fbpx Economic Perspectives on Infrastructure Investmen - Edward Glaeser | Harvard Kennedy School

HKS Affiliated Authors


July 14, 2021, Paper: "To determine the appropriate level of infrastructure spending, there is no alternative to aggregating the results of project-by-project cost-benefit analysis. With widespread variation in both the benefits and costs of projects within broad infrastructure asset classes, it is important to recognize that the returns to some additional highway lanes are much higher than others, and that the costs of extending wire-line broadband coverage in some locations may exceed the benefits relative to the next-best alternative technology. Because comprehensive project evaluation is enormously information-intensive and can be gamed, many of the widely discussed estimates of the infrastructure gap in the United States are based on alternative methodologies, such as benchmarking infrastructure spending levels against international or historical averages. Such exercises may not recognize that infrastructure projects in the United States often cost more than arguably comparable projects in other nations. As infrastructure spending ramps up, heightened attention to procurement practices and to project management could yield high returns in avoiding unnecessary spending. Cost-benefit calculations must also consider maintenance spending as an important infrastructure outlay, since the bias of the political system toward ribbon-cuttings for new projects can often short-change high-return upgrade and maintenance work. Financing infrastructure is a perennial challenge. User fees, while politically difficult to adopt, can be an important way of ensuring that infrastructure is used efficiently and of aligning...." Read Via the Economic Strategy Group

Non-HKS Author Website - Edward Glaeser