The Economic Cost of Auto-Dependence

Two CarsRecently, Paula and I started talking about the possibility of turning our two-car family into a one-car family. In many ways, this kind of downsizing makes a lot of sense. Both of us love riding bikes and having only one car would give us the extra incentive to use them for our short trips around the neighborhood, building exercise right into our daily routine. Financially, we’d save a fairly significant amount of money on gas, maintenance, and insurance. And while it’s not always at the forefront of our minds, it’s worth noting that with automobile accidents as the leading cause of death among those between the ages of 5 to 44 getting out from behind the wheel could make us safer as well.  Yet still we hesitate. We cannot escape the fact that in a world where everything is so spread out, not having access to a car feels like living on an island without a boat. Sure we could swim to the mainland every time we need a pint of milk but frankly it’s a burden.  A hundred years ago, we lived in a compact and connected world in which the automobile was a luxury and a convenience. Today, even having just one car seems impractical. So how did we end up this way?

How We Got Here

Not long ago in this country, travel was free. The operating cost associated with traveling from point A to point B was zero, because that travel involved either a horse* or your own two feet. By sheer necessity, places were densely designed such that everywhere you needed to go – the store, the school, the doctor’s office – was within walking distance. The dawn of the automobile dramatically changed this picture. For the mere price of gasoline longer trips could be made in less time and with greater convenience. As more and more Americans traveled via automobile, the built environment started changing in response. Since cars allowed for faster travel, places began to spread out and downtown density gave way to suburban sprawl. This sprawl, however, soon made what used to be a luxury – owning a car – a necessity, as no walker could hope to cover the new distance between home and the office, for example, in any reasonable amount of time.

Our free options were suddenly gone. A few generations into this transportation experiment, the average American household now spends approximately $2,900, or 4% of their pre-tax income, per year on gas. And where does this incredible amount of money go? Not anywhere local, that’s for sure. Instead, this money is funneled out of every community in the country up to oil and gas companies (now making up six of the seven richest companies in the world) and to the government to fund new highway construction, further perpetuating the cycle of dependence. This represents local money leakage on a scale that boggles the mind. Strong local communities circulate money internally and prevent dollars from leaving the local economy as much as possible. Just imagine what a difference the retention of 4% of the income of every household in a community would make to the local economy.

Why It’s So Hard to Change

You would think that local governments would be fighting tooth and nail to keep those dollars local by investing in transportation infrastructure that brings that operating cost of travelling back down to zero: sidewalks for walking, protected bicycle lanes, a trail network, etc. Yet they don’t. Rather, they have doubled down on the exact opposite strategy, spending the vast majority of their funding promoting the automobile. Why?

The answer, I believe, is two-fold. The first issue is that decision-making is dominated more by financial considerations (where is the money coming to pay for this?) than economic (is this the best use of our limited resources?).  Investing in walking and biking infrastructure is economically and environmentally prudent but financially it’s problematic. Financially speaking, a workable transportation network is one that has a dedicated revenue source to pay for itself. So while walking and biking infrastructure is a great way to keep money within the local economy, financially there’s no clear way for the city to recover money directly from the end-user – the walker or biker. This is very different from automobile infrastructure, since gas taxes, tolls, parking meters, and vehicle registration all provide a revenue stream from that infrastructure’ end-user, the driver.

The second issue is a lack of understanding of how to address traffic congestion. Yes, we all hate it and would do anything to alleviate the problem. There are too many cars on the road so the answer is simply to build more roads, right? Well, not so fast! Interestingly, it has been a well-known and yet sadly under-publicized fact since the 1940s that adding highways, far from reducing traffic, actually promotes it. The authors of Suburban Nation describe it perfectly:

 “The simple truth is that building more highways and widening existing roads, almost always motivated by concern over traffic, does nothing to reduce traffic. In the long run, it actually increases traffic. This revelation is so counterintuitive that it bears repeating: adding lanes makes traffic worse. This paradox was suspected as early as 1942 by Robert Moses, who noticed that the highways he had built around New York City in 1939 were somehow generating greater traffic problems than had existed previously. Since then, the phenomenon has been well documented, most notably in 1989, when the Southern California Association of Governments concluded that traffic-assistance measures, be they adding lanes, or even double-decking the roadways, would have no more than a cosmetic effect on Los Angeles’ traffic problems. The best it could offer was to tell people to work closer to home, which is precisely what highway building mitigates against.”

