The Economic Outlook of Infrastructure Investment: Economics


Wall Street Journal Report on this paper:

“If we are going to invest a lot of resources in new infrastructure projects or maintaining our existing infrastructure, then introducing some discipline in the way we decide to spend is an important factor in it,” said James Poterba, MIT’s Economist, he co-authored this paper with Edward Glaeser of Harvard University.

A common method for determining the country’s infrastructure needs is to calculate the cost of alleviating congestion and improving existing roads, bridges, airports, and transportation systems. Instead, the economist’s approach is to look at the projects individually to assess whether they are needed.

The author writes that in some cases, the best solution does not involve construction at all. They wrote that instead of building new lanes in densely populated urban areas to ease traffic congestion, it is better to consider congestion charging, which charges drivers a variable fee based on the time of day.



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