Why Don’t We Know More About the Subway Cost Disease?

Alon Levy has a good deck based on data he collected covering 205 projects in 40 countries on why subway costs are so expensive in the United States compared to much of the rest of the world.

One of the points he makes is that a significant fraction of cost varies across countries which means “the explanation should be institutional and not geologic or geographic. This is difficult and requires qualitative research, since N is about 40.”

Costs are lower in poorer countries but Levy argues that GDP per capita is not a big factor once differences in type of subways are accounted for, I find that surprising and somewhat difficult to believe.

Levy’s major factor is simply that Americans and New Yorkers in particular don’t know much about how things are done elsewhere. In Europe, when a city builds a subway it can look to ten or twelve examples in three to four nearby countries for best practices. New Yorker’s don’t look anywhere else and say things like “New York has a more built-out commuter rail network than London,” as MTA chair Pat Foye recently claimed. In one way, this is good news because Levy argues that if Americans adopted European practices such as separating design from construction and simplifying station construction they could cut costs significantly.

Levy is to be lauded for his pioneering work on this issue yet isn’t it weird that a Patreon supported blogger has done the best work on comparative construction costs mostly using data from newspapers and trade publications? New York plans to spend billions on railway and subway expansion. If better research could cut construction costs by 1%, it would be worth spending tens of millions on that research. So why doesn’t the MTA embed accountants with every major project in the world and get to the bottom of this cost disease? (See previous point). Perhaps the greatest value of Levy’s work is in drawing attention to the issue so that the public gets mad enough about excess costs to get politicians to put pressure on agencies like the MTA.

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