Does Driving Still Matter in Today's Economy? - Pacific Standard

Does Driving Still Matter in Today's Economy?

Of course it does, but what was once a truism is becoming less absolute.
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Winter driving. (PHOTO: P199/WIKIMEDIA COMMONS)

Winter driving. (PHOTO: P199/WIKIMEDIA COMMONS)

There’s been a handy rule of thumb since at least the 1930s that the more miles driven by Americans, the more economic activity there is. The correlation makes intuitive sense—people with jobs have work and shops and vacations to drive to, while those un- or underemployed must economize, and may not even be able to afford a car.

Around 2003 the linkage began to fray.

In large part, according to Michael Sivak of the University of Michigan’s Transportation Research Institute, that’s because younger people in the U.S. started driving less (a point we’ve made here using his research). While the vast majority of travel in the U.S. is still in some way behind the wheel, in cities in particular the metric of “vehicle miles traveled” (VMT) became less valuable than the underlying concept of mobility. Others want to “decouple” the relationship—assuming it really was a relationship and not just a 75-year coincidence—entirely, to get away from the infrastructure and environmental costs that accompany driving while still fostering economic growth. Last December Liisa Ecola and Martin Wachs of the Rand Corporation, for example, conducted a meta-analysis on just how to do that for what might seem an unlikely client—the Federal Highway Administration.

Even though the two measures, VMT and GDP, no longer march in lockstep, having a larger amount of economic value per mile (or whatever unit you choose) remains desirable until the ol’ rule of thumb is completely kaput.

To get a handle on how vibrant this relationship is right now, Sivak compared the gross domestic product of each U.S. state and the District of Columbia with the number of miles driven in that state. He looked at data from 1997 and again from 2011; those intervening years included a number of dramatic economic events, including the dot-com boom and bust, 9/11, and a big chunk of the Great Recession. The research didn’t aim to prove anything, just to observe and report facts on the ground.

The first thing that leaps out is that data from D.C., a very small place with a whole lot of economic activity, and Alaska, a very large place with high prices, few roads, few people, and lots of natural resources, may not be the best examples with which to compare the other 49 states.

The District’s current dollars of GDP to road-mile reading is $30.04/mile; the median for the country is $4.66/mile, or $4.4/mile if you exclude D.C. Alaska comes in at $11.16/mile, followed by the nation’s third most populous state, New York—12 NYs fit on one AK— which came in third, at $9.16/mile. At the other end of the scale, Mississippi logs $2.51/mile and Alabama $2.75/mile.

Yes, population impacts GDP, Sivak notes, but population also impacts distance driven. And while high population density, as expected, correlated with a high dollar/mile figure, “the effect of land area was the opposite of what was expected (large land area was associated with high level of GDP per distance driven).” Two giant western states with lots of people and lots of driving, California and Texas, come in above the national mean, at $5.95/mile and $5.56/mile respectively.

So that’s what we have now. What’s changed between 1997 and 2011?

In absolute terms, the largest increase came in the District of Columbia, with an additional $14.95/mile representing a 99 percent increase over the 14 years. Rounding out the top five were Alaska (+$5.42/mile), New York (+$3.68/mile), Delaware (+$2.89/mile), and Oregon (+$2.66/mile). But in percentage terms, the winner was Wyoming, at 115 percent (and +$2.21/mile), followed by D.C., North Dakota (95 percent), Alaska (94 percent), and Oregon (89 percent).

Sivak's paper doesn’t suggest reasons for the changes, but it's fun to guess. The inclusion of Wyoming and North Dakota, for example, points to fracking's economic boost in sparsely settled states. And it's instructive, if not academically rigorous, to turn to the cable business channel CNBC’s annual America’s Top States for Business Survey, which lists South Dakota, Texas, North Dakota, Nebraska, and Utah as tops based on a compilation of 51 different “measures of competitiveness.” Looking just at CNBC’s economic measures, the top five were Texas, North Dakota, Massachusetts, Nebraska, and Iowa.

Every state showed an increase over the years—the median increase was $1.75/mile—but not always a large one, and given that inflation was 40 percent over the same period, not always a real one. Showing the smallest increase in economic activity per mile driven was ... Mississippi, up $0.67/mile, a 37 percent increase. That percentage increase was not the smallest though; Ohio (36 percent), Florida (32 percent), and Michigan (28 percent) were lower.

Sivak, as noted, wasn’t trying to make a point with his study so much as he was surveying today’s traffic. Even though the two measures, VMT and GDP, no longer march in lockstep, having a larger amount of economic value per mile (or whatever unit you choose) remains desirable until the ol’ rule of thumb is completely kaput.

And that decoupling may be on the map. In the near term improving environmental sustainability is going to require reducing VMT, Ecola and Wachs summarized in their 2012 meta-analysis, but that doesn’t automatically mean that policies aimed at achieving that have to cut off growth.