The Public Purpose
Number 40 - December 2000

Doubling US Public Transit Ridership:
An Impossible Task?

  • US Transit Spends $26 Billion: It Is estimated that U.S. public transport spent approximately more than $26.1 billion annually in 1998 (motor bus, trolley bus, rapid rail, commuter rail and surface or light rail). By comparison spending on all streets and highways was $108 billion in 1998.

  • Low Estimate: 140 Percent Increase in Spending to Obtain 100 Percent Ridership Increase: Generally research indicates that there is a 0.7 elasticity with respect to new service --- a 7 percent increase in ridership for each 10 percent increase in service. This would suggest, at best, that doubling transit ridership would cost approx. $37 billion additional annually, for a total of $63 billion. This is considered a highly optimistic estimate, for two reasons: 1) Transit already serves its best markets and the 0.7 elasticity factor is not likely to hold for large service increases 2) there is a significant welfare loss in transit expenditure increases (below)

  • High Estimate: 97 Percent or Higher Welfare Loss Makes Virtually Impossible: Since 1970, new transit revenues (subsidies and fares) have tended to produce a 2.3 percent increase in ridership --- that is, every 10 percent increase in spending (inflation adjusted) returns less than a 0.3 percent increase in ridership. This indicates a welfare loss of more than 97 percent --- more than 97 percent of new revenues have funded higher costs relative to inflation, as opposed to new ridership. This would suggest a more than $1.5 trillion increase in annual transit funding to double ridership, though this number is shown only for the purpose of illustrating that there may not be a reasonable amount of money that could accomplish a doubling of transit ridership. This calculation uses "unlinked trips," which double counts approximately 20 percent of ridership. Because of new more liberal transfer policies in New York and the increase in transit modes (such as light rail) that force passengers to transfer to second or third vehicles, the fiture above is considered to be very conservative. If "The Public Purpose" estimated linked trips figures are used, the welfare loss is 99.5 percent. This cost escalation is in contrast with the generally falling unit costs of other modes of transport over the same period.

  • Doubling Public Transport Ridership Would Make Little Difference: Even if ridership could be doubled, the overall impact would be slight in most areas. The urban transit market share is now less than 2 percent, and doubling would be equal to a single year's growth in urban auto use. And, as has occurred in a number of areas that have increased ridership, a large percentage of the new riders may not be auto drivers --- they could be induced riders, especially lower income riders who lack autos taking advantage of the higher levels of service. This is not necessarily a negative outcome, but has nothing whatever to do with reducing traffic congestion, which a principal rationale (unjustified based upon experience) for increasing transit expenditures.

  • Concentration Would Make More Difficult: The difficulty of doubling transit ridership is heightened by the fact of its concentration. More than 35 percent of transit ridership is in the New York metropolitan area. It would not seem likely that this number could be doubled. It woud also be difficult to double ridership in places like Chicago and Boston, where transit ridership is far higher than in most other urban areas. This means that much of the additional ridership would have to come from less traditional transit areas.

  • Transit is About Downtown: Studies have shown a strong correlation between the number of central business district (downtown or CBD) jobs and ridership. A prerequisite to doubling ridership would be a reconcentration of jobs (market share) in CBDs. No such trend is projected.

(c) 2000 --- Wendell Cox Consultancy --- Permission granted to use with attribution.
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