Tour de Links - So money

Maillot Jaune: Bicycles can save the economy. According to the national building museum (see below), the reduction in car ownership in the District (15,000 fewer cars despite 15862 more residents) between 2005-2009 kept $127 million dollars from leaving the District. That will buy a lot of bike lanes. 

Maillot Vert: But that is only part of the savings. "Now, some of Gotschi’s calculations are probably a bit of a stretch from a purely scientific point of view. But his main point — that during the next 30 years Portland residents could save as much as $594 million in health care costs because of the city’s investment in biking — bears noting. The more we spend on bike lanes and other biking inducements, Gotschi says, the more the eventual health care savings." I'd love to see a plot of major American cities, with the x-axis being "money invested per capita" since 2000 and the y-axis as "increase in bike commuting" over the same period. You'd expect a somewhat direct relationship, but one researcher they interviewed questioned that.

Maillot a Pois Rouge: Chicago is testing cycletracks. "The Chicago Department of Transportation was given a $3.2 million grant from the federal government to improve their bicycle lanes by testing and building cycle tracks in the city." They also did a bicycle count and determined that mode share at one place was as high as 21.9%.

Maillot Blanc: LA's bicycle plan, which should be approved by the City Council, calls for 1680 miles of bikeway.

Lanterne Rouge: The driver in Brazil who plowed through a Critical Mass ride is being charged with attempted murder.

Infographic: Mgmt Design, courtesy of the National Building Museum

Comments

[charlie]

Every single graphic I've seen by these guys is just wrong. Stuff like that makes me question a lot.

Can I just point out that AAA's figure is mostly

1) depreciation
2) multiple car-ownership
3) finance charges

[Contrarian]

Since the cost presented as the benefit of getting rid of a car -- which is what apparently 15,000 people have done -- I have no quarrel with that part of the argument. However, the whole "dollars leaving the local economy" notion is bogus and simplistic.

[washcycle]

I think that most dollars spent to own and maintain a car leave the District. We don't make any of that stuff and there aren't even that many car mechanics, banks etc... here. Why is it bogus.

charlie, depreciation is just a way of accounting for purchase price over years, so what is your point about that (or finance charges)?

I'm not sure what you mean by "multiple car-ownership."

[Dacmanj]

+1 on depreciation... It's just a way to spread out the cost of the car - there's no point in including the entire purchase cost of the car in the figures, nor to exclude it entirely, so the way to annualize the cost would be depreciation.

Notably absent from this analysis is the subsidization of car production, car fuel, and car infrastructure.

It does, however, include part of the dollar value of the deaths, injuries and property damage caused by our choice of transportation infrastructure through the economic proxy of insurance.

David

[Contrarian]

Car insurance is a poor proxy for the cost of injuries as most of the cost is paid for by health insurance, which is paid for by drivers and non-drivers alike. I read recently (but can't find a cite) that the economic cost of automobile related injuries is about $2,000 per driver per year.

[Contrarian]

Why is it bogus?

In an interconnected regional, national and international economy it's awfully simplistic to draw a line on the ground and say that spending on one side of the line is somehow better than on the other. Taken to it's logical extreme, consider that DC essentially produces nothing. However, we do have the Bureau of Engraving, so we produce money -- 100% of which leaves the local economy. Surely we're better off that it does, otherwise we'd be sitting around eating 20's and burning 100's for heat.

[Scott]

What about parking money? I'm sure that there is more money spent on parking then anything bike or bike related. There are allot of lots and private spaces owned by dc residents in operation.

[washcycle]

It's also simplistic to act as though it doesn't matter where the things we buy are made or that it has no impact on the local economy where we spend our money. Taken to it's logical extreme it would mean that the city would be identical if everyone did all of their shopping in Maryland.

As for parking, I suspect it's included - and don't be so sure it's local. Imperial Parking is a Canadian company I believe.

[Mark Williams]

So what if the parking company is owned by the Canadians? The biggest cost components are likely rent and labor. I highly doubt they import Canadians to be parking lot attendants.

BTW, what is the argument that car production is subsidized? (Except to the point that GM and Chrysler were bailed out?)

[charlie]

because "depreciation" is accounting; it isn't "leaving" the local economy. Not to mention the bit, well, about being part of the same economy.

You want a better argument: look at the US trade deficit, and figure out what percentage it related to vehicles.

