Harvard Economist Glaeser on the Costs of High Speed Rail

Harvard University economist has a useful thumbnail cost assessment of high-speed rail in his most recent contribution to the New York Times Blog Economix. It’s the second installment of a four part series Prof. Glaeser plans to publish.

Glaeser makes several assumptions to calculate the costs and benefits of a stylized high-speed rail link between Houston and Dallas to make his point. This is a good choice, because this is exactly the kind of corridor that would most likely benefit from high-speed rail. The employment centers are far enough away (yet close enough) that trains might effectively compete with air travel, and the metro areas are very large–about 6 million people (in the top 10 for U.S. urban areas). Moreover, most of his assumptions and stylized facts favor rail. For example, he assumes that the Houston-Dallas high-speed rail corridor would attract as many riders as current air travel between the two cities. (Unfortunately, he doesn’t mention whether these air travelers are flying to their final destination or continuing on to other national destinations; Dallas is an American Airlines Hub and Houston is a Continental Airlines hub.)
Still, the results are sobering for high-speed rail advocates. Concludes Glaeser:
“Now it’s just down to multiplying: 1.5 million trips times $68 a trip means $102 million for benefits minus operating costs. Annual capital costs came in $648 million, more than six times that amount. If you think that the right number is three million trips, then the benefits rise to $200 million, and the ratio between the per rider net benefits and costs drops to one-to-three. This is the cruel arithmetic faced by people, like myself, who would love to be pro-rail.”

Prof. Glaeser’s first article focused on the general question of whether high-speed reail was a good public investment. The third and fourth blog contributions will focus on congestion and the environment.

The analysis is not definitive by any stretch, but it’s a useful and highly relevant illustration using good rules of thumb from the academic, research, and policy literature.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and managing director of the DeVoe L. Moore Center at Florida State University in Tallahassee where he teaches graduate and undergraduate courses in urban planning, regulation, and urban economics. Prior to joining Florida State, Staley was director of urban growth and land-use policy for Reason Foundation where he helped establish its urban policy program in 1997.