Tuesday, February 3, 2009

How market failure is causing traffic accidents in the US

This is not a conclusion of any serious research...yet. But if anyone wants to give me funding, I'll be more than happy to work on the empirical evidence and produce a rigorous research! :)

So, here's my theory:

Not everyone is good at driving or enjoy driving. In a Ricardian world where everyone specializes according to his/her comparative advantage, the bad drivers should not drive at all--but should spend his/her time on doing what he does better (e.g. fixing computers, teaching, farming, cooking, etc. you name it). The teacher or farmer or cook can then pay for transportation service from those who have comparative advantage in driving.

If you have lived your whole life in California, the abovementioned world may sound ridiculous to you. However, if you're from Hong Kong (Singapore, Taipei, or New York City), you know how natural and desirable that is. There people have access to reliable public transports within a few minutes from their doors, or they can flag a taxi right at the doors. Consequently, people who can't drive aren't forced to drive, leaving the road safer. Moreover, fewer cars are left idle. It does the environment a big favor. For those who still decide to drive, it's easier to find parking.

Now, look at what's happening in the US. The road is filled with bad drivers who would stop in the middle of the road suddenly, change lanes when there's another car 25cm away, take up 2 parking spaces when they parallel park...

Being a lousy driver myself, I sympathize with the drivers. I know clearly that driving requires talent. If you don't have the talent, you may still be a dangerous driver even though you try hard to drive safe. Moreover, if you know you're a bad driver, chances are that you won't like to drive either. However, if you can't go to work without a car, you are forced to drive even though you aren't good at it and don't like it.

Public transportation systems in the US are indeed so bad that people can't rely on them as the sole means of transportation. Taxicabs are inaccessible and/or prohibitively expensive.* To make the matter even worse, urbanization hasn't quite happened in the US. As many people live in suburbs, the population is too scattered to be served by public transport.

These form a vicious cycle: As people can't use public transport, they drive. Because they drive, they live in the suburbs where they can park for free. Since most people live in suburbs, demand for public transport is low. With the thin market, public transport remain scanty.

I think that is why so many people who are not supposed to drive are driving in America. Next time when you're pissed off by a bad driver, don't blame the driver--blame the market.

*: Here is an article about why taxis are so expensive (and services so poor) in Boston.

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