Transportation Economics, Finance, and Policy - UCLA Luskin

Transportation Economics, Finance, and Policy Urban Planning 256 / Public Policy 222 UCLA Luskin School of Public Affairs

When? 2013 spring quarter (1 April 2013 to 5 June 2013) Mondays and Wednesdays from 3:30 am to 5:00 pm

Where? 2250 Public Affairs Building Who? Brian D. Taylor (Instructor) 3320D Public Affairs Building [email protected]

310.903.3228 Schedule appointments at http://www.its.ucla.edu/hours Taner Osman (Reader) [email protected]

Course Description

This course deals with the economic and financial aspects of urban transportation policy and planning. We examine the costs and benefits of transportation systems, paying special attention to who wins and who loses in transportation finance. Because the politics of transportation finance critically shape both the development and use of transportation systems, we focus substantial attention on the political debates surrounding transportation finance. In the eyes of many politicians, interest groups, and their constituents, transportation finance is simply an issue of “give us more money and let us spend it the way we want.” Their viewpoint, simple as it may seem, raises many political and economic questions. For example, what share of societal resources should be devoted to transportation? Should users of the transportation system pay their own way, and should they pay for direct or total costs? Is mobility a right or a privilege? How should policy making and implementation powers be divided among federal, state, regional, county and local jurisdictions? What blend of public and private entities should provide transportation services? The answers to these questions are played out in policy setting and finance, through federal transportation bills, state policy, and regional and local plans. Compared with land use planning, transportation policy generally occurs at higher levels of government and involves more parties. By the end of this course you should:

mailto:[email protected]

http://www.its.ucla.edu/hours


Transportation Economics, Finance, and Policy 2

Know the processes by which transportation infrastructure is funded, and understand the roles of each level of government;

Understand key economic principles that guide economic analyses of transportation systems;

Be familiar with the goals and assumptions that underlie debates about transportation finance and policy; and

Be able to develop well-reasoned oral and written policy positions on matters of current interest in transportation finance and policy.

Course Format and Requirements

This course is comprised of four parts: (1) lectures, (2) participation, (3) required (and supplemental) readings, and (4) written assignments. Each part is described in more detail below.

1. Class Lectures Most of the class sessions will be devoted to lectures and discussion guided by the instructor. The required readings will provide an overview of the topics covered in each session, while the lectures and discussions will tend to focus more on specific questions or a piece of research related to the topic; the readings and lectures, in other words, are complementary. 2. Regular Attendance and Participation

Counts for 10% of final grade

The course consists of 19 class sessions. Regular attendance is required and participation in class discussions is an essential part of linking and critically analyzing the readings and lectures. Regular attendance and frequent participation in class discussions will enhance both your experience in the course and your attendance and participation grade.

3. Required and Supplemental Readings

Careful review of the required readings is an essential part of this course. Links to all of the required readings are available on the course website. This syllabus also includes numerous supplemental readings for each topic, as a reference for those interested in doing deeper reading on a particular topic. Many, though not all, supplemental readings are available on the course website, though nearly all are available on the Internet or through the UCLA Library. Please note that many of the readings on the course website can only be accessed on campus through the UCLA WiFi or remotely by using the UCLA VPN. You are expected to complete all required readings prior to the corresponding class session – including the required readings for which you do not write a critical summary.


4. Written Assignments Count collectively for 90% of final grade

There are two parts to the writing portion of the course: (1) eight critical summaries of the required readings, and (2) a medium-length research paper on a transportation economics or finance topic. Critical Summaries of the Required Reading Counts for 50% of final grade Planners and policy analysts are frequently asked to synthesize detailed and sometimes technical work clearly and concisely, and critically analyze sometimes contradictory findings. Accordingly, the critical summaries are designed to improve your critical writing skills in this regard. One way to think of these summaries is as equivalent to movie reviews; good ones manage to synthesize the principal elements of a film, and offer insightful critical commentary on it. This is what you should endeavor to do with these reviews. The summaries should be submitted (1) electronically through TurnItIn on the course website, and (2) via a hardcopy placed in a tray marked for PP 222/UP 256 papers on Whitney Gouche’s desk in Public Affairs Building room 3357 ([email protected], 310-825-4025) no later than 3:25 pm on the day we cover the topic in class. Papers submitted late will be marked down by a third of a grade. Which eight topics from among Topics 2 through 20 you choose to review is entirely up to you. Your reviews should in all cases summarize the substantive content of all of the required readings for that topic and offer comments, criticisms, or insights on their collective content. The summaries should be about 750 to 1,000 words (~3 to 4 pages double-spaced) each, double-spaced with 1-inch margins and 12-point type. They should also clearly indicate the course topic (and not session) number being reviewed, include citations with page numbers for direct quotations, and have a complete bibliography (which does not count toward the word/page requirements). Research Paper on a Transportation Economics and Finance Topic Counts for 40% of final grade In addition to your critical summaries of a little over 40 percent of the course readings, you will also prepare a mid-length research paper on a topic of your own choosing, subject to approval by the instructor. In constructing your research paper, you should pose, investigate, and report on a specific transportation economics or finance question, ideally building on the topics covered in the course.

Paper Prospectus (5% of final grade; grade based on the final research paper grade). Due Wednesday, April 10th at 3:25 pm.



You need to submit a proposal for your paper for review and approval by the instructor. This prospectus should include (1) a ~100 word description of the question you expect to explore, (2) a ~250 word description of how you propose to go about gathering evidence (articles, books, data, interviews, etc.) to answer your question, and (3) a ~100 word description of what you expect to find. You should also include a one-page proposed outline of your paper and a preliminary bibliography. This prospectus will be returned with comments and suggestions for your final paper.

