Doctoral Dissertation Research in Economics: Spatial Equilibrium and the Value of Public Transit


Donald Davis
Ragnar Nurkse Professor of Economics
Lucas Husted
PhD Student
Vinayak Iyer
PhD Student


One of the important issues in an urbanizing world is understanding how public transportation affects the growth and development of regions. Public infrastructure investments are costly and thus understanding their contribution to regional development is imperative to assess the benefits given the high costs. Since public transportation is not randomly distributed across space, it is challenging to disentangle the amenity value of neighborhoods from that of the transportation network itself. This research considers an unexpected closure of a major transit network due to a hurricane and examines how this closure affected businesses, neighborhoods and commuters by utilizing a detailed dataset. This proposal will highlight the economic forces driving the complex relationship between public transportation and neighborhood dynamics. Thus the research will inform policy makers in what ways infrastructure projects may be funded and how these decisions shape the development of neighborhoods.

Finding credible evidence of the value that commuters place on proximity to public transport is of first-order importance in an urbanizing world. This proposal utilizes as an exogenous shock, the unexpected closure of a major transit line for an extended period in a large city due to a hurricane. This closure was expected to cause major disruption to hundreds of thousands of commuters and thousands of businesses in the affected neighborhoods. This project utilizes this large information shock to disentangle the spatial equilibrium of urban networks into their component parts. In order to do this, the project will construct a novel dataset of residential history, detailed housing characteristics and rental price history. The project will explore fundamental questions about the nature of cities and neighborhoods and how the individual choices of consumers when choosing housing endogenously change the urban landscape, including how much, and in what ways, policy makers should fund transportation.