1. Do Americans Have A Unique Love Affair with the Automobile? Joel Schwartz Visiting Fellow American Enterprise Institute June 24, 2005

2. 2 Questions Have we been forced into driving by carmakers, roadbuilders, and planners? Are Americans unique in their love affair with the automobile? Does driving make us worse off overall?

3. 3 A Worldwide Love Affair with the Automobile In a wide range of economic, policy, and cultural contexts, people the world over choose automobiles for travel and suburban living as soon as they become wealthy enough to afford them Wealth is the single greatest determinant of automobile ownership and driving Driving is the overwhelming transportation mode even in countries that heavily tax cars and driving and provide widespread subsidized transit

4. 4 Have Americans been Forced or Hoodwinked into Cars and Suburbs? If Americans were forced into driving, then transportation in other countries would look quite different from the U.S. But it doesnt. –Americans use cars for 88% of motorized passenger-miles. In Europe, the figure is 78%. –Transits share dropped 35% in Europe between 1970 and 2000. –Singapores car ownership quota increased cost of purchasing a car by 60%, but caused only about a 10% reduction in demand for automobiles Europe has suburbanized much as America –Population densities in European cities dropped more than 60% between 1960 and 1990 –Amsterdams suburban share grew from 20% to 33% from 1970- 1994, while Pariss grew from 68% to 77% between 1968 and 1990 Americans adopted the automobile before interstate highways and post-war suburbanization –By 1930, Americans owned 3 cars for every 4 households

5. 5 Huge Net Benefits from Driving What do people know that policymakers and activists dont? –The dominance of driving and suburbs in wealthy countries is the result of deep-seated human desires for opportunity, space, convenience, autonomy, and privacy –Driving increases choice and opportunity: Greater choice of jobs and housing. Greater choices and lower prices for consumer goods. Greater lifestyle competition among cities. Ability to visit friends and relatives who are otherwise too far away. Greater recreational opportunities. More rapid response to fires and medical emergencies. –Not only do wealthier people buy cars; cars help people become wealthier. Even after accounting for the harm from air pollution, accidents, congestion, and other ills, automobile travel delivers trillions of dollars per year in net benefits to Americans

6. 6 More of the Good, Less of the Bad Greater safety –Compared to today, the per-passenger-mile risk of dying in a car accident was four times greater in 1960 for vehicle occupants and seven times greater for pedestrians Pedestrian improvement is not the result of less walking suburbanites are the most physically active group. –Risk of injury dropped Air pollution –Despite steadily increasing driving, air pollution has steadily declined. Almost all carbon monoxide pollution comes from cars. But peak CO levels have declined 75% since 1975 despite more than a doubling of driving. Congestion –Getting worse, but this is largely the intentional result of public policies to restrict road building and encourage people to use transit. –Although congestion has increased, cars are also much more comfortable and quiet than they used to be.

7. 7 Automobiles Critics Have It Exactly Backwards The automobile is a powerful enabling technology that has vastly increased human welfare Policymakers and activists have spent decades working to override peoples preferences, and impose their own prescriptions for how people ought to live work and travel. –These policies have unnecessarily eroded the benefits of automobile travel by increasing congestion, diverted hundreds of billions of dollars to transportation modes that few people choose to use, and driven up the cost of housing by artificially restricting supply. Instead, to maximize Americans welfare and prosperity, policies should be reoriented to work in concert with peoples choices and aspirations, rather than against them

8. 8 Auto Ownership Follows Income Cars per capita vs. GDP per capita by country in 1992

9. 9 Trend in Automobile Ownership Follows Trend in Income Trend in cars/person vs. GDP/person, 1970- 1992 (log scale) By 1992, many European countries had reached Americas 1970 per-capita income level, and Americas 1970 per-capita car ownership level

10. 10 European Travel Trends Passenger miles by mode, 1970- 2000 Air is fastest growing sector, likely due to deregulation Auto miles increased by 2.4 Transit increased slightly, with bus increasing more than rail

11. 11 Europeans drive less per capita when compared at the same income level But per-capita driving has been growing more than twice as fast in Europe as in the U.S.

12. 12 Automobiles and Opportunity Automobile travel is faster that transit, providing access to three times the land area in a given amount of travel time. Many places arent and cant be served by transit If only half of all households and employers are accessible by transit, then the autos speed and accessibility advantage would put 12 times as many employers within reach Welfare-to-work studies show owning an automobile greatly increases the chance of landing and keeping a job

13. 13 Automobile Benefits vs. Costs Costs and Benefits (1995) –Costs: roughly 2 to 4 trillion dollars Includes all costs, such as estimated costs of air pollution, climate change, free parking at malls and work, etc. (Source: DeLucchi 2005) –Benefits: roughly 6 to 11 trillion dollars Includes expenditures and consumers surplus Even after accounting for externalities and other subsidies and hidden costs, Americans derive trillions of dollars per year in net benefits from automobile travel –This explains why demand for driving and automobiles is so high, even in countries that levy large taxes on cars and driving

14. 14 Automobiles Compared to Transit Driving cost about $0.20 per passenger-mile in 2002, while transit cost $0.82. –Adding in a recent RFF estimate of externalities would add a few cents per mile to the cost of autos –Adding in the most extreme and implausible automobile costs proposed by smart growth activists would add about $0.23 per passenger-mile Full-cost pricing of all modes would decrease transit use, because transit is so much more heavily subsidized that autos –About 64% of transit costs are subsidized by taxpayers

15. 15 More Driving, Less Pollution

16. 16 What Is the Alternative? There is no realistic alternative to the automobile that would not require large reductions in peoples autonomy, prosperity, and quality of life Automobile travel provides a level of opportunity, choice, and mobility unparalleled in human history Policymakers should continue to reduce the negative side effects of automobile travel; but they should also stop trying to erode the huge benefits of automobile travel

17. 17 Contact information Joel Schwartz joel@joelschwartz.com 916.203.6309 www.joelschwartz.com