Final Paper (35% of final grade). Due Friday, June 7th at 3:25 pm. Your paper should run 4,000 to 6,000 words (16 to 24 double-spaced pages), not counting a one-page abstract and complete bibliography (both of which are required) or appendices (which are optional). Be sure to edit your work carefully and include tables, charts, and pictures to support your narrative as appropriate. As with the reading summaries, your research paper should be should be double-spaced with 1-inch margins and 12-point type.

Both the paper prospectus and the final paper should be submitted (1) electronically through TurnItIn on the course website, and (2) via a hardcopy placed in a tray marked for PP 222/UP 256 papers on Whitney Gouche’s desk in Public Affairs Building room 3357 ([email protected], 310-825-4025). Late prospecti and final papers will be marked down by a third of a grade. Academic Honesty Planners work together in teams, and much of the work in the Public Policy and Urban Planning programs is collaborative. But whether work for a grade is done collaboratively or individually, academic and professional integrity are absolutely essential. This applies not only to your work submitted in graduate school, but in your professional work in public policy and urban planning. In this age of frequent film remakes, music mash-ups, and the voluminous and instantaneous information available on the Internet, the line between plagiarism and creative reinterpretation has surely blurred. But academic policy at UCLA regarding plagiarism is clear: the sources of all ideas, text, pictures, or graphics that are not your own must be fully cited, all passages copied from other sources must be in quotation marks with the source cited, and you absolutely cannot submit materials that have previously been submitted by other students in earlier iterations of this course, even if you have re-worked this material for your submission. Should you have any questions about UCLA’s academic integrity policies, go to: http://www.studentgroups.ucla.edu/dos/students/integrity/ No Laptops in Class While I understand that many of you like to refer to the course readings, previous lectures, and take notes on your laptops during class, past experience suggests that the temptation for multi-tasking – checking email, Facebook, Twitter, or surfing the web – is just too great for many


http://www.studentgroups.ucla.edu/dos/students/integrity/


students. Because the lectures for this course are content-heavy, and class participation is an essential part of the class, you will not be permitted to use any electronic devices – laptops, netbooks, tablets, smart phones, or cell phones – during class sessions.

Weekly Topics and Required Readings

Session 1, Topic 1: Course Introduction and Overview (April 1st)

Discussion of transportation finance and subsidy issues; definitions of key concepts.

Required reading

Davidson, Adam. 2013. “It’s the Economy: Should We Tax People for Being Annoying?” New York Times Magazine, 8 January. 2 pages.

Taylor, Brian D. 2006. “Putting a Price on Mobility: Cars and Contradictions in Planning,” Longer View, Journal of the American Planning Association, 72(3): 279–284.

Jaffe, Eric. 2013. “The End of Federal Transportation Funding as We Know it” The Atlantic Cities. 1 page.

Goldberg, David. 2013. “Rethinking the gas tax: Suddenly it’s the theme of 2013,” Transportation for America. 1 page.

Supplemental readings

Taylor, Brian D. 2004. “The Geography of Urban Transportation Finance,” in The Geography of Urban Transportation, Third Edition, Susan Hanson and Genevieve Giuliano, Editors. New York: The Guilford Press. Pages 294–331.

Dean, Thomas B. 2003. “Policy Versus the Market: Transportation’s Battleground,” Transportation Research Record, 1839: 5–22.

Session 2, Topic 2: Evaluating the Economic Benefits of Transportation Systems (April 3rd)

How can we systematically balance social and environmental costs of transportation investments in determining project benefits? What does it take to do good analyses and make good decisions? How do we use this information to evaluate the tradeoffs between projects?

Required reading

Small, Kenneth A. 1999. “Project Evaluation,” in Gómez-Ibáñez, William B. Tye, and Clifford Winston, Editors, Essays in Transportation Economics and Policy: A Handbook in Honor of John R. Meyer. Washington, D.C.: Brookings Institution. Pages 137–177.

Hill, Mary C., Brian D. Taylor, Asha Weinstein, and Martin Wachs. 2000. “Assessing the Need for Highways,” Transportation Quarterly, 54(2): 93–103.



Taylor, Brian D. and Libby G. Halperin. 2005. “Overview of Expert Panel and Opening Remarks,” in The Benefits and Costs of Highway and Transit Investments: Highlights of an Expert Panel. GAO-05–423SP. Washington, DC: U.S. Government Accountability Office. Pages 19–23.

Forkenbrock, David, Jose Gómez-Ibáñez, Ronald Kirby, David Lewis, Michael Meyer, Don Pickrell, Kenneth Small, Brian D. Taylor, and Martin Wachs. 2005. “How Could Benefit-Cost Analysis Be Improved?” in The Benefits and Costs of Highway and Transit Investments: Highlights of an Expert Panel, GAO Report GAO-05–423SP. Washington, DC: U.S. Government Accountability Office. Pages 59–72.

Forkenbrock, David, Jose Gómez-Ibáñez, Ronald Kirby, David Lewis, Michael Meyer, Don Pickrell, Kenneth Small, Brian D. Taylor, and Martin Wachs. 2005. “How Could Benefit-Cost Analysis Be Most Useful in Investment Decisions?” in The Benefits and Costs of Highway and Transit Investments: Highlights of an Expert Panel, GAO Report GAO-05–423SP. Washington, DC: U.S. Government Accountability Office. Pages 73–84.

Litman, Todd. 2009. “Evaluating Transportation Economic Development Impacts: Understanding How Transportation Policies and Planning Decisions Affect Productivity, Employment, Business Activity, Property Values and Tax Revenues.” Victoria Transport Policy Institute. Pages 1–52.

Session 2/3, Topic 3: Transportation and the Economy: What’s the Relationship (April 3rd & 8th)

How does the transportation system benefit or hurt the economy? Given limited transportation investment dollars, how do we really know the extent to which a transportation project will benefit the economy? What are the fundamental economic concepts we use to analyze the transportation system?

