Most transportation policies, including urban highway spending, off-road parking obligations, and lower fuel taxes, are based on the assumption that faster, cheaper, and more vehicle travel will increase economic productivity and community prosperity. It’s time to critically examine that assumption. My latest research, explained in the Mobility Productivity Paradox, shows that on the contrary, there is a tendency for economic productivity to be reduced due to more vehicle miles and city lane miles, lower fuel prices and cheaper parking.
Certainly, some car trips are very productive. Farmers, carpenters and visiting nurses usually achieve more in the car than using other modes. However, motor vehicle travel places great costs on users (to own and operate vehicles), governments and businesses (to the roads and parking facilities), and communities (to the crowds, crash risks and pollution damage imposed on others). As a result, as each individual’s driving increases, the increasing portion is economically inefficient. That marginal cost exceeds marginal profit. If that driving is eliminated, our economy will be more efficient.
Show me some proof here. See the report for more details.
Great decoupling
In the 20th century, vehicle travel and economic productivity were closely aligned. However, in the 21st century, vehicle movement peaked while productivity continued to increase and new efficiencies and technologies reduced the amount of vehicle travel needed for economic activity. The following diagram illustrates these trends:
US productivity and vehicle travel trends (FHWA and BEA data)
The following diagram shows the negative relationship between US mobility and productivity. The state said: Productivity tends to decline as vehicle miles increase.
US productivity and vehicle travel countries (FHWA 2020, PS-1)
The diagram below shows that productivity decreases as city lane miles increase, indicating that urban road expansion is economically harmful.
Productivity and Urban Lane Miles (USDOT 2024)
The diagram below shows that regional productivity tends to increase in transport. This reflects the ability of high quality transport to increase urban transport efficiency and promote more compact development.
Productivity and Transit Ridership (APTA 2020 and BEA 2024)
The diagram below shows that productivity tends to increase with local population density. This is an effect called cohesion efficiency. This reflects the benefits of proximity (reduced travel distance) and travel diversity (better non-automatic travel). This indicates that policies that enable and encourage compact urban development tend to increase productivity, and policies that increase sprawl are economically harmful.
Productivity and Urban Density (USDOT 2024)
Many people assume that rising fuel prices reduces economic productivity by increasing costs for producers and consumers, but the relationship is actually positive. As shown in these two graphs, fuel prices rise is more related to economic productivity. This suggests that rising fuel prices can help increase productivity by promoting more efficient energy use and transport.
National Productivity vs. Fuel Price, Global (Global Gasoline Price 2025)
Crowd Paradox
Traditional plans assume that traffic congestion is economically harmful and that urban road expansion will increase productivity, but the diagram below shows the opposite. Productivity tends to increase with the intensity of congestion. As previously shown, productivity tends to decline at more city lane miles, indicating that efforts to reduce congestion by expanding roads tend to be economically harmful overall. Their costs exceed their benefits.
Productivity and Traffic Congestion (USDOT 2024 and TTI 2023)
Productivity tends to increase with urban traffic congestion. This claims that traffic congestion significantly reduces productivity. It suggests that urban road expansions tend to be economically harmful overall. Their costs exceed their benefits.
Businesses often argue that commercial districts need plenty of free parking, but productivity tends to increase with less car parks in the city centre and higher parking prices. Increased parking supplies and fees can improve urban efficiency by freeing up city land for more productive uses and promoting more resource-efficient travel.
Productivity vs. Parking Supply and Price (PRN 2023; USDOT 2024)
In the past, businesses often assumed that drivers were better customers and workers, so improved motor vehicle travel would support economic development. This study shows that this is not the case. Many cities bring together economically successful residents who prefer non-automated travel and want to reduce vehicle traffic. More compact, multimodal urban neighborhoods tend to attract more residents, customers, and workers by increasing development density and mixing, improving multimodal accessibility, reducing vehicle traffic, and reducing infrastructure costs. For example, in the area of auto-dependent driving by most customers and workers, parking subsidies represent roughly 20% of rent. In a multimodal area with only half drives, rents will be reduced by about 10%, and the pool of potential workers will increase by 10-30%, making up of potential workers who cannot drive.
