Scandinavian Working Papers in Economics

Working papers in Transport Economics,
CTS - Centre for Transport Studies Stockholm (KTH and VTI)

No 2014:6: Does benefit/cost-efficiency influence transport investment decisions?

Jonas Eliasson (), Maria Börjesson (), James Odeck () and Morten Welde ()
Additional contact information
Jonas Eliasson: KTH, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Maria Börjesson: KTH, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
James Odeck: NTNU, Trondheim, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Morten Welde: NTNU, Trondheim, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden

Abstract: We explore how benefit-cost efficiency and electoral support affect road investment decisions in Sweden and Norway. In Norway, neither benefits nor costs seem to affect project selection. In Sweden, civil servants’ decisions are strongly affected by projects’ benefit-cost ratios, with a stronger effect for more expensive projects, while politicians’ decisions are only weakly affected, and only for small projects. In both countries, governments tend to favour investments in regions where they enjoy strong local electoral support. Using cost efficiency as a final selection criterion seems to filter out many inefficient projects already at an early stage of the planning process. We argue that even if political decisionmakers are apparently mostly governed by other concerns than cost efficiency, civil servants at the administrations should not shy away from preparing efficient project suggestions for decisionmakers to choose from.

Keywords: Cost benefit analysis; Project appraisal; Public decision making; Transport investments

JEL-codes: H43; R42; R48

19 pages, April 1, 2014

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CTS2014-6.pdf PDF-file 

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Published as
Jonas Eliasson, Maria Börjesson, James Odeck and Morten Welde, (2015), 'Does benefit/cost-efficiency influence transport investment decisions?', Journal of Transport Economics and Policy, vol 49, no 3, pages 377-396

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