Required reading

Dev Bhatta, Saurav and Matthew P. Drennan. 2003. “The Economic Benefits of Public Investment in Transportation,” Journal of Planning Education and Research, 22(3): 288–296.

Holtz‐Eakin, Douglas and Martin Wachs. 2011. Strengthening Connections Between Transportation Investments and Economic Growth. Bipartisan Policy Center, Washington, D.C., January. 25 pages.

Ahn, Daniel and Levi, Michael A. February 2013. “Higher Oil Taxes Would Lift the Economy” Bloomberg.com. 1 page.


Shatz, H., K. Kitchens, S. Rosenbloom, and M. Wachs. 2011. Highway Infrastructure and the Economy: Implications for Federal Policy, The RAND Corporation, Document MG‐1049, May. 90 pages.

Lakshmanan T. R. and Lata R. Chatterjee. 2005. “Economic Consequences of Transport Improvements,” Access, 26: 28–33.

Wachs, Martin. 2011. “Transportation, Jobs, and Economic Growth, Access, 38: 8-14.

Ahn, Daniel, Levi, Michael A. and Rubenstein, David M. 2013. “Using Oil Taxes to Improve Fiscal Reform” Council on Foreign Relations, February.


Session 3, Topic 4: Transportation Investments and Local Economic Development (April 8th)

Transportation investments are frequently justified as tools for local economic development, though the exact links between transportation systems and economic revitalization are often poorly understood. This session will examine how transportation investments affect land values, stimulate investment, and affect labor mobility.

Required reading

Drennan, Matthew and Charles Brecher. 2012. “Can Public Transportation Increase Economic Efficiency? Access, 40: 29-33.

Taylor, Brian D. and Kelly Samples. 2002. “Jobs, Jobs, Jobs: Political Perceptions, Economic Reality, and Capital Bias in U.S. Transit Subsidy Policy,” Public Works Management & Policy Journal, 6(4): 250–263.

Eno Center for Transportation and Bipartisan Policy Center. 2012. The Consequences of Reduced Federal Investment in Transportation. Washington, DC: Eno Center for Transportation and Bipartisan Policy Center. 32 pages.

Chapple, Karen and Carrie Makarewicz. 2010. “Restricting New Infrastructure: Bad for Business in California?, Access, 36: 9-14.


Kain, John F. 1999. “The Urban Transportation Problem: A Reexamination and Update,” in Gómez-Ibáñez, William B. Tye, and Clifford Winston, Editors, Essays in Transportation Economics and Policy: A Handbook in Honor of John R. Meyer. Washington, D.C.: Brookings Institution. Pages 359–402.

Boarnet, Marlon G. and Andrew F. Haughwout. 2000. “Do Highways Matter? Evidence and Policy Implications of Highways’ Influence on Metropolitan Development,” Center on Urban & Metropolitan Policy. The Brookings Institution. Pages 1–35.

Drennan, Matthew. 2012. “Does Public Transit Use Enhance the Economic Efficiency of Urban Areas?” Journal of Transport and Land Use, 5(3): 53-67

Session 4, Topic 5: Economic Restructuring, Free Trade, and Inter-Regional Transportation (April 10th)

Current and future changes in economic production and distribution have enormous implications for transportation. This session will examine the increasing mobility of goods, information, and labor in economic production, emphasizing future demands on the transportation system, new patterns and trends in goods movement, and upcoming changes in production and transportation technologies. We will explore the pressure to better integrate transportation modes, telecommunications, and industrial facilities to cut sourcing, production, and delivery cycle times.

Required reading

Glaeser, Edward L. and Janet E. Kohlhase. 2003. “Cities, Regions, and the Decline of Transport Costs,” Harvard Institute of Economic Research, Discussion Paper Number 2014. 53 pages.

https://docs.google.com/viewer?url=http%3A%2F%2Fksgfaculty.harvard.edu%2Ffaculty%2Fcv%2FJoseGomez-Ibanez.pdf



Hummels, David. 2007. “Transportation Costs and International Trade in the Second Era of Globalization,” Journal of Economic Perspectives, 21(3): 131–154.

Dimitriou, Harry T. and Oliver Trueb. 2005. “Transportation Megaprojects, Globalization, and Place-Making in Hong Kong and South China,” Transportation Research Record, 1924: 59–68.

Gallamore, Robert E. 1999. “Regulation and Innovation: Lessons from the American Railroad Industry,” in Gomez-Ibanez, William B. Tye, and Clifford Winston, Editors, Essays in Transportation Economics and Policy–A Handbook in Honor of John R. Meyer. Washington, D.C.: Brookings Institution. Pages 493–530.

Garrison, William L. 1996. “Transportation Improvements, Innovation, and Social and Economic Development.” Berkeley, CA: Institute of Transportation Studies. 11 pages.

Kasarda, John D. 1996. “Transportation Infrastructure for Competitive Success,” Transportation Quarterly, 50: 35–50.

Session 5, Topic 6: Externalities and the Full Social Costs of Transportation (April 15th)

This session will explore the dispute over the full social costs of the transportation system and the implications for intermodal transportation. Are single-occupant drivers really subsidized? If so, how much and by whom? Why is this such an ideologically heated issue? What would a full social marginal cost pricing system look like and what effects would it likely have on the transportation system?

Required reading

Delucchi, Mark. 2000. “Should We Try to Get the Prices Right?” Access, 16: 14–21.

Gómez-Ibáñez, Jose A. 1997. “Estimating Whether Transport Users Pay Their Way: The State of the Art,” in Greene, David L., Donald W. Jones, and Mark A. Delucchi, Editors, The Full Costs and Benefits of Transportation: Contributions to Theory, Method and Measurement. Heidelberg, Germany: Springer-Verlag Berlin. Pages 149–172.