The Road Ahead

Politically speaking, it is interesting to me that this mistake is being made on both sides of the aisle. In my home state of Texas, the one and only issue the Republican and Democratic gubernatorial candidates seem to agree on is the need for more automobile infrastructure. Now I know walking and bicycle groups can’t compete dollar for dollar with the lobbying of the highway construction business, but I believe investment in car infrastructure contradicts the fundamental principles of both parties. For conservatives and proponents of low taxes, supporting the planning of cities around the automobile effectively coerces people into an ecosystem of higher costs – from the car itself, its maintenance, and paying gasoline and other associated taxes and fees. For liberals and the champions of environmental sustainability, supporting the growth of auto-oriented infrastructure encourages the transformation of more greenspace into parking lots and undermines attempts to prevent emissions of greenhouse gases into the atmosphere.

Someday I hope to see the political leadership necessary to at least turn our relationship with the automobile into a real debate. But until that day comes that leadership needs to start with grassroots movements for local communities to think through their own infrastructure choices first. It is in their economic interest for these places to build a comprehensive transportation network that promotes various free means of travel, whether that’s sidewalks and bicycle paths in more urban areas or horseback riding trails in rural areas. When other options are viable, communities can stop the tremendous drain of money out of their economies, and my wife and I can finally feel comfortable kicking that second car to the curb.

* Update (11/5/14): After hearing from a number of readers, I acknowledge I was mistaken in my claim that the operating cost of a horse is zero. When I wrote this I was thinking that the car and the horse would both be capital expenses, but after this initial investment, if the horse ate grass and the car used gasoline than the horse’s operating expenses would be minimal if not free in comparison. However, now in retrospect, I admit that this understates the real expenses it takes to maintain a horse. Perhaps sunk cost would have stated it better: that the costs associated with maintaining the horse are fixed regardless of whether one travels with the horse or not (kind of like insurance).

It should also be noted that while both the car and the horse have associated costs – the nature of those costs from the perspective of the local economy is very different. The operating expenditures on the horse generally stay circulating within the local economy, while those with the automobile get leaked out. Incrementally, this can make a big difference.

Thanks for the thoughtful feedback. Keep it coming!

8 thoughts on “The Economic Cost of Auto-Dependence

  1. Great piece. One quick thing….horses were not free. In fact, there was a good case to be made that even early automobiles were cheaper than a horse. And that is just for an individual or family. For the public, the tradeoff from manure to exhaust was a pretty easy one to make.

    You are completely correct, however, that we have all the wrong incentives in place here.

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    • Chuck – Good point and one I think I confused “operating cost” with “sunk cost.” When I wrote this I was thinking that the car and the horse would both be capital expenses, but after this initial investment, if the horse ate grass and the car used gasoline than the horse’s operating expenses would be minimal if not free in comparison. However, now in retrospect, I admit that this understates the real expenses it takes to maintain a horse. Perhaps sunk cost would have stated it better: that the costs associated with maintaining the horse are fixed regardless of whether one travels with the horse or not (kind of like insurance).

      It should also be noted that while both the car and the horse have associated costs – the nature of those costs from the perspective of the local economy is very different. The operating expenditures on the horse generally stay circulating within the local economy, while those with the automobile get leaked out. Incrementally, this can make a big difference.

      Thoughts?

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  2. This statement is wrong/hogwash: “This is very different from automobile infrastructure, since gas taxes, tolls, parking meters, and vehicle registration all provide a revenue stream from that infrastructure’ end-user, the driver.”

    The revenue that you cite does not come anywhere near covering the cost of auto infrastructure. All transportation is subsidized in one way or another. Automobile infrastructure costs are distributed across all citizens – not just car drivers. And all upstream processes such as oil refining are heavily subsidized — who pays for oil spills? Who pays for wars that protect oil interests? Who pays for pollution health effects from cars?

    Better health is achieved through Active Transportation which more than pays for itself in reduced health care costs. Auto infra never pays for itself.

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    • Bicycle Dreaming – Thanks for the feedback. I’ll have to look into this further and follow-up. Can you point me to to any research or materials to help me get started?

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        • Perfect – this is exactly the kindof hard data I was looking for. Per this it looks like the user fees make up half the financial equation while the other half is subsidized with other funds. Thanks Bicycle Dreaming for this!

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  3. Pingback: Did A 1930s-1950s Conspiracy Against the Streetcar Lead to America’s Auto-Dependence? | The New Localization

  4. Pingback: Home Search: Finding Common Ground Between Urban & Rural | The New Localization

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