Sunday, September 20, 2009

Success indeed

Taking a cue from Tom Sowell, I try to disuade students from talking about "solutions". There are only trade-offs. Second on the list of offenders is the easy use of "success". Today's NY Times includes "In Phoenix, Weekend Users Make Light Rail a Success".

Well, no. Just use the data in the article. $1.4 billion of capital costs, 33,000 riders per day and fares of $1.75 suggest $109.5 million of annual losses. Use 365 days (the story cites the many weekend users), 5 percent opportunity cost of capital, depreciate over 30 years. Add lowest-in-the-U.S. operating costs, San Diego's $1.15 per boarding. Fiddle with any of these and "success" is still far fetched.

Boosters love to cite non-rider benefits. $109.5 million a year is a very high hurdle.