Improving Urban Mobility Through Motor Vehicles

The nation’s road system is vital to U.S. urban areas. Roughly 75 percent of goods, based on value, are transported on roads by truck, 93 percent of workers’ commutes are on roads by private automobiles and public buses, and by far the largest share of non-work and pleasure trips are taken by road.

Unfortunately, the arteries are clogged: the benefits that commuters, families, truckers, and shippers receive from the road system have been increasingly compromised by growing congestion, vehicle damage, and accident costs. The Texas Transportation Institute’s latest Urban Mobility Report puts the annual cost of congestion to the nation, including both travel delays and expenditures on fuel, at more than $100 billion. Despite frustratingly frequent lane closures for road repairs, federal and state highway agencies’ expenditures cannot seem to outpace the rate of road-infrastructure deterioration. Finally, although highway safety has improved during the past few decades, because of greater enforcement of drunken driving laws, improvements in vehicle safety, and other factors, traffic fatalities are still one of the leading causes of non-disease deaths in the United States, exceeding more than 30,000 lives annually.

Economists have repeatedly pointed out that policymakers could address highway inefficiencies by implementing efficient road pricing for cars and trucks and by making efficient investments based on cost-benefit analyses. Highway authorities could also implement recent technological innovations to improve highway performance. However, efficient reforms are impeded by institutional and political factors and by policymakers’ unsustainable but nonetheless preferred strategy to increase spending to build their way out of congestion and to improve the condition of highways and motorists’ safety.

Fortunately, the private sector is introducing new technological innovations in motor vehicles, especially the driverless car, which will greatly improve the speed, reliability, and safety of highway travel for all motorists.

A Brief Overview of Highway Inefficiencies

Substantial economic inefficiencies have developed under public ownership and management of highway infrastructure because public policies have not been guided by basic economic principles: prices do not reflect social marginal costs, especially cars’ and trucks’ contributions to congestion and delays and trucks’ contribution to pavement damage; road investments are not based on cost-benefit analysis and have failed to maximize net benefits; and production costs are inflated by regulations. In addition, Congress broadly apportions federal highway funds to states, instead of allocating those funds efficiently to specific locales to alleviate the country’s most congested highways.

Certain stakeholders pressure members of Congress and regulatory officials to oppose efficient reforms. For example, the American Automobile Association and the American Trucking Association oppose efficient congestion tolls and pavement charges because they may cause some of their members to pay more for using the road system, while labor unions oppose removing Davis-Bacon regulations because thousands of construction workers would see their wages fall¹.

Policymakers could improve highway pricing, investment, operations, and safety by expeditiously implementing technologies developed by the private sector. New general purpose technologies include global positioning system (GPS) satellite navigation services that, among other things, collect information about motorists, such as their location, speed, and alternative routings for their journeys; Bluetooth signals that can be detected to monitor the speed of cars and trucks through the road system in real time in order to assist drivers’ route choice decisions and to adjust traffic signal timing; and mobile software applications (apps) and websites that provide motorists with real-time information on traffic speeds and volumes, conditions on alternate routes, and available parking spaces. Motorists are becoming increasingly aware of the benefits of GPS services and the share of cars on the road that are equipped with those services is expected to climb from 10 percent as of 2013 to 50 percent by 2015.

Specific highway and vehicle technologies include Weigh-in-Motion capabilities, which provide real-time information about truck weight and axle configurations that can be used by highway officials to set efficient pavement-wear charges and efficient enforcement for safety; adjustable lane technologies, which allow variations in the number and width of lanes in response to real-time traffic flows; improved road construction and design technologies to increase pavement life and to strengthen roads and bridges; and photo-enforcement technologies to monitor vehicles’ speeds to improve traffic flow, capacity, and safety.

