Dallas-Houston Bullet Train: Economics Brawl!

Is a high-speed rail line between Dallas and Houston practical?  In a four-part series for the New York Times, Harvard professor Edward L. Glaeser used the example of a possible Dallas-Houston line to do his back-of-the-envelope calculations on whether it is worth the money. His conclusion: as much as he would like to be pro-rail, the cost-benefit ratio doesn’t justify it. Economist Robert Samuelson then used Glaeser’s numbers to denounce high-speed rail as a “boondogle”  in the Washington Post, a piece that was quickly attacked by economics writer Ryan Anent as a “hack job.”

On Tuesday, transportation researcher Yonah Freemark delivered another sharp rebuttal to Glaeser:

The problem is that—through a sorry mix of omission, oversimplification, distortion, and deficiency—his calculations bear no relation to the effects he is claiming to consider. So it’s important to show that “the numbers” do not at all undermine the viability of HSR in the US, even outside the northeast and California. In fact, they tend to support it.

Using projected population figures for 2019 (it would take ten years to build the line), Freemark concludes the only rational conclusion is to “build, baby, build.”

Yesterday, George Mason economist Tyler Cowen took a pencil to Freemark’s numbers, and did not like what he found:

I’m not sure what discount rates he is using but even if we put that problem aside this screams out: don’t do it.  Given irreversible investment, lock-in effects, and required hurdle rates of return, this still falls into the “no” category.  And that’s an estimate from an advocate writing a polemic on behalf of the idea.  I’m not even considering the likelihood of inflation on the cost side or the public choice problems with getting a good rather than a bad version of the project.  How well has the Northeast corridor been run?

We link. You decide.