Sperling, Daniel, and Ethan Abeles, David Bunch, Andrew Burke, Belinda Chen, Kenneth Kurani and Thomas Turrentine. 2004. “The Price of Regulation,” Access 25: 9–18.


Greene, David L. and Donald W. Jones. 1997. “The Full Costs and Benefits of Transportation: Conceptual and Theoretical Issues,” in Greene, David L., Donald W. Jones, and Mark A. Delucchi, Editors, The Full Costs and Benefits of Transportation: Contributions to Theory, Method and Measurement. Heidelberg, Germany: Springer-Verlag Berlin. Pages 1–26.

Bae, Chang-Hee Christine. 2004. “Transportation and the Environment,” The Geography of Urban Transportation, 3rd Edition, Susan Hanson and Genevieve Giuliano, Editors. New York: The Guilford Press. Pages 356-381. Barnes, Gary and Peter Langworthy. 2004. “Per Mile Costs of Operating Automobiles and Trucks,” Transportation Research Record, 1864: 71–85.



Beshers, Eric W. 1996. “External Costs of Automobile Travel and Appropriate Policy Responses,” Highway Users Federation, March 9. Pages 529–549.

Delucchi, Mark A. 1997. “The Annualized Social Cost of Motor-Vehicle Use in the U.S., Based on 1990–1991 Data: Summary of Theory, Data, Methods, and Results,” in Greene, David L., Donald W. Jones, and Mark A. Delucchi, Editors, The Full Costs and Benefits of Transportation: Contributions to Theory, Method and Measurement. Heidelberg, Germany: Springer-Verlag Berlin. Pages 27–68.

Krupnick, Alan J., Robert D. Rose, and Carolyn M. Lang. 1997. “Transportation and Air Pollution: The Environmental Damages,” in Greene, David L., Donald W. Jones, and Mark A. Delucchi, Editors, The Full Costs and Benefits of Transportation: Contributions to Theory, Method and Measurement. Heidelberg, Germany: Springer-Verlag Berlin. Pages 337–370.

Lakshmanan, T.R., Peter Nijkamp, and Erik Verhoef. 1997. “Full Benefits and Costs of Transportation: Review and Prospects,” in Greene, David L., Donald W. Jones, and Mark A. Delucchi, Editors, The Full Costs and Benefits of Transportation: Contributions to Theory, Method and Measurement. Heidelberg, Germany: Springer-Verlag Berlin. Pages 387–406.

Lee, Douglass. 1997. “Uses and Meanings of Full Social Cost Estimates,” in Greene, David L., Donald W. Jones, and Mark A. Delucchi, Editors, The Full Costs and Benefits of Transportation: Contributions to Theory, Method and Measurement. Heidelberg, Germany: Springer-Verlag Berlin. Pages 113–148.

Mackenzie, James J., Roger C. Dower, Donald D.T. Chen. 1992. “The Going Rate: What it Really Costs to Drive,” World Resources Institute, June. Pages 1–29.

Session 6, Topic 7: Induced Demand and Highway Investments (April 17th)

If we build it, will they come? Is investing in new highway capacity largely a waste of time, money, and environmental quality? How can we measure and evaluate the effects of latent, or induced, demand on new transportation investments?

Required reading

Hansen, Mark. 1995. “Do New Highways Generate Traffic?” Access, 7: 16–22.

Noland, Robert B. and Lewison L. Lem. 2002. “A Review of the Evidence for Induced Travel and Changes in Transportation and Environmental Policy in the U.S. and U.K.,” Transportation Research, Part D, 7: 1–26.

Cervero, Robert. 2003. “Are Induced-Travel Studies Inducing Bad Investments?” Access, 22: 22–27.


Pickrell, Don. 2002. “Induced Demand: What Happens When We Expand Capacity?” paper presented at Tackling Traffic Congestion: The Transportation – Land Use – Environment Connection, 13 pages.

Cervero, Robert. 2003. “Road Expansion, Urban Growth, and Induced Travel,” Journal of the American Planning Association, 69(2): 145–163.

DeCorla-Souza, Patrick. 2000. “Induced Highway Travel: Transportation Policy Implications for Congested Metropolitan Areas,” Transportation Quarterly, 54(2): 13–30.


Hansen, Mark, Robert T. Dunphy, Richard G. Dowling, Steven B. Coleman, and Kevin Heanue. 1998. Highway Capacity Expansion and Induced Travel: Evidence and Implications. Transportation Research Circular Number 481. Washington, DC: Transportation Research Board. 46 pages.

Session 7, Topic 8: The Evolution of Transportation Finance (April 22nd)

How has the system of Transportation finance evolved over the years? What philosophies have guided its development? Have things been changing recently? How is this system likely to evolve in the coming years?

Required reading

Brown, Jeffrey, Eric Morris, and Brian D. Taylor. 2009. “Paved with Good Intentions: Fiscal Politics, Freeways, and the 20

th Century American City,” Access, 35: 30-37.

Brown, Jeffrey, et al. 1999. “The Historical Evolution of the Highway Finance System,” The Future of California Highway Finance: Detailed Research Findings. Berkeley, CA: California Policy Research Center. Pages 18–40.

National Surface Transportation Infrastructure Financing Commission. 2009. “Chapter 2: The Route We Are On: The Widening Investment Gap,” Paying Our Way: A New Framework for Transportation Finance. Washington, DC, pages 33-61.

Wachs, Martin. 2003. “Local Option Transportation Taxes: Devolution as Revolution,” Access, 22: 9–15.

Recommended Reading:

Robert W. Poole, Jr. and Adrian T. Moore. 2010. Restoring Trust in the Highway Trust Fund. Policy Study 386, The Reason Foundation.

