Why Does Road Traffic Remain Such a Big Problem

by robekulick

If you had asked me yesterday whether building additional roads and adding public transportation reduce traffic, I would probably have answered yes to both questions. However, if you start to think about the question of traffic for a second, some strange issues may occur to you. For instance, why do the cities with the best public transportation networks still have such bad traffic? Also, why despite the fact that there always seem to be new highways under construction, do these new highways never seem to reduce congestion?

This month’s American Economic Review (one of the most prestigious economics journals) has a fascinating empirical article that provides a stark answer: because new roads and public transportation are completely ineffective when it comes to reducing traffic. In their paper “The Fundamental Law of Road Congestion: Evidence From US Cities” Duranton and Turner find:

"We investigate the effect of lane kilometers of roads on vehicle-kilometers traveled (VKT) in US cities.
VKT increases proportionately to roadway lane kilometers for interstate highways and probably
slightly less rapidly for other types of roads. The sources for this extra VKT are increases in driving
by current residents, increases in commercial traffic, and migration. Increasing lane kilometers for
one type of road diverts little traffic from other types of road. We find no evidence that the provision
of public transportation affects VKT. We conclude that increased provision of roads or public transit
is unlikely to relieve congestion."

In other words, they find that  the act of building a new road simply leads to more usage of roads and does not reduce traffic! Thus when it comes to roads it seems that supply really does creates its own demand. This is consistent with an economic theory known as the “Fundamental Law of Road Congestion,” which also proposes that increases in the availability of public transportation do not reduce road congestion. The authors also test his part of the theory and find that public transportation does not reduce traffic, just as the theory predicts.

So what then can be done about traffic? It appears that from a policy perspective, the only measure that can really reduce traffic is congestion pricing or charging people directly for their usage of highways and busy roads.