The Economy & Traffic Congestion

If vehicle traffic flowed better through your downtown, would it improve the business climate?  Is it viewed as a hassle to go downtown because traffic is too congested so more people shop at the mall due to "convenience?"  Is traffic congestion a drag on the economy?  Professor Eric Dumbaugh offers a thoughtful analysis of this issue in his June 1, 2012 article "Rethinking the Economics of Traffic Congestion" in the Atlantic Cities. Based on common perception it may be surprising to learn that in a recent study conducted by Dumbaugh and Wenhao Li they find that every 10% of increase in traffic delay per person was associated with a 3.4% increase per capita gross domestic product (GDP).  This was not a typo - let me restate: more traffic congestion is associated with an increase in GDP.

As Dumbaugh asserts, the relationship is not causal (meaning the traffic congestion does not in and of itself improve the economy) but GDP and traffic congestion are tied to a common variable - "the presence of a vibrant, economically-productive city."

Dumbaugh concludes:

None of this is to suggest that there is no benefit in having our transportation system operate efficiently. But automobile congestion, vehicle delay, and their proxy, level-of-service, are not measures of system efficiency. Nor are they measures of economic vitality. They are nothing more or less than measures of how convenient it is to drive an automobile.