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What Determines Decision‐Makers’ Preferences for Road Investments? Evidence from the Norwegian Road Sector

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  • James Odeck

Abstract

What determines decision‐makers’ preferences for road projects has been a subject of debate in the transport economics literature for decades. Because economic assessments of road projects are conducted subject to demands by decision‐makers in almost all western European countries and the USA, it should be expected that they use these assessments in one way or another to determine the preferred portfolios of projects. This paper attempts to reveal the preference of decision‐makers with respect to road investment projects to be included in the Norwegian National Transport Plan for the period 2002--11. The decision‐makers are the Norwegian parliament members. The basis for considering each individual project for investment is the Impact Assessment sheet containing monetized and non‐monetized impacts that will accrue to society if a project is implemented. The dataset comprises a pool of 1121 independent projects, of which 184 were selected for investment. We hypothesize different models that may explain decision‐making using a multinomial logit model. The preferred model shows that most of the variables determining decisions are actually included in the traditional benefit--cost analyses (BCAs), except that the decision‐maker takes account of them in non‐monetary units rather than in a composite benefit--cost ratio or net present value. Further, among the government’s three stated objectives of efficiency, safety and regional development, only safety is found to be significant in the preferred model. These results support other previous studies to the extent that a BCA per se does not matter in decision‐making, but its components matter in a non‐monetized form.

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  • James Odeck, 2009. "What Determines Decision‐Makers’ Preferences for Road Investments? Evidence from the Norwegian Road Sector," Transport Reviews, Taylor & Francis Journals, vol. 30(4), pages 473-494, June.
    • Handle: RePEc:taf:transr:v:30:y:2009:i:4:p:473-494
    DOI: 10.1080/01441640903138640
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    1. Daniel McFadden, 1975. "The Revealed Preferences of a Government Bureaucracy: Theory," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 401-416, Autumn.
    2. Nellthorp, J. & Mackie, P. J., 2000. "The UK Roads Review--a hedonic model of decision making," Transport Policy, Elsevier, vol. 7(2), pages 127-138, April.
    3. Daniel McFadden, 1976. "The Revealed Preferences of a Government Bureaucracy: Empirical Evidence," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 55-72, Spring.
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