Taylor, Brian. 1995. "Public Perceptions, Fiscal Realities, and Freeway Planning: The California Case," Journal of the American Planning Association, 61(1): 43–56.

Crabbe, Amber Rachael Hiatt, S. D. Poliwka, and Martin Wachs. 2005. “Local Transportation Sales Taxes: California’s Experiment in Transportation Finance,” Public Budgeting & Finance, 25(3): 91-121.

Hannay, R. and M. Wachs. 2007. “Factors Influencing Support for Local Transportation Sales Tax Measures,” Transportation, 34(1): 17-35. Goldman, Todd and Martin Wachs. 2003. “A Quiet Revolution in Transportation Finance,” Transportation Quarterly, 57(1): 19-32.

Agosta, D. Roberto. 2006. “Financing Road Networks in Developing Countries,” Transportation Research Record, 1954: 1–6. Lem, Lewison Lee. 1997. “Dividing the Federal Pie,” Access, 10: 10–14.

Session 8, Topic 9: Overview of Surface Transportation Finance (April 24th)

How is our transportation finance system structured? And how does it work in practice? Do we have enough money? Or too much money? We will explore these questions from a variety of perspectives.


Required reading

Breiland, Kendra and Dana Curry. 2007. California Travels: Financing Our Transportation. Sacramento: California Legislative Analyst’s Office, pages 5-53.

National Surface Transportation Infrastructure Financing Commission. 2009. “Chapter 4: Paying by the Gallon: Motor Fuel Taxes,” Paying Our Way: A New Framework for Transportation Finance. Washington, DC, pages 99-109.

National Surface Transportation Infrastructure Financing Commission. 2009. “Chapter 5: Paying for the Ton: Freight-Related Charges,” Paying Our Way: A New Framework for Transportation Finance. Washington, DC, pages 111-122.


Sciara, Gian-Claudia. 2009. "Earmark Pursuit Practices of MPOs and Their Members," Transportation Research Record, 2119: 58-65. Forkenbrock, David J. 2006. “Financing Local Roads: Current Problems and New Paradigm,” Transportation Research Record, 1960: 8–14. Taylor, Brian D., Asha Weinstein, and Martin Wachs. 2001. “Reforming Highway Finance: California’s Policy Options,” in California Policy Options 2001, Daniel J.B. Mitchell and Patricia Nomura, editors. Pages 119–146.

Session 9, Topic 10: Heavy Vehicles, Road Wear, and Highway Finance (April 29th)

What costs do heavy vehicles impose street and highway systems, and who pays for these costs? We will explore long debated issue of heavy vehicle road damage and taxation from both an economic and political perspective. Required reading

Forkenbrock, David J. 2001. "Comparison of Freight Rail and Truck External Costs," Transportation Research, Part A, 35A(4): 321–337.

Small, Kenneth Clifford Winston and Carol A. Evans. 1989. “Pavement Wear and Road Durability,” in Road Work: A New Highway and Pricing Investment Policy. Washington, DC: The Brookings Institution. Pages 37–68.

Hartgen, David, Gregory Fields, and Elizabeth San Jose. 2013. ”Examining 20 Years of U.S. Highway and Bridge Performance Trends,” Policy Study 407, Reason Foundation. 31 pages.


U.S. Federal Highway Administration. 1997. “Executive Summary,” 1997 Federal Highway Cost Allocation Study Final Report. Washington, DC: U.S. Department of Transportation. Pages 1–13.

Forkenbrock, David J. 1999. "External Costs of Intercity Truck Freight Transportation," Transportation Research, Part A, 33A(7/8): 505–526.

Ozbay, Kaan, Dima Jawad, and Neville A. Parker, and Sajjad Hussain. 2004. “Life-Cycle Cost Analysis: State of the Practice Versus State of the Art,” Transportation Research Record, 1864: 62–70.


Session 10, Topic 11: Road Pricing (May 1st)

Concepts, problems, prospects, and politics of applying principles of marginal cost pricing to congestion on streets and highways. Just what is this idea widely embraced by transportation economists and why is it so unpopular with elected officials?

Required reading

Downs, Anthony. 2004. “Peak Hour and Other Road Pricing,” Still Stuck in Traffic: Coping with Peak-Hour Traffic Congestion. Washington, D.C.: The Brookings Institution. Pages 152–179.

Schweitzer, Lisa and Brian D. Taylor. 2010. “Just Pricing,” Access, 36: 2-7.

King, David, Michael Manville, and Donald Shoup. 2007. “For Whom the Road Tolls: The Politics of Congestion Pricing,” Access, 31: 2–7.

Hårsman, Björn and John M. Quigley. 2011. “Political and Public Acceptability of Congestion Pricing: Ideology and Self-Interest in Sweden,” Access, 38: 2-7.


Government Accountability Office. 2012. Traffic Congestion: Road Pricing Can Help Reduce Congestion but Equity Concerns May Grow, Report GAO-12-119. Washington, D.C. 60 pages.

Wachs, Martin. 2003. “Then and Now: The Evolution of Transport Pricing and Where we are Today,” in International Perspectives on Road Pricing: Report of the Committee for the International Symposium on Road Pricing,” November 19-22, 2003, Key Biscayne, Florida. Transportation Research Board, 2005, pages 63-72.

DeCorla- Souza, Patrick. 2005. “Trade-Off for Road Pricing Between Transportation Performance and Financial Feasibility,” Transportation Research Record, 1932: 23–32.

Burris, Mark W. and Bill R. Stockton. 2004. “HOT Lanes in Houston – Six Years of Experience,” Journal of Public Transportation, 7(3): 1–21.

Kalmanje, Sukumar and Kara M. Kockelman. 2004. “Credit-Based Congestion Pricing: Travel, Land Value, and Welfare Impacts,” Transportation Research Record, 1864: 45–53.

