Cycling: Socially Profitable--And Good For Business

As an undergraduate, I took an economics class.  The thing I remember most is the professor intoning, "Marginal Revenue equals Marginal Cost", then pounding the podium  and shouting "Always!"  I don't recall, exactly, what that means, but I do understand--more or less--by two other phrases he seemed to use in every class:  "supply and demand" and "benefit cost analysis."

That last phrase might be one of the few things I actually understood in that class, which may be the reason why it's probably the only thing I took from that class and used in my daily life.  Well, sometimes, anyway.  I guess most of us perform some version of a "benefit cost analysis" when we're making important decisions.  

Of course, the "benefits" and "costs" are not always monetarily measurable, or even quantifiable in any other way.   For example, we might give up some free time in order to volunteer for something, or simply to help someone.  The "cost" of the free time can't be measured; nor can the "benefit" of serving meals at a soup kitchen.  

Sometimes the costs and benefits of something are both quantitative and qualitative or, if you like, empirical and subjective.  An example is a city's efforts to encourage cycling.  

What's interesting is that the authors of a study from the Spanish research group Applied Economics and Management, which is based at the University of Seville, set out to discover whether building cycling infrastructure in their city--and generally--is a net gain.  One thing that sets their study apart from others like it, however, is that the economists involved didn't try to calculate only business profitability.  Instead, they tried to measure what is commonly called "social profitability":  Does the investment make the city a better place to live?

Now, if you ask cyclists--or people who want to make their cities "bicycle friendly"--that question in reference to bicycle infrastructure, their reflexive answer would be "Yes!"  And, on the whole, the authors of the study agree, but with some caveats.

Those researchers seem to share some of my skepticism about bike lanes.  Indeed, they conclude that it's not enough that Seville has constructed 140 kilometers (about 87 miles) of bike lanes or 260 bike-share share stations.  They are just two elements of a scheme that would actually entice more people to ride bikes to work, school, shop or play.  The authors, therefore, advise that other  "complementary services", such as places to safely and securely park bicycles at the beginnings and ends of routes, are necessary.  Absent such measures, they say, cycling for transportation in Seville "will probably enter a period of stagnation, not to say decline."

Yes, they understand that "bicycle infrastructure" isn't just bike share programs and bike lanes and that they alone don't make cities "bike friendly."  (If anything, the poorly-conceived, designed, constructed and maintained bike lanes I've encountered probably keep people from cycling and discourage those who've just started.)  Moreover, they also acknowledge that public projects often end up costing a lot more than anyone anticipated, especially in a country like Spain, notorious for its corruption and the over-spending that results from it.

Even weighing in such factors, the researchers found a remarkably high social profitability to the bike lanes and stations that have been constructed. That, even as University of Seville Economics Professor Jose Ignacio Castillo Manzano, the chief author of the study, says that his team used a "conservative approach" that didn't take into account such factors as the reduction of traffic and noise levels or the national and international recognition the city has earned for its use of the bicycle.

So, the short answer is, yes, building bicycle infrastructure--the right kind, anyway is socially profitable--and good for business!