Because the Federal Highway Administration is biased toward the status quo in managing and operating the nation’s highway transportation system, it has failed to implement those technologies in a timely manner. FHWA may also lack the expertise to ensure that technologies to improve the highway system are implemented effectively and efficiently. Indeed, its budget allocates only a small amount of funds for research and development to improve highways. Like other agencies, FHWA may be risk-averse and want to avoid the mistakes and well-publicized delays in implementing technology that, for example, have tarnished the Federal Aviation Administration’s reputation to manage air traffic control effectively. Finally, FHWA may not stand to gain much from technology that reduces the cost of building and maintaining highways if those savings lead to reductions in its budget.

The absence of evidence that extensive and costly government failure in highway policy is likely to be corrected by efficient reforms in the near future motivates serious consideration of privatization. However, given that no general consensus about the social desirability of highway privatization has developed, it would be useful for policymakers, in collaboration with scholars, practitioners, and users, to carefully design and execute experiments to obtain evidence on its effects before considering nationwide adoption.

Private Sector Innovations in Motor Vehicles

Regardless of the state of their infrastructure, motor vehicles’ safety and performance has improved. Automakers have continued to improve vehicle engines, designs, and structural strength, and have installed seat-belts, anti-lock brakes, air bags, and the like. Recent safety innovations include electronic stability control, warning and emergency braking systems, speed alerts, and mirrors with blind spot warnings, which will also increase road capacity by enabling vehicles to drive closer together without compromising speed.

The recent revelation of “autonomous vehicles” raises the possibility of an entirely new era of highway transportation. Autonomous or driverless cars and trucks do a human driver’s normal job and much more. Driverless cars are operated by computers that obtain information from an array of sensors on the surrounding road conditions, including the location, speed, and trajectories of other cars. The on-board computers gather and process information many times faster than the human mind can process it. By gathering and reacting immediately to real-time information, and by eliminating concerns about risky human behavior, such as distracted and impaired driving, the technology has the potential to prevent collisions and greatly reduce highway fatalities, injuries, vehicle damage, and costly insurance. And it can significantly reduce delays and improve travel-time reliability by creating a smoother traffic flow and by routing and, when necessary, rerouting drivers who have programmed their destinations.

Driverless trucks are also in the developmental stage. For example, dozens of such trucks are being used to haul materials in an iron-ore mine in Australia and at other locations away from public thoroughfares. In addition to contributing to improved traffic flows and motorists’ safety, driverless trucks could benefit industry and ultimately consumers by substantially reducing labor costs, insurance, and operating costs.

Thus far, seven U.S. states—including California, Florida, and Nevada—have legalized the testing of driverless cars, and several other states are considering doing the same. Competition among automakers and other firms to develop the best technology is already underway. Google has logged nearly 500,000 miles testing its version of a driverless car; General Motors is working on a model with researchers at Carnegie Mellon University; Audi, BMW, Toyota, and Volvo have demonstrated their driverless models; and Nissan has claimed that it will offer a full line of driverless cars in the next decade. In short, some, admittedly optimistic, forecasts indicate that driverless cars could be a common sight on U.S. roads by 2025.

Empirical estimates of their benefits are sparse but one study shows that they are highly dependent on the speed of adoption and extent of market penetration. Accounting for the reduction in fatalities and injuries, less vehicle damage, and savings in travel time, fuel, and parking costs, even a modest 10% penetration of driverless cars would generate annual benefits of $40 billion. Annual benefits amount to an eye-popping $200 billion if market penetration reaches 50%.

Driverless vehicles are inevitable and will generate significant improvements in road travel that certainly compensate for policymakers’ failure to reform their policies to provide such improvements. The major obstacle to motorists and firms from adopting driverless vehicles as soon as possible is whether the government will take prudent and expeditious approaches to help resolve important questions about assigning liability in the event of an accident, the availability of insurance, and safety regulation. The National Highway and Traffic Safety Administration (NHTSA), which is responsible for regulating automobile safety, has issued cautious recommendations about driverless cars. That may be appropriate at this stage of the vehicle’s development, but NHTSA should also be cautious about sharing FHWA’s legacy of not promoting timely innovation in highway travel that could greatly benefit the public.