Widespread Beliefs About US Infrastructure Spending May Be Unfounded

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Robison Wells
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It is a fact that much of the United States infrastructure is deteriorating rapidly, but the commonly held belief that our spending on such infrastructure has dramatically decreased does not appear to be upheld by the evidence, according to a new report from the Brookings Institute.

In an in-depth analysis that uses the interstate system as its case study, the Brookings Institute came to the following two findings. First, that spending per-mile on the interstate increased three times (adjusted for inflation) from the 1960s to the 1980s, and second, that the rise in spending coincides with the rise in “citizen voice”. Rising amounts of incomes and real estate prices adequately compensate for the increase in cost.

They state that the misperception comes from the fact that it is so hard to judge value of infrastructure, when we compare our system to that of other countries with other economies. Also, the legal and number-driven approaches to analyzing our infrastructure costs have been lacking or absent.

The study makes two important findings. According to the report:

“First, we document Interstate costs over time and reveal a dramatic increase in spending per mile of constructed Interstate. In real terms, states spent approximately three times as much to construct a highway mile in the 1980s as they did in the early 1960s. This substantial increase persists even controlling for the pre-existing geography of Interstate construction. In other words, the bulk of the increase is not due to highway planners leaving the “hardest” sections until last in ways captured by observable differences in geography.”

“Our second contribution is to shed light on which hypotheses about increases in costs explain the temporal increase. To do so, we take advantage of the large dispersion in construction costs across states, even considering differing geography, that emerges in the later years of highway construction. Multiple plausible prominent hypotheses are likely not important.”

Among the hypotheses they find non-important are increases in per-unit prices, change in prices over time, and no changes in interstate highway construction accounts for the change.

What they do find instead is that the demand for better and fast interstates increases with the income of an area, whether because it is a necessity of their work, or that they have a louder voice with decision makers. Second, they find that “citizen voice” makes a significant impact on spending (and by “citizen voice” they refer to the lobbying of special interests, such as environmental groups, civil rights groups, and the rising number of homeowners. All of these have strong impact on the increased spending on infrastructure.

To learn more about the changing spending on government infrastructure, read the Brookings Report here.  

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