Transport Economist Challenges Claim That ‘VMT Causes Growth’

The claim to a link between economic growth and vehicle mileage — that, in other words, auto travel is essential to keeping U.S. productivity high — remains controversial and much-debated in transportation policy circles.

One notable recent flare-up in that debate took place on National Journal’s blog after road lobbyist Greg Cohen, referring to an October paper [PDF] released by the Cascade Policy Institute, contended that "it’s not simply a correlation but VMT actually causes economic growth."

Now economist Todd Litman, founder of the Victoria Transport Policy Institute, has taken direct aim at the mileage-growth arguments made by Cascade’s Randall Pozdena. In a paper [PDF] prepared for next week’s Transportation Research Board conference in D.C., Litman charges that Pozdena’s research "misrepesents" the relationship between prosperity and VMT "in important ways."

Litman questions Pozdena’s conclusion, based on the below chart, that "increasing a country’s income by 10 percent appears to increase its use of energy by the same percentage."

vtpi_2.png(Chart: VTPI/Litman)

Note that Pozdena equates a per-capita mileage in poorer nations with a per-capita mileage increase in richer ones, despite data showing that growth in car travel slows markedly once individuals reach a certain income level. Moreover, Litman notes, America and Norway end up close together on Pozdena’s graph even though "Norwegians actually consume about half as much fuel per capita as U.S. residents."

Looking exclusively at developed nations — specifically, the United States — Litman found that per-capita productivity and VMT were negatively correlated. Check out his graph of the state-by-state trend below:

vtpi_1.png(Chart: VTPI/Litman)

By contrast, Litman found a positive correlation between per-capita productivity and fuel prices, suggesting that political opposition to gas-tax increases, motivated by fear of impeding economic growth, may be misguided.

But it’s his takedown of Pozdena, using a truism that many remember from elementary statistics class, which packs the most punch. (Incidentally, the Cascade paper does argue in favor of one progressive transportation policy: congestion pricing, which it says may have a positive "economic footprint.")

  • I wouldn’t say Todd is an economist but that doesn’t mean that his work isn’t any good. The working degree in economics is generally the PhD. Again, however, Todd’s really sharp and he’s been working in the field for a long time, so it’s just a matter of labeling, but there are economists like Richard Arnott and Ken Small and then there are policy researchers. They overlap, but not everybody in policy research is an economist, and they don’t have to be in order to make contributions.

    But it would help here to be an economist because this isn’t a simple question you can dismiss with basic statistics the way you imply. No correlation does not imply causation, but people on the transit side, including Todd, routinely make the opposite argument–that transit prompts growth–based on correlation, too. In Prodenza’s case, you could argue he’s simply examined the relationship between mobility demand, income, and population levels–not growth, per se, but the ingredients of growth. Yes, higher incomes suggest greater demand for every type of normal good from penne pasta to car trips. Transit trips are normal goods in some regions and nonnormal in other regions–the difference being service quality levels–so you can make the same type of calculation for transit demand, or energy demand for that matter. Dueling regressions aren’t going to get us very far here as we’re just describing income effects. Do people get more and better urban services because they are wealthy and demand them and can pay for them? Or do more and better urban services help make them wealthier? Causation can go both ways. I think you have to look at the structural effects over time in controlled studies, and these are really hard to do because controlling for all the differences in context is…daunting if not impossible, and the data are not really there for most regions. Richard Funderberg and Marlon Boarnet published a very nice method for doing this with highway investments (a found little effect), but the method is not for the faint of heart.

  • (As I commented to Litman’s Planetizen post) and yet there are still people out there who will argue against such commonsensical approaches by saying such things like increasing density and walkability actually increases VMT! And I find it interesting that their arguments against broadening our multi-modality could be applied to roadways at the Interstate inception in the mid-1950s, ie the short-term benefits aren’t worth the short-term costs. But higher transit use is not an input but rather an output in economic development and urban redevelopment; the benefits of great mixed-use places will outweigh all the negative externalities associated with cars and, while the effects of such developments may not be immediately felt, in a couple of generations it will be – Just like it took the pro-road/autocentric lobby a couplathree generations for their myth to be firmly inculcated.

    As a quick sidenote: Simon Kuznets, the inventor of GNP/GDP, had this to say: “The welfare of a nation can scarcely be inferred from a measure of national income.”

    David Parvo
    Most Senior Fellow
    The Placemaking Institute
    http://placemakinginstitute.wordpress.com/2009/12/16/contriving-multi-mo

  • In any case, remember what happened in the mid-1970s when the U.S. reached its peak production of oil (which is essentially when we began going abroad in order to satisfy our sprawl-driven GDP economies ravening thirst for oil) – what happens when we reach peak production at a global scale (which some argue has already occurred)? At that point we as a society will have no choice but to decrease VMT and increase density, no?

    David Parvo
    Most Senior Fellow
    The Placemaking Institute
    http://placemakinginstitute.wordpress.com/2010/01/04/wendell-cox-intellectual-terrorist/

  • Hi, I’m new I would like to welcome all… 🙂

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