(downside to that argument: there are vehicle exports, jets are the only thing we build anymore, and something like 99% of bicycles are imported from china)

[washcycle]

Mark, The biggest cost components are likely rent and labor.

I'd be surprised if that were true. And if so, very little of it is probably labor.

charlie, OK, instead of depreciation, just use "car purchases." Average the cost of the thousands of cars purchased by DC residents per car owner (including those who didn't buy that year). It should be basically identical, no? And it is leaving the local economy because the cars are generally purchased in the suburbs and made elsewhere, including overseas.

Yes, we're part of the same economy. But as jobs move to other places, so must workers. If you see no transaction cost in moving from state to state or country to country in the pursuit of jobs, then I suppose that doesn't matter. But most people do see a transaction cost in that.

[washcycle]

BTW, total reduction in lane miles in DC between 2004 and 2008 = 3 miles.

[charlie]

I am sorry to be picking here, but as I said, this MGMT people are the worst sort of propagandists.

Again, depreciation isn't a valid concept here. It is an accounting loss, no money is "leaving" the district.

I'd agree DC is unique because it doesn't have a single car dealer (is that true?) but you can't use that as an analogue.

Take Arlington, for example. The AVERAGE car in Arlington in only worth 7500. Depreciation at that part is far less than what AAA takes into account, and you can't assume that every person who buys a car is buying a new one.

other problems: how many models driven. the AAA data assumes a certain amount of miles per year and a certain car class. None of that here.

DC drivers drive a lot less than the national average. I get about 3500K miles a year.

You can't assume gas is "leaving' the local economy.

If I run myself through the AAA model, I get about $600 in operating expenses, $400 in insurance, POSITIVE appreciation (in the past few cars older cars have gone up in value). Throw in a few tickets -- that is an hundred million dollar business in DC -- and I suspect cars like mine are a net gainer for the economy.

And DC only gained 15,000 people since 2005?

[washcycle]

How do you wish to account for the purchase price of a car?

Why can't I assume gas is "leaving" the local economy? Do we have oil wells here, or refineries?

The above number is an average. If you own an older car that is paid for, obviously, your number will be different. You'll notice the graphic mentions the national average - not the specific costs for Charlie.

It is likely the local numbers are different than the national average, but the point is still valid. Owning a car is expensive. The money spent on buying and operating a car largely go to areas outside of DC.

[charlie]

The DC average is probably closer to my experience than the national average. They don't state which model they are using, but from a few tries at the AAA model I'd guess 15,000 miles a year.

Gas bought locally means gas tax in DC.

Not sure how you could model purchase price of a car. take a mix of used/new? Not to mention the sales tax on cars and other registration fees.

This is the data source:
http://www.aaaexchange.com/Assets/Files/201048935480.Driving%20Costs%202010.pdf

Doesn't match perfectly, but again, just remove deprecation and the chart above goes almost 50/50.

Again, for a typical DC driver,

[washcycle]

But charlie if you take out depreciation you have to add the purchase price back in.

It's true that gas bought locally means local gas tax, but the bulk of the money still leave the area. The same is true of other taxes you cite. And if I don't spend that money on gas and a car, I'll instead spend it on something else - something possibly with more local value added - on which I will also be taxed. So it's not like the tax money goes away.

[charlie]

OK. I got your point about the purchase price. Either you take out 30K in one year, or 5K over 6 years (depreciation), which nets out, right?

Couple points:

1. Depreciation is still artificial -- the actual rate is different that AAA's rough estimate.

2. Still assuming 15K NEW cars bought, not a mix of used/old. Very different rates after that.

3. Again, the larger error: AAA was measuring costs to the driver. Your idea of replacement costs is OK, but the $5000 I lose on my car when I drive off the lot isn't going to stop another purchase.

Not buying a car can save you some money. Not USING your car, or using it a lot less, is even a better money saver.

This chart reminds me of the chap who wanted to show the Arctic was melting and decided to kayak out there..and got stuck in the ice.

[washcycle]

AAA was measuring costs to the driver. What else would you measure?

Not buying a car can save you some money. Not USING your car, or using it a lot less, is even a better money saver.

I think you have it backwards. There are a lot of fixed costs to ownership (registration, parking, insurance) but then smaller costs for incremental uses.

Finally, depreciation isn't artificial (things do depreciate) but it is estimated.

This is all based on estimates, if that's your issue then I feel like I've wasted my time here.