Supernak, Janusz and Christine Kaschade and Duane Steffey. 2003. “Dynamic Value on I–15 in San Diego: Impact on Travel Time and Its Reliability,” Transportation Research Record, 1839: 45–54.

Sullivan C. Edward. 2002. “State Route 91 Value-Priced Express Lanes: Updating Observations,” Transportation Research Record, 1812: 37–42.

Session 11, Topic 12: User Fees versus Taxes in Highway Finance (May 6th) Guest Lecture by Martin Wachs

Do we finance highways with fees or taxes? How have perceptions of this question changed over time? Is the motor fuels tax out of gas? Are there new approaches to financing our highway system on the horizon?


Required reading

Taylor, Brian D., Martin Wachs, Bill McCullough, Eric Morris, Alexandra Evans, Megan Smirti, Michael Gougherty, and Paul Sorensen. 2006. Transportation Pricing and Finance Options: Handbook for California Decision-makers. Los Angeles: UCLA Institute of Transportation Studies. 40 pages.

Wachs, Martin. 2003. “Commentary: A Dozen Reasons To Raise the Gas Tax,” Public Works Management & Policy, 7(4): 235-242; reprinted in State Tax Notes, 2003, 29(12): 849-853. Sorensen, A. Paul. 2006. “Cheaper Gas and More Expensive Shoes: California’s Transportation Finance Reform Proposal,” Transportation Research Record, 1960: 1–7. Slone, Sean. 2010. Vehicle Miles Travelled Fees: A Trends in America Special Report. Lexington, KY: The Council of State Governments. 12 pages.

Supplemental readings Sorensen, Paul, Lisa Ecola, and Martin Wachs. 2012. “Mileage-Based User Fees for Transportation Funding: A Primer for State and Local Decisionmakers,” RAND Corporation Report TL-104. 33 pages. Sorensen, Paul, with Martin Wachs and Lisa Ecola. 2010. System Trials to Demonstrate Mileage-Based Road Use Charges, National Cooperative Highway Research Program Web Only Document 161, October. 193 pages. Sorensen, Paul, Lisa Ecola, Martin Wachs, M. Donath, Lee Munnich, and B. Serien. 2009. Implementable Strategies for Shifting to Direct Usage-Based Charges for Transportation Financing, National Cooperative Highway Research Program Web Only Document 143, August 2009. 124 pages. Parry, Ian W.H., and Kenneth A. Small. 2005. "Does Britain or The United States Have the Right Gasoline Tax?" American Economic Review, 95: 1276–1289. Puentes, Robert and Ryan Prince. 2003. Fueling Transportation Finance: A Primer on the Gas Tax. Brookings Center on Urban and Metropolitan Policy Transportation Reform Series. Washington, DC: The Brookings Institution. 19 pages. Brown, Jeffrey. 2001. “Reconsider the Gas Tax: Paying for What You Get,” Access, 19: 10–15. Ang-Olson, Jeffrey, Martin Wachs, and Brian D. Taylor 2000. “Variable-Rate State Gasoline Taxes,” Transportation Quarterly, 54(1): 55–68.

Session 12, Topic 13: The Public and Private Sector Roles in Transportation Finance (May 8th)

Many are advocating greater private sector participation in the provision of new transportation facilities; what has been happening and what are the prospects for genuine benefits?

Required reading

Boarnet, Marlon G. and Joseph F. DiMento. 2004. “The Private Sector’s Role in Highway Finance: Lessons from SR 91,” Access, 25: 26-31.

International Technology Scanning Program, Public Private Partnerships for Highway Infrastructure: Capitalizing on International Experience, March 2009. Pages 9-54.


Supplemental readings National Cooperative Highway Research Program. 2011. Public Sector Decision-making for Public Private Partnerships, NCHRP Synthesis No 391, pages 1-41. David Czerwinski and R. Richard Geddes, Policy Issues in US Transportation – Public-Private Partnerships: Lessons from Australia, Mineta Transportation Institute Report 09-15; Mineta Transportation Institute, San Jose State University, July 2010. 91 pages.

Session 13, Topic 14: New Directions in Transportation Finance (May 13th)

Will pricing ever catch on? Or are the technical and political obstacles simply too great? Or, are we headed away from a user-finance philosophy? This topic examines the latest developments in new ways of pricing and funding transportation systems.

Required reading

National Transportation Policy Project. 2011. “Executive Summary,” Performance Driven: Achieving Wiser Investment in Transportation, Bipartisan Policy Center, pages 5-11.

Wachs, Martin. 2010. “The Future of Transportation Finance: A New Generation of User Fees,” Resources, 175: 11-12; reprinted in Commentary, by Resources for the Future.

Sorensen, Paul and Brian D. Taylor. 2005. “Paying for Roads: New Technology for an Old Dilemma,” Access, 26: 2-9.

Sciara, Gian-Claudia and Martin Wachs. 2007. “Metropolitan Transportation Funding: Prospects, Progress, and Practical Considerations,” Public Works Management & Policy, 12(1): 378-394. Crane, Keith, Nicholas Burger, and Martin Wachs. 2012. “Putting a Tax on Oil,” Public Works Management and Policy, 17(3): 256-282.


Poole, Robert. 2013. “Funding Important Transportation Infrastructure In a Fiscally Constrained Environment,” Policy Brief Number 102, Reason Foundation. 20 pages.

Joshua Schank and Nikki Rudnick-Thorpe. 2012. “The End of the Highway Trust Fund? Long-Term Options for Funding Federal Surface Transportation,” Transportation Research Record, 2221: 1-9.

National Surface Transportation Infrastructure Financing Commission. 2009. “Executive Summary,” Paying Our Way: A New Framework for Transportation Finance, Washington, DC: National Surface Transportation Infrastructure Financing Commission. Pages 1–16.

