Working Paper: NBER ID: w21551
Authors: Michael L. Anderson; Fangwen Lu; Yiran Zhang; Jun Yang; Ping Qin
Abstract: Congestion plays a central role in urban and transportation economics. Existing estimates of congestion costs rely on stated or revealed preferences studies. We explore a complementary measure of congestion costs based on self-reported happiness. Exploiting quasi-random variation in daily congestion in Beijing that arises because of superstitions about the number four, we estimate a strong effect of daily congestion on self-reported happiness. When benchmarking this effect against the relationship between income and self-reported happiness we compute implied congestion costs that are several times larger than conventional estimates. Several factors, including the value of reliability and externalities on non-travelers, can reconcile our alternative estimates with the existing literature.
Keywords: Traffic Congestion; Subjective Well-Being; Happiness; Urban Economics
JEL Codes: R41; R48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Traffic congestion (L91) | Willingness to pay (WTP) to avoid congestion (R41) |
| Traffic congestion (L91) | Quality of life (I31) |
| Traffic congestion (L91) | Potential welfare gains from congestion pricing (L91) |
| Traffic congestion (L91) | Self-reported happiness (I31) |
| Percentage of cars allowed on the road (tailpctdt) (R48) | Congestion (measured by the Traffic Performance Index, TPI) (L91) |