High Speed Rail

Why Schmancy Train Projects Always Cost More Than Forecasted

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Not a still from "Atlas Shrugged: Part One"

Virginia Postrel, the beloved former editor of Reason, has a good and always-timely piece up over at Bloomberg entitled "Too Many Public Works Built on Rosy Scenarios." Begins like this:

"Infrastructure" may be one of the least glamorous words in the English language, but with the right touch the concrete and steel of roads, bridges, tunnels, dams and railroads can look as alluring as a movie star. Witness the sleekly seductive illustrations produced for today's California High-Speed Rail Authority or the midcentury pictures of effortlessly flowing superhighways, a genre that reached its apotheosis in Walt Disney's "Magic Highway U.S.A." in 1958.

This glamorizing extends not just to imagery but also to forecasts. Project promoters routinely overstate benefits and understate costs—and not just a little bit.

"Cost overruns in the order of 50 percent in real terms are common for major infrastructure, and overruns above 100 percent are not uncommon," Bent Flyvbjerg, a professor of major program management at the University of Oxford's Said Business School, writes in the Oxford Review of Economic Policy. "Demand and benefit forecasts that are wrong by 20-70 percent compared with actual development are common."

Richard Pryor coaches Gene Wilder on how to evade Danish infrastructure forecasters

Then later:

Rail-ridership predictions are especially over-optimistic in the U.S., where the average gap between expectations and reality is 60 percent, compared with 23 percent in Europe. So a back-of-the-envelope calculation would suggest that California High-Speed Rail can expect to carry only 15.6 million passengers a year by 2035, rather than the 39 million projected. […]

A charitable explanation is that promoters are starry- eyed and suffer from what psychologists call optimism bias. But it's suspicious that forecasters rarely seem to learn, even over decades of experience. Alas, contractors, local governments and other advocates have strong incentives to underplay costs and exaggerate benefits to sell their services or attract funding.

Whole thing here.

Reason has been citing Flyvbjerg (not a euphemism!) and calling the California high-speed rail project by its proper names for quite some time now.

Take it away, Supertrain!

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  1. I don’t know, there sure look like a lot of happy riders in that high-speed rail visual tour.

    And I hate to be contrary on this, but if James West’s the Wanderer had been a bullet train, Dr. Loveless wouldn’t have been able to escape capture so many times.

  2. “I’m a macaroni!”

  3. “Cost overruns in the order of 50 percent in real terms are common for major infrastructure, and overruns above 100 percent are not uncommon,”

    This just means we need to get started ASAP to beat the cost increases.

  4. What a mess when that thing hits a stalled school bus.

  5. The discourse of advocacy always includes the kinds of distortions Postrel identifies here. It is seen in the gloom and doomers who are seeking action against some danger that they perceive. It is also done by those who have a solution they feel will address some problem or other. It is part of the political process. You see it very strongly in this publication, as expected, because it is an advocacy magazine.

    1. Advocacy groups overstate benefits and understate costs.

      This is as admittedly true of libertarians as any other group.

      The difference is that libertarians use their own money, not other people’s.

  6. That scene from Silver Streak was hilarious. Jail scenes in Stir Crazy were great too. What are you doing? I’m getting bad. You better get bad too. Priceless.

  7. Doesn’t matter how much they cost as long as they have some Senators name on them.

  8. High speed rail projects are the modern politicians’ pyramids. Economic reality is irrelevant in the pursuit of “great achievements”.

  9. Since bullet trains go crazy fast, I think they should call them crazy trains, market them as such, and make the Oz their spokesman. They won’t need tax dollars, as the investors will flow in like bats into a cave.

  10. @Neu Mejican: not really. Among those participating in the “discourse of advocacy” against California’s high-speed rail project: the state’s Legislative Analyst Office, state Treasurer Bill Lockyer, and the High Speed Rail Authority’s own Peer Review Group. Among the California project’s problems: it has nowhere near enough money to complete the line, it has no plan for actually operating it, and construction is going to begin in the absolute middle of nowhere. Other than that, though, sure: discourse of advocacy.

    1. GSL – ???

      You seem to be supporting my point, not refuting it.

      1. My point was that the HSR project has some very real problems, entirely separate from the interests of those advocating for or against it. When a body as apolitical as the LAO says a project is an ungodly mess that should be scrapped, at some point it needs to occur to you that people saying things you don’t like might know what they’re talking about.

