What’s Your Time Worth?
David Hembrow writes today about the extensive, €100M inter-city / inter-town cycle route building programme that the Netherlands is engaged in. Apparently, it’s cheeper to build them than not to!
The basis for that claim is a report by Fietsberaad, which uses calculations to show how the time saved by people using these routes means that they actually generate a net profit.
I’m always very sceptical of these economic ROI calculations for public infrastructure projects - especially when their basis for calculation is on the value of time saved. Similar calculations are also used for road building schemes in the UK, and I think are flawed in their basic proposition: That the ROI for real money spent can be calculated using the extra free time that beneficiaries derive, multiplied by some notional € per hour figure. It assumes that people would either want to buy those hours at that rate if they were on sale, or that they would use that time to some other productive end rather than watching more X-Factor.
This is an example of how the public sector tries to apply management techniques from private business, and gets it very wrong. Private business is fundamentally interested in the return on its capital expenditure, and how this translates to real, money-in-the-bank profits. The only way the public sector calculations ‘work’ is if they try to turn fundamental human rights - things like being able to go about your business in safety; living in a pleasant land; being a connected part of your community - into commodities on a balance sheet, using some plucked-out-of-the-air figure for their unit worth.
These projects (and their road / rail / airport counterparts) should never be justified on such bogus grounds. We should do these things because we believe they are right, and that the result will be a better place to live for us and our children.
Unfortunately, that would require some leadership from our politicians. So in the meantime we’re left with vast numbers of Whitehall bureaucrats, consultants and special advisers producing these meaningless reports full of figures whose only real purpose is to brandish at the Opposition.