Sorensen, Paul A. and Brian D. Taylor. 2006. “Innovations in Road Finance: Examining the Growth in Electronic Tolling,” Public Works Management & Policy, 11(2): 110–125.

Wachs, Martin. 2005. “Improving Efficiency and Equity in Transportation Finance,” Chapter 4 in Bruce Katz and Robert Puentes, eds., Taking the High Road: A Metropolitan Agenda for Transportation Reform. Washington: The Brookings Institution Press, pages 77-100.


Session 14, Topic 15: Overview of Public Transit Economics and Finance (May 15th)

Why is public transit so heavily subsidized? Why does the financial health of the industry seem to grow worse each year? Why are market share and peaking such problems in public transit? What are the prospects for the future?

Required reading

Hess, Daniel Baldwin and Peter A. Lombardi. 2005. “Governmental Subsidies for Public Transit: History, Current Issues, and Recent Evidence,” Public Works Management & Policy, 10(2): 138–156.

Brown, Jeffrey. 2005. “Paying for Transit in an Era of Federal Policy Change,” Journal of Public Transportation, 8(3): 1–32.

Taylor, Brian D., Mark Garrett, and Hiroyuki Iseki. 2000. “Measuring Cost Variability in the Provision of Transit Service,” Transportation Research Record, 1735: 101–112.


Kirby, Ronald F. 1992. "Financing Public Transportation," in Public Transportation, Second Edition, George E. Gray and Lester A. Hoel, Editors. Englewood Cliffs: Prentice-Hall. Pages 445–460.

Pickrell, Don H. 1988. “Federal Operating Assistance for Urban Mass Transit: Assessing a Decade of Experience,” Transportation Research Record, 1078: 1–9.

Winston, Clifford, and Chad Shirley 1998. “Introduction and Overview,” Alternate Route Toward Efficient Urban Transportation. Washington, D.C.: Brookings Institution Press. Pages 1–20.

Winston, Clifford, and Chad Shirley 1998. “The Urban Transit Operating and Institutional Environment,” Alternate Route Toward Efficient Urban Transportation. Washington, D.C.: Brookings Institution Press. Pages 21–28.

Session 15, Topic 16: Public Transit Economics and Finance: Policy Critiques (May 20th)

In this session, we turn to some case studies of states and region support public transit systems and the influence of this support on the deployment and performance of transit.

Required reading

Wachs, Martin 1989. "U.S. Transit Subsidy Policy: In Need of Reform," Science, 244: 1545–1549.

Gómez-Ibáñez, Jose A. 1996. “Big-City Transit Ridership, Deficits, and Politics: Avoiding Reality in Boston,” Journal of American Planning Association, 62(1): 30–50.

Jaffe, Eric. 2013. “The Economic Case for Rail Subsidies,” The Atlantic Cities.

Parry, Ian W. H., and Kenneth A. Small. 2007. “Should Urban Transit Subsidies be Reduced?” IDEAS. Federal Reserve Bank of St. Louis. 26 pages.




Hess, Daniel Baldwin, Brian D. Taylor, and Allison Yoh. 2006. “Light-Rail-Lite or Cost-Effective Improvements to Bus Service? Evaluating Costs of Implementing Bus Rapid Transit,” Transportation Research Record, 1927: 22–30.

Winston, Clifford, and Vikram Maheshi. 2006. On the Social Desirability of Urban Rail Transit Systems. Journal of Urban Economics, 62(2): 362–382.

Aschauer, David Alan 1991. “Transportation Spending and Economic Growth: The Effects of Transit and Highway Expenditures,” Prepared for American Public Transit Association. 17 pages.

Camph, Donald H. 1997. “Dollars and Sense–The Economic Case for Public Transportation in America,” Pages 1–95.

Semmens, John. 1998. A Critique of ‘Dollars and Sense’: The Economic Case for Public Transportation in America,” Policy Study 243. Los Angeles: Reason Foundation.

Winston, Clifford, and Chad Shirley 1998. “Sources of Inefficiencies,” Alternate Route Toward Efficient Urban Transportation. Washington, D.C.: Brookings Institution Press. Pages 68–88.

Taylor, Brian. 1995. "Program Performance versus System Performance: An Explanation for the Ineffectiveness of Performance-based Transit Subsidy Programs," Transportation Research Record: Public Transit, 1496: 43–51.

Session 16, Topic 17: Private Sector Public Transit (May 22nd)

Planners often forget that an enormous part of the urban public transit system is privately owned and operated. In this session we will look at the private provision of public transit and explore some the controversies surrounding calls to privatize more public transit services.

Required reading

Morris, Eric. 2006. “How Privatization Became a Train Wreck,” Access, 28: 18–25.

Sclar, Elliott D. 2000. “The Urge to Privatize: From the Bureaucratic State to the Contract State,” You Don’t Always Get What You Pay For: The Economics of Privatization. Ithaca: Cornell University Press. Pages 1–19.

Sclar, Elliott D. 2000. “All in the System: Organizational Theories and Public Contracting,” You Don’t Always Get What You Pay For: The Economics of Privatization. Ithaca: Cornell University Press. Pages 94–129.

Taylor, Brian D. 2003. “Review of You Don’t Always Get What You Pay For: The Economics of Privatization by Elliott D. Sclar,” Journal of Planning Education and Research, 22(3): 315–317.


Winston, Clifford, and Chad Shirley 1998. “An Alternative Route: Privatization,” Alternate Route Toward Efficient Urban Transportation. Washington, D.C.: Brookings Institution Press. Pages 89–106.

Iseki Hiroyuki, Amy Ford and Rachel J. Factor. 2005. “Contracting Practice in Fixed-Route Transit Service: Case Studies in California,” Transportation Research Record, 1927: 82–91.