        1. My point was that the HSR project has some very real problems, entirely separate from the interests of those advocating for or against it.

          Which, again, supports my point. Those advocating for it will downplay those problems. Those fighting it will exaggerate them. The truth will be somewhere in the middle. The data Postrel presents is not surprising, but it is not limited to infrastructure projects.

          1. If the truth lies somewhere in the middle, then those with the most at stake should just lie the hardest.

            1. That is typically what happens. Are you saying otherwise?

              1. What I’m saying is, by setting your own truth in the middle of two claims, you are giving advantage to the biggest liar.

                1. Who said the truth was dead center between the two?

                2. More importantly, the more an untruth deviates from reality, the more likely it is to stretch credibility to the breaking point. The liar’s advantage always has limits.

          2. I like the Rand observation that one can avoid reality but one cannot avoid the consequences of avoiding reality.

            1. I know. Facts and logic are so biased.

          3. Ehh . . . no, it really doesn’t support your point. The HRSA’s own Peer Review Group (which presumably is not fighting the project) is blasting its implementation, on the heels of the LAO, which has absolutely no stake in the fight. Again, you’re just ignoring the criticisms of people who have no reason to oppose the project, because you don’t like what you’re saying.

            1. . . . what “they’re” saying. My bad.

            2. I am not even commenting on the project. How am I ignoring their criticism? I was commenting on Postrel’s article…about how infrastructure projects underestimate costs, as a rule. This is not surprising and is just an extension of the discourse of advocacy that applies across areas.

    2. Look, we’re getting along fine without high-speed rail, and the federal government and most of the state governments are in various stages of fiscal crisis. I don’t think the time is ever right for government to blow money on something like this, but even for those who believe we need such a thing, now is clearly not the time.

      1. And more to the point: the High Speed Rail Authority is pretty much going it alone on this one. Not even prominent officials in California’s government, including some like Lockyer who support HSR in concept, think we should be spending money on this particular project.

  11. You see it very strongly in this publication, as expected, because it is an advocacy magazine.

    Yeah, sure.

    What would be interesting is if libertarian advocates constantly used arguments that were patently false based on years of hard data, in order to line their own pockets.

    Any examples, NM?

    1. What would be interesting is if libertarian advocates constantly used arguments that were patently false based on years of hard data, in order to line their own pockets.

      Any examples, NM?

      Why would you ask me for examples? You’re the one that just came up with the claim. Is this a homework assignment of some type?

      1. That wasn’t a claim AFAICT. It was a hypothetical. Which based on RC’s previous comments is not something he actually believes.

        But you knew all that, didn’t you?

        1. sage –

          Upon my first read of it…it seemed that RC Dean was suggesting that I was claiming something along the lines of his hypothetical…and therefore wanted me to back up the claim.

          1. Ah, gotcha.

  12. You see it very strongly in this publication, as expected, because it is an advocacy magazine.

    1. Ah. Perhaps I misread RC.

      Examples of H&R overstating a problem (big government) while painting an overly optimistic picture of a favored solution (libertarianism)? You want me to detail examples of that? If it ain’t obvious, you should take off those rose colored glasses when you read articles here.

      1. Whether libertarian government will work as advertised is a somewhat open question, but whether government doesn’t at all work as advertised is not. Even when it does “work”, it does so with insane inefficiency and expense and often rewards favored constituents at the expense of everyone else.

        1. Whether libertarian government will work as advertised is a somewhat open question

          It could be argued that we have at least one real-world example of how a government designed around libertarian principles would develop over a couple of centuries. Assuming we take the US constitution to be largely consistent with libertarian principles.

          1. Yes, but we haven’t been an example for that much of our history. Even at the beginning, state government asserted quite a bit of control over businesses. And now, we’re only a free market in any real sense when compared to some other countries.

            1. Yes, but we haven’t been an example for that much of our history.
              And that is, probably, how it would occur every time. Set up a government based on libertarian principles, it you end up with the government similar to the one we have today after a few centuries.

              1. I don’t buy that. First of all, we could simply build in some additional safeguards.

                Also, the cultural and technological changes of the last couple of centuries probably helped to make it easier for government to grow, given the uncertainty people had about the future and the inevitable displacements caused by change. However, we’ve been through that and should be able to do a better job of keeping things in check, if and when we decide to do it.

