Induced Demand

Herb Caudill’s article on traffic planning seems to be everywhere.

In, Comment of the week: Induced demand is free fast food, a comment comparing building public roads with providing free hamburgers is explored:

Let’s give everyone free McDonald’s hamburgers. Let’s put 10,000 hamburgers a day on a table in front of the Capitol (or wherever).

What would happen? People would take and eat the hamburgers, and once word got out, all 10,000 hamburgers would be taken very quickly every day. We may thus infer that because people need food and they really seemed to like those burgers, McDonald’s hamburgers are an important public good.

… We are seeing induced demand for a good which is being provided at artificially low prices.

But for some reason, replace hamburgers with roads and everybody goes nuts.

In short, the fact that a new lane or road immediately fills up with traffic does not “prove” that there was a high demand for that road—it proves that people will use way too much of something that’s free.

First, I don’t find the analogy pertinent. Food is very ephemeral, while pavement lasts for quite a while. Food is essential to life, while pavement is a convenience. Etc, etc.

Second, does free stuff always induce demand?

If you gave away free table tennis paddles, do you think that everyone would start playing more and more table tennis?

If you gave away free air, would people breathe more?

If you gave away free water, would corporations use millions of gallons for fracking? OK, yes on that one.

Clearly it matters what is distributed for free.

Third, it seems to me to be an argument against building any sort of public infrastructure or commons. The problem with distributing free hamburgers is not only that they are free, but that they are unhealthy and unsustainable. It matters what you distribute as a public good. To a certain extent, public roads are beneficial. We’ve simply gone overboard. We could do with fewer roads and more bike paths and sidewalks.

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