash clean up?
The toll price and effect modelling seems to be set to ‘revenue conservative’ though, tending to over-value the revenue risk of impacts on demand.
From what I can tell, demand has tended to be better than modelled – albeit not sufficiently so to offset the financial volatility from the three existing toll roads being on pretty marginal routes from a commercial tolling perspective.
It will be interesting to see what happens with Transmission Gully. Like Waterview, the network intention is to shift the bulk of demand through that part of the corridor, so any demand displacement through tolling is counter-productive. But there is a notional debt to service by way of the availability payments, so toll revenue towards that also makes sense. There are a few points along the existing coastal route where throwing some traffic lights in would be safer and calming, so perhaps the opportunity is to slow the old route down enough that a $2 toll on TG is no issue.
Harder to achieve in a significantly more complex network like Auckland’s.
That is subjective, you could also argue that some people enjoy driving, and other people enjoy reading in the bus, and some people don’t like the inconvenience of the whole thing, and so economists should stay away from trying to arbitrarily quantify feelings and include them in terms of mathematic proofs to base policy on along with objective and scientifically observed economic variables.
And that is ultimately the downfall of communism/socialism, where ‘experts’ attempt to assign arbitrary values on things to dictate the direction and quantity of resources, and the people in charge of the supervision of resources appointed by bureau, whereas in a capitalist system pricing is set by real demand/supply (not some assumed calculation) and resources distributed according to whom can create the most value (with the exception of rent-seeking which is predominantly enabled by government intervention, and also in the form of inheritance).
Thereby the capitalist system achieves a better Allocative Efficiency not just in the sense of consumer goods/services, but in terms of financial capital, i.e. projects with merit have a higher likelihood of being worthwhile under a capitalist system where the capitalist is risking his resources to pursue some sort of commercial programe, i.e. Boeing which is a private company developed the 787 and Aerobus which is an arm of the EU developed the A380 based on the hub-and-spoke network, which existed on the basis of a technological limitation that the 787 overcame…
Its an example of a socialist organization, not understanding fundamental market principals, and therefore making poor decisions, on faulty assumptions, that lead to a failed programme. Boeing on the other hand is privately owned, and has a responsibility to it’s shareholders, and it is ran on this basis.
“And that is ultimately the downfall of communism/socialism, where ‘experts’ attempt to assign arbitrary values on things to dictate the direction and quantity of resources”
My dude, you’re the one arguing that we should require everyone to drive because you’ve assigned an arbitrary cost of US$37 per hour to their travel time. That sounds pretty central planning to me.
Better make sure the roads aren’t built by the gummint. Communist plot that, using taxes for a common good.
I’d never seen the need for communism before. Hollows is suggesting that if we’re not going to have petrolheads killing even more people, at 120 km/hr, making decisions about transport as if climate change, pollution, social cohesion, urban form, children’s access don’t matter, I’ll have to shift my politics further to the left. Rightio.
“attempt to assign arbitrary values on things to dictate the direction and quantity of resources, and the people in charge of the supervision of resources appointed by bureau”
Sounds like the last governments policy on Roads of National (Party) Significance…
‘Choice’ = totalitarianism
‘No choice’ = freedom
Is it 1984?
Peter the differential in work and non-work time is most probably the compensation that people need to receive to put up with a boss. The worse the boss, the greater the premium you need.
Is time spent in the car transitioning between anger at the boss to anger at the traffic better costed at the higher rate or the lower rate?
I used to find it good therapy. 50 minutes of listening to music and I would get home and could fit in with the happy people who were pleased to see me.
But a similar argument applies to time spent cooking. It can be much more enjoyable than time spent working for someone else. As for eating out, I would pay to avoid that. Who wants to eat butter-soaked over-salted food while some prick hangs around asking you if everything is ok?
Ah, well, not me. My husband cooks better food than any restaurant chef, and I rarely get told off for putting my feet up at home. And the wine is cheaper. Even the food I cook, which is known locally as “Heidi-slop”, is at least made from picked-that-moment vegetables (even if they are vegetables most people have never heard of.)
But surely as a society we need to be valuing the time that people are spending doing the things that make them happy higher than the time spent doing things that don’t?
I think Bhutan was working on this…
Good post and discussion.
Social impact measurement seems to be getting a lot of cut through… this is pretty interesting: https://www.simetrica.co.uk/wwwsimetricacouk-resources Good roundup of social impact investment incl nifty chart comparing different models for calculating whether something’s overall worth it (p8).