As a result of these savings and profits, productivity, business activities and assets value tends to increase in walk-score, transportation, complete on the streets and proximity to bicycles.
Paradox explanation
My research identifies how increasing vehicle travel can reduce economic productivity, as summarized in the table below.
Overview of how vehicle travel reduces productivity
element
Productivity impact
The impact of accessibility
User Cost
Households will spend less on other products, such as education and housing, which will increase productivity in the future.
It reduces access to economic opportunities such as jobs, especially for low-income people.
Infrastructure Cost
Vehicle infrastructure subsidies increase taxes, rents and other products costs.
Wide roads and larger parking lots degrade walking and cycling.
External costs
Vehicle traffic causes congestion, crashes and pollution that reduces productivity.
Congestion delays cars and buses. Risk and pollution break down active travel.
Reduced non-automatic mobility options
Reduces economic opportunities for non-drivers and increases driver costs.
Reduces non-natural accessibility.
Sprawl-related costs
Increases travel and public services costs and reduces cohesion efficiency.
It reduces accessibility, especially in non-automatic modes.
Low-productivity spending
The purchase of vehicles and fuel means you have less local work and less business activity than most other spending.
Sprawl encourages local shopping and reduces local services and jobs.
The charm of the neighborhood
High traffic parking makes the area less attractive to residents and customers.
Wide roads and traffic increase reduces walking and bicycle access and transport efficiency.
This table summarizes how vehicle travel can reduce productivity and accessibility.
This indicates that increased car travel tends to reduce productivity by increasing costs, reducing accessibility and reducing the appeal of the neighborhood to residents, customers and workers. These effects can be enormous. For example, compared to the compact and multimodal community, car dependency and sprawl add hundreds of hours to more annual travel time by adding thousands of dollars to annual users, infrastructure and external costs, and increasing travel distance and drivers. Similarly, in areas that rely on cars, businesses need to subsidize parking for customers and employees, with fewer potential customers and workers (people who cannot drive), and operate in an unattractive environment. A more compact multimodal community offers savings and benefits filtered through the economy, increasing productivity, affordability, economic opportunities, property value and tax revenue.
The study suggests that optimal vehicle travel is approximately 4,000 vehicle miles per person per year and 50% automatic mode share, more in rural areas and less in urban and low-income areas. Interestingly, a recent study found that Americans who rely on driving more than 50% of their home trips tend to reduce their satisfaction in life.
Find the balance
It’s time to question the assumptions about how transport policies influence economic development. Transportation spends tens of billions of dollars each year to expand city roads based on the assumption that it reduces congestion delays, saves travel time, makes workers more productive, increases community wealth, and makes everyone happy. Forget these assumptions. They are unfair.
This study shows that urbanization improves accessibility, reduces costs and provides cohesive efficiency. Policies that support urbanization increase economic productivity and opportunities. Anything that contradicts urbanization is economically harmful. This does not suggest that economic productivity requires a car-free life in a high-rising apartment. On the contrary, some of the biggest profits seem to be attributed to moderate reductions in vehicle miles traveled and a slight increase in non-automatic mode share, as well as a moderate increase in density from households that own one instead of two.
Mobility is like salt in cooking. This study shows that economic activity requires less vehicle travel, as the best economic development strategy is to improve transportation efficiency. This requires a policy that favors more valuable travel and space-efficient modes than low-value travel and space-efficient modes in addition to diverse transport systems to meet diverse travel needs. This can be achieved with multimodal planning and incentives for travelers to choose the best option for each trip. A development policy that creates a compact community, along with walking and cycling for local errands, transportation when traveling through busy corridors, and driving when it’s really optimal. This also helps you achieve many goals, including affordability, equity, health and safety, and environmental quality.
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