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Rising incomes, environmentalism could have made highway construction costs more expensive, study suggests

Ever heard the one about infrastructure week?

As politicians make calls to rectify the decline of U.S. infrastructure investment, a new study from Leah Brooks of George Washington University and Zachary of Liscow of Yale University provides "suggestive evidence" as to how and why infrastructure costs could have changed over time.

After digitizing annual state-level data on interstate highway construction — one of the largest projects in American history — they found that per-mile construction costs increased dramatically over time, tripling between the early 1960s and the 1980s. But why?

Brooks and Liscow ruled out some old theories such as the idea that highway planners procrastinated and left the most geographically challenging routes for last, or that costs for labor and materials changed. Instead, one possible explanation they found is that as incomes and home values rose, so did demand for more expensive interstates. For example, the doubling in real median per capita income between the '60s and '80s accounts for about half the increase in construction costs per mile. States were also building more bridges and ramps as incomes increased. The study suggests all this could have occurred simply because the more money people had, the more willing they were to spend it.

One other factor that the study finds consistent with the data is the rise of the "citizen voice" in the late '60s and early '70s. That includes the growth of environmental activism, the civil rights movement, and homeowners organizing as lobbyists. Basically, more power to the people possibly meant more expensive highway construction. The timing checks out, at least.

The findings, the paper says, are suggestive, but not causal. Still, it looks like a good start in bettering our understanding of infrastructure investment over time. Read the full study here.