Friday, November 23, 2012

The Interstate Highway System is Awesome


As millions of Americans contemplate the long journey home after the holiday, it's easy to forget that the interstate highway system is a real miracle:

In an article in the Review of Economics and Statistics in 1994, Ishaq Nadiri and Theofanis Mamuneas looked at the impact of the highway system. In all but three of the 35 industries they studied, costs fell sharply—by 24 cents for each $1 invested in the highways—thanks to easier and cheaper transport. As a result, the authors reckoned, the highway system had a big impact on productivity. During the late 1950s, they said, interstate-highway spending was responsible for 31% of the annual increase of American productivity (at a time when the economy was growing at 6% a year). Its contribution to productivity growth obviously slackened over time, but in the 1960s was still about 25%, before falling to 7% in the 1980s as the system neared completion.

Steve Clowney

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