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Dubious HSR Studies

In modern, complex economies, calculating the cost/benefit of a high-speed rail project is virtually impossible. That is because  there are too many confounding variables. Pro or Con, one should be dubious of any economic study on HSR.

In the latter category, there is a new study from the UCLA Anderson School of Management (California High-Speed Rail and Economic Development: Lessons From Japan). The authors argue against high-speed rail investment as a generator of economic growth. Their methodology was as follows: look for correlations in the economic growth rates of Japanese prefectures depending on whether or not they had Shinkansen service. The authors found no measurable difference between prefectures with Shinkansen stations and those without.

This is not a really surprising result. Let us note that Japan has the world’s best passenger rail system, reaching all parts of the country. Areas lacking a Shinkansen station still have really, really good conventional rail service — so good that they might even be considered “high-speed” by US standards. And there is the “network” effect: conventional rail links serve as feeders to the Shinkansen station in the big city.

Even worse, the study extrapolates the Japanese experience to California’s high-speed rail project. If the Shinkansen made so little difference in Japan, the authors argue, then surely California would be the same, right? Well, that is a really apples-oranges comparison. California doesn’t already have an extensive and high-quality conventional rail network like Japan. Compared to California’s existing Amtrak service, HSR would be a gigantic improvement in mobility. Now, whether that big gain in mobility results in economic growth is anyone’s guess, but studying the Shinkansen probably doesn’t tell us a whole lot.

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