Tuesday, July 03, 2012

What do we know?

Matt Drennan and Charles Brecher ask "Can Public Transportation Increase Economic Efficiency?" It's a great question which should include consideration of the cost side.  The cost side can sink the argument if the transit choices are the high-cost political favorites -- which I have complained about many times (as recently as last Friday on this blog).

That aside, the authors study 42 U.S. metropolitan areas and consider square feet of office space in each.  They pay attention to the proportion of metropolitan area office space concentrated in the area's central business district (CBD), reasoning that the high rents paid there signal the presence of agglomeration opportunities.  And these must be the places where good things happen, including knowledge spillovers and information sharing.

Then it's a hop-skip-and-jump to testing, via regression analysis, whether public transit makes a difference. "For those CBDs with more than 30 percent of the total metropolitan office space, the effect of transit use on rents is small but positive and statistically significant. For suburbs in those MSAs the effect is similar.  By contrast, the results show that transit use has no effect on office rents in places with a low concentration of office space in the CBD."

There are, of course, questions of mutual causation. Have new transit systems prompted new office agglomerations?  And, again, at what cost?

What do we know?  Transit subsidies have been growing for many years and most cities keep suburbanizing -- as they grow.  Growing cities manage to capitalize on the agglomeration econonomies where they can find them.  And most new office space is outside traditional CBDs.