                The Founders looked back at the Roman Republic for examples of its successes and the features of its system that led to its collapse into empire. We now have a more recent example to base a better system on.

                1. You would get variations on the theme. Perhaps marginally different, but in broad strokes the same forces which got us where we are today would work in your new system no matter what safeguards you attempted to build into the system. Humans would still be humans and the process of governing large groups of them would still have the same pitfalls.

                  1. I’d rather make the attempt–repeatedly, if necessary–than just watch us fall into more overt tyranny.

                    1. I don’t disagree. I think libertarian principles need to be a part of every policy discussion.

  13. Your freedom to be wrong applies when you’re spending your own money, Neu.

    If you want to spend all your money on Paul Krugman Action Figures, that’s your problem. If you want me to fund a Paul Krugman Action Figures National Monument, you can fuck off.

    I might even engage in advocacy to stop you.

    1. That’s a nice content free rant.

      1. “That’s a nice-content, free rant.”

        Say thank you, PB.

    2. I shudder to think of who would actually produce Paul Krugman Action Figures, let alone of the kind of people who would play with them.

      1. I admit, there is some appeal in using a large fresnel lens to melt a Paul Krugman Action Figure.

        I think I need large fresnel lens, anyway. Can I get some stimulus money?

  14. Those advocating for it will downplay those problems. Those fighting it will exaggerate them.

    Holy fuck. I never thought of that.
    It’s a TRUTH; a truth like a red-hot mechanical pencil stabbing me right in the eye.

    1. /sarcasm.

      That’s actually a nice paraphrase of my point, actually.

  15. Content-free?

    Meeeeee?

  16. I actually like to downplay opposition too. (Usually the downside is so horrifice you can underplay your hand.)
    I once debated a former governor on tv and made an observation about what a liberal think tank thought of something he had done. He was outraged, accused me of lying, that they’d never said such a thing. I calmly referred to my notes and responded, “You are right that I was wrong. They didn’t say ‘loss of $X million, they said – and I held it up to the camera – ‘loss of $XX million.'”

  17. Shorter Neu: people with an interest in something can never say anything true about it. And even when people without an interest in it say something I don’t like, I don’t have to listen, because I have an interest in my own opinion.

    1. Shorter GSL:

      I am having a hard time reading Neu Mejican’s posts.

      1. OK, I just glanced at your clarification that you were strictly referring to Postrel’s article. If that’s the case, my bad. It just seemed like your whole “discourse of advocacy” was trying to extend it further than that.

        Plus, by, you know, replying to my comments, I assumed you were actually addressing them. My bad.

        1. No problem.

          Plus, by, you know, replying to my comments, I assumed you were actually addressing them.

          I tried to figure out how they related to what I had said, however poorly.

  18. the High Speed Rail Authority is pretty much going it alone on this one.

    Circling the wagons, so to speak.

  19. I am having a hard time reading Neu Mejican’s posts.

    You have to admit, they’re pretty much content-free.

    1. Particularly pre-coffee.

  20. “Advocates advocate.”

    That’s nice, as far as it goes, but when one team of “advocates” trots out a bunch of completely bogus ridership and revenue projections in order to justify taking a giant pile of money from a large diffuse group of taxpayers victims in order to enrich themselves, and the opposing group of “advocates” is calling attention to the *improbability* of those aforementioned projections, I apply greater weight to the advocates of *not* taking the money (mine, or yours).

  21. “Set up a government based on libertarian principles, staff it with people it you end up with the government similar to the one we have today after a few centuries.”

    1. I think you are on to something here. Maybe the libertarian robot government would work better.

  22. What was the last government program that didn’t exceed all cost estimates?

    1. What was the last government program that didn’t exceed all cost estimates?
      The US Supreme Court Building. Completed in 1935, it was finished 3 months early and $94,000.00 under budget.

  23. There is an error in VP’s back of the envelope calculation. It should be an adjusted estimate of 24.4M, rather than her 15.6M. The equation is (fantasy – reality)/reality = .6. So reality = fantasy/1.6 = fantasy * .625. She used instead (fantasy – reality) / fantasy = .6, so reality = fantasy * .4.

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