Research shows the indirect economic benefit of public transportation

By Robbie Webber

A study done by Cambridge Systematics for NCHRP Project 20-65 examined the indirect economic benefits to society of state investment in public transportation. The study found there are substantial cost savings to other government programs due to increased access to jobs, health care, and education. In many economic impact analyses, these indirect benefits are less well-documented than job creation through capital and operational spending, effects on local development patterns, and direct benefits to riders such as cost or time savings leading to increased productivity.

The study found three primary areas of indirect benefits, all far exceeding the cost of transit investment. Transit access to jobs reduced spending on unemployment and increased income for riders. Access to schools and education led to lower unemployment, higher wages, and better reemployment. Higher wages and lower unemployment are both associated with a reduced demand for and cost of social services and public assistance, which benefits not just the rider, but also the community at large and government budgets.

Transit also had an impact on access to routine health care, which in turn reduced trips to the emergency room and home health care, both of which are more expensive than routine health care. Medicaid payments are reduced by access to routine health care as well, again benefiting the larger community.

The study used a review of the existing literature across the country as well as tools developed specifically for Wisconsin and Michigan that estimated savings to government programs. The authors are careful to say the tools and models they examined were developed with data from the two states, so they cannot claim the tool will be easily adapted to other states. However, the results clearly show how indirect benefits can be calculated.

Robbie Webber is a Senior Associate at SSTI.