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Infrastructure Costs

Author

Listed:
  • Leah Brooks
  • Zachary Liscow

Abstract

Despite infrastructure's importance to the US economy, evidence on its cost trajectory over time is sparse. We document real spending per new mile over the history of the Interstate Highway System. We find that spending per mile increased more than threefold from the 1960s to the 1980s. This increase persists even conditional on pre-existing observable geographic cost determinants. We then provide suggestive evidence on why. Input prices explain little of the increase. Statistically, changes in income and housing prices explain about half of the increase. We find suggestive evidence that the rise of "citizen voice" in government decision-making increased spending per mile.

Suggested Citation

  • Leah Brooks & Zachary Liscow, 2023. "Infrastructure Costs," American Economic Journal: Applied Economics, American Economic Association, vol. 15(2), pages 1-30, April.
    • Handle: RePEc:aea:aejapp:v:15:y:2023:i:2:p:1-30
    DOI: 10.1257/app.20200398
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    References listed on IDEAS

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    1. Jan De Loecker & Jan Eeckhout & Gabriel Unger, 2020. "The Rise of Market Power and the Macroeconomic Implications [“Econometric Tools for Analyzing Market Outcomes”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 561-644.
    2. Valentin Bolotnyy & Shoshana Vasserman, 2023. "Scaling Auctions as Insurance: A Case Study in Infrastructure Procurement," Econometrica, Econometric Society, vol. 91(4), pages 1205-1259, July.
    3. Kawika Pierson & Michael L Hand & Fred Thompson, 2015. "The Government Finance Database: A Common Resource for Quantitative Research in Public Financial Analysis," PLOS ONE, Public Library of Science, vol. 10(6), pages 1-22, June.
    4. Ricard Gil & Justin Marion, 2013. "Self-Enforcing Agreements and Relational Contracting: Evidence from California Highway Procurement," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 29(2), pages 239-277, April.
    5. Brian Knight, 2002. "Endogenous Federal Grants and Crowd-out of State Government Spending: Theory and Evidence from the Federal Highway Aid Program," American Economic Review, American Economic Association, vol. 92(1), pages 71-92, March.
    6. Daniel P. Miller, 2014. "Subcontracting and competitive bidding on incomplete procurement contracts," RAND Journal of Economics, RAND Corporation, vol. 45(4), pages 705-746, December.
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    Cited by:

    1. Jinwon Kim & Jucheol Moon & Dongyun Yang, 2024. "Pigouvian Congestion Tolls and the Welfare Gain: Estimates for California Freeways," Working Papers 2402, Nam Duck-Woo Economic Research Institute, Sogang University (Former Research Institute for Market Economy).
    2. Ryan H Murphy, 2023. "The clear expectation of cultural betterment in the face of rising living standards," Rationality and Society, , vol. 35(3), pages 338-365, August.

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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-
    • N72 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: 1913-
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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