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Methods for Estimating the Economic Impacts of Transportation Improvements: An Interpretive Review. of Transportation Improvements


  • Michael Iacono
  • David Levinson

    () (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)


Transportation analysts and the public decision-makers they support are confronted with a broad range of analytical tools for estimating the economic impacts of improvements to transportation networks. Many of the available models operate at different scales and have distinctly different structures, making them more or less appropriate for analyzing the impacts of different types of projects. Here, we review several of the economic methods and models that have been developed for analyzing the impact of transportation improvements, giving special attention to types of projects that add highway capacity in urban areas. We review project-based methods, including beneÞt-cost analysis and several analytical software tools developed by the Federal Highway Administration (FHWA) for economic analysis of transportation investment. We then move on to aggregate and disaggregate-level econometric methods, including regional economic models, hedonic price functions, production functions and cliometric analyses. We also devote some attention to the role of induced demand in economic evaluation, since it is often one of the most uncertain and confounding factors faced by those charged with conducting economic evaluation of transportation projects.

Suggested Citation

  • Michael Iacono & David Levinson, 2008. "Methods for Estimating the Economic Impacts of Transportation Improvements: An Interpretive Review. of Transportation Improvements," Working Papers 000041, University of Minnesota: Nexus Research Group.
  • Handle: RePEc:nex:wpaper:estimatingeconomicimpact

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    References listed on IDEAS

    1. Paul Anderson & David Levinson & Pavithra Parthasarathi, 2011. "Accessibility Futures," Working Papers 000088, University of Minnesota: Nexus Research Group.
    2. Wachs, Martin & Kumagai, T. Gordon, 1973. "Physical accessibility as a social indicator," Socio-Economic Planning Sciences, Elsevier, vol. 7(5), pages 437-456, October.
    3. Handy, Susan, 1994. "Highway Blues: Nothing a Little Accessibility Can't Cure," University of California Transportation Center, Working Papers qt66k8b8bz, University of California Transportation Center.
    4. David Levinson & Ajay Kumar, 1994. "The Rational Locator: Why Travel Times Have Remained Stable," Working Papers 199402, University of Minnesota: Nexus Research Group.
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    More about this item


    Economic Impact; Benefit-Cost Analysis;

    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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