The theory of ‘induced demand’ for highways fails the road test 

Like many sects, traffic planners have their dogmata. One of their doctrines is that adding capacity to highways is futile because it merely creates more traffic. This phenomenon is called “induced demand,” or, more colloquially, “if you build it, they will come.” The theory is simple: Traffic systems that suffer from congestion have latent demand — that is, a universe of drivers who would use the freeway, but don’t, because of the traffic.

When you add extra capacity to the highway, there may be an initial decrease in congestion. But then the latent demand begins to flow into the system and it quickly fills the road back up to the previous traffic level. “Congestion” is not a problem, but rather an equilibrium point to which traffic systems inevitably tend.

The idea of “induced demand” comes up a lot in modern transit discussions. Whenever a government entity wants to add highway capacity, the induced-demand crowd tut-tuts about it being wasteful, or even harmful. Induced demand doesn’t just fill up new highway lanes, they say; it pushes suburban growth farther out — leading to even worse congestion as people move away from metropolitan cores. It leads to higher fuel costs and more accidents.

In short, they say, building highways is a terrible idea all around. Those extra lanes might even make traffic worse. So the idea of induced demand is exceedingly important — if it’s true.

But in the real world, adding highway capacity can prove quite helpful. And induced demand doesn’t always materialize.

Take the city of Phoenix, a town built with almost no freeway system. As a result, the metro area historically had some of the worst congestion in the nation. Between 1982 and 2007, Phoenix decided to build highways. They added so much asphalt that, according to the research firm Demographia, the city’s highway-lane miles per capita grew by 205 percent. And highway vehicle miles traveled per capita increased by only 12 percent. Like magic, traffic congestion plummeted.

What is true for Phoenix may not be true for Philadelphia. Building highways almost certainly induces some demand. The real issue is: Why do we get in our cars in the first place?

That’s a question that drives Wendell Cox a little nuts. The principal at Demographia, Cox has spent a lot of time pushing back against the induced-demanders. “Latent demand” for a highway, he says, isn’t actually a desire to drive on that stretch of road. People only want the road as a means to an end. “Transportation is not a primary activity,” Cox explains. “There is no ‘love affair’ with the automobile. Driving is not something we would choose to do.” What we choose to do, for the most part, is go to our jobs.

A metropolitan area typically has about half as many jobs as people. But, because of geographical constraints, not every job is accessible to every person. Highways are the most efficient way of delivering people to a job. When we add capacity to a highway, we’re actually expanding the universe of available jobs to everyone in the area.

What we really care about is maximizing the number of potential jobs that people can reach, which increases affluence. Traffic, then, is a symptom of an economy with a mobile workforce, where workers can seek out better jobs with ease. Modern, multi-lane highways, even when they are sometimes congested, are the road away from serfdom.

Jonathan V. Last is a senior writer at The Weekly Standard, where this article appeared.

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