Kim, Songju and Martin Wachs. 2006. “Transit and Contracts: What's Best for Drivers?,” Access, 28:26–31.


McCullough, William S., Brian D. Taylor, and Martin Wachs. 1997. “Does Contracting Transit Service Save Money?” Access, 11: 22–26.

McCullough, William S., Brian D. Taylor, and Martin Wachs. 1998. “Transit Service Contracting and Cost Efficiency,” Transportation Research Record, 1618: 69–77.

Session 0: No Class: Memorial Day Holiday (May 27th)

Session 17, Topic 18: Fare Policy in Public Transit (May 29th)

How can transit fares minimize or exacerbate problems of transit finance? Why are simple, flat fare structures likely to hurt poor people? What new fare structures and technologies are likely to help transit systems in the future? Why is public transit gradually evolving into a social service for the poor and others without Access to motor vehicles? Why are social equity concerns of increasing importance in transit finance?

Required reading

Litman, Todd. 2004. “Transit Price Elasticities and Cross-Elasticities,” Journal of Public Transportation, 7(2): 37–58.

Nuworsoo, Cornelius. 2005. “Discounting Transit Passes,” Access, 26: 22–27.

Brown, Jeffrey and Daniel Baldwin Hess, and Donald Shoup. 2003. “Fare-Free Public Transit at Universities: An Evaluation,” Journal of Planning Education and Research, 23(1): 69–82.

Small, Kenneth A. 2005. “Unnoticed Lessons from London: Road Pricing and Public Transit,” Access 26: 10–15.


American Public Transit Association 1991. “Effects of Fare Changes on Bus Ridership.” Washington, D.C.: APTA.

Cervero, Robert. 1990. "Transit Pricing Research: A Review and Synthesis," Transportation, 17(2): 117–140.

Cervero, Robert and Martin Wachs 1982. "An Answer to the Transit Crisis: The Case for Distance Based Fares," Journal of Contemporary Studies, 5(2): 59–70.

Hess, Daniel Baldwin, Jeffrey Brown, and Donald Shoup. 2004. “Waiting for the Bus,” Journal of Public Transportation, 7(4): 67–84.

Session 18, Topic 19: Equity in Public Transportation Finance (June 3rd)

In this session, we will turn our exploration of equity in transportation finance specifically to the question of public transit systems in cities.

Required reading

Garcia, Robert and Thomas A. Rubin. 2004. “Crossroad Blues: The MTA Consent Decree and Just Transportation,” in Running on Empty: Transport, Social Exclusion, and Environmental Justice, Karen Lucas, Editor. Bristol, UK: The Policy Press. Pages 221–256.


Garrett, Mark and Brian Taylor 1999. “Reconsidering Social Equity in Public Transit,” Berkeley Planning Journal, 13: 6–27.

Giuliano, Genevieve. 2005. “Low Income, Public Transit, and Mobility,” Transportation Research Record, 1927: 63–70.

Garcia, Robert. 2012. “Just Transportation: Is Los Angeles Making Progress on Transit for All? The City Project Blog: Equal Justice, Democracy, and Livability for All. 3 pages.


Fruin, Geoffrey and P.S. Sriraj. 2005. “Approach of Environmental Justice to Evaluate the Equitable Distribution of a Transit Capital Improvement Program,” Transportation Research Record, 1924: 139–152.

Brown, Jeffrey 1998. “Race, Gender, and Public Transportation Planning: Lessons from the Bus Riders Union Lawsuit,” Critical Planning, 5: 3–20.

Siegel, Kevin L. 1997. “Discrimination in the Funding of Mass Transit Systems,” West-Northwest, 4(1): 107–128.

Taylor, Brian. 1991. "Unjust Equity: An Examination of California's Transportation Development Act," Transportation Research Record, 1297: 85–92.

Session 19, Topic 20: My Fair Share: Confounding Notions of Equity in Transportation Finance (June 5th)

The complex structure of transportation system finance has evolved to respond to the concerns of a wide array of interests and places. The funding of transportation systems and projects, therefore, does not necessarily relate to the expected economic benefits from investments. This final session will explore the geo-politics of the current system of transportation finance. In this context we will examine the apportionment debate and how transportation funds get distributed from one level of government to another.

Required reading

Taylor, Brian D. and Alexandra T. Norton. 2009. “Paying for Transportation: What’s a Fair Price?” Journal of Planning Literature, 24(1): 22-36.

Levinson, David. 2002. “Identifying Winners and Losers in Transportation,” Transportation Research Record, 1812: 179–185.

Taylor, Brian D. and Rebecca Kalauskas. 2010. “Addressing equity in political debates over road pricing: Lessons from recent projects,” Journal of the Transportation Research Board, 2010: 44-52.

Blumenberg, Evelyn. 2003. “Transportation Costs and Economic Opportunity Among the Poor,” Access 23: 40–41.


Taylor, Brian D. 2012. “Some Thoughts on Transportation Equity and Public Policy,” Transportation for America Forum Policy Brief. 6 pages.


Wachs, Martin. 2003. Improving Efficiency and Equity in Transportation Finance. Brookings Center on Urban and Metropolitan Policy Transportation Reform Series. Washington, DC: The Brookings Institution. 19 pages.

Santos, Georgina and Tom Catchesides. 2005. “Distributional Consequences of Gasoline Taxation in the United Kingdom,” Transportation Research Record, No. 1924: 103–117.

Weinstein, Asha and Gian-Claudia Sciara. 2006. “Unraveling Equity in HOT Lane Planning: A View from Practice,” Journal of Planning Education and Research, 26(2): 174–184.

Documents

Transportation Economics, Finance, and Policy - UCLA Luskin