Sunday, September 27, 2015
MICHAEL L. ANDERSON, U.C. Berkeley - Department of Agricultural and Resource Economics
FANGWEN LU, University of California, Berkeley; YIRAN ZHANG, Renmin University of China
JUN YANG, Beijing Transportation Research Center; PING QIN, Renmin University of China
Congestion plays a central role in urban and transportation economics. Existing estimates of congestion costs rely on stated or revealed preferences studies. We explore a complementary measure of congestion costs based on self-reported happiness. Exploiting quasi-random variation in daily congestion in Beijing that arises because of superstitions about the number four, we estimate a strong effect of daily congestion on self-reported happiness. When benchmarking this effect against the relationship between income and self-reported happiness we compute implied congestion costs that are several times larger than conventional estimates. Several factors, including the value of reliability and externalities on non-travelers, can reconcile our alternative estimates with the existing literature.
[Ed.: A fun and clever new identification strategy.]