The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of SnoQap, any other agency, organization, employer or company. Assumptions made in the analysis are not necessarily reflective of the position of any entity other than the author(s). These views are subject to change and revision.

The Economics of Traffic

My greatest plight in life is traffic. Nothing fires me up more than sitting stationary waiting out a long jam. While the most immediate frustration of traffic is the amount of time we waste, we're actually spending billions of dollars on an industry that many may not even know exists. Traffic has always been personal. My beloved father is a "highwayman" who works for the Virginia Department of Transportation (VDOT) to combat traffic in Fairfax County, just outside of Washington D.C. Furthermore, I've lived my entire life just outside of the worst cities for traffic in America, Washington D.C.

Traffic isn't a new phenomenon. What's always fascinated me about traffic is that there are historical elements  that explain an area at large. For example, traffic in Boston is bad because the roads are much too narrow for cars, initially being intended for wagons. Meanwhile, cities with eight lane highways (for example, Los Angeles) have about 18 million reasons for traffic.

The Center for Economics and Business Research estimated the cost of traffic in Britain, France, Germany and America combined. In 2013, costs related to traffic totaled $200 billion, about 0.8% of the GDP for these four countries. The majority of these costs are related to wasted fuel used during idling, with crumbling infrastructure in many of these countries adding to the final third. These costs are expected to increase by another $100 billion by 2030!

Of course, these costs vary by country. The average French commuter spent slightly more on traffic than their American counterparts, $2,500 to $1,700. What city you're in obviously matters, with the average Los Angeles commuter spending an astronomical figure of six grand per year on their commutes. In fact, Los Angeles makes up about 1/8th of the costs from that $200 billion figure, totaling around $23 billion spent on traffic per year.

Boston's "Big Dig" project to lighten traffic was a great success, severely reducing traffic and emissions on the city's Central Artery. But the cost of the project? About $24 billion: roughly half a million dollars per inch of highway constructed.

The most obvious answer to traffic is the use of public transit. Public transit projects such as subway and metro line additions seek to generate city revenue through travel fares. The only problem is that they must be constructed first, often at a massive cost to tax payers. For example, the new metro line that would streamline traffic in the D.C. area has an estimated cost of around $25 billion and would take about 10 years to complete.

Public office campaigns are won and lost on the promises of reduced traffic via public transit. The head of the Washington transit board asked for $300 million every year to revamp Washington's metro issues, which included frayed electrical cables, reduced ridership, uninterested employees, and overall dangerous conditions that lead to the death of a rider in 2015. While public transport may be a high cost, it's an even higher cost if it's underutilized.

Part of the draw to living in rural and even some suburban areas is that you don't have to deal with crowds and thus public transit. Public transit projects are now trying to extend further and further out to the suburbs to eliminate the need for those in the surrounding areas to drive into the city, congesting it. The problem presented to those in charge of transportation is making these lines of transit, be them metro or bus lines, accessible and attractive to the average suburban or rural commuter.

Many navigation apps now provide a simplistic way to avoid traffic on one's commute. They use data gathered from other users as well as traffic analytics to give the quickest possible route available. Such apps like Waze have become huge because their ability to give the commuter the peace of mind that they're on the best possible route.

Of course, this app isn't perfect. Sometimes there simply isn't a way to avoid the traffic. That doesn't seem to hurt Waze's bottom line though, which is why Google paid $1 billion for it in 2013. They're even launching a carpool app in California with the hopes of furthering their crusade against traffic. According to the Municipality of Anchorage the average commuter spends roughly $5,000 a year commuting. Therefore one can always cut costs, but not time, carpooling.

The sobering reality is that one can never really escape the horrors of traffic, be it cost or time, even both. The awful struggle of traffic may be eased but not ended.


Bort, Julie. 2017. “Waze Cofounder Tells Us How His Company’s $1 Billion Sale to Google Really Went down.” Business Insider. Accessed June 1.

Muoio, Danielle. 2017. “The 10 US Cities with the Absolute Worst Traffic.” Business Insider. Accessed June 1.

Nelson, Laura J. 2016. “A Tax Hike to Fund a Major Expansion of the Metro System Is Leading in Early Returns.” Los Angeles Times, November 9.

“The Cost of Traffic Jams.” 2017. The Economist. Accessed June 1.



How Green is your “Green” Car?

The Economic Effect of Automotive Pollution