Abstract
During the winter of 2015, large snowstorms in the northeast caused massive service delays on Boston’s subway, the T. The performance failure led to gubernatorial intervention that revealed that the subway’s parent organization, the MBTA, consistently skipped infrastructure maintenance and faced large organizational inefficiencies. The system’s infrastructure needs are in the context of bipartisan agreement that the nation’s infrastructure as a whole is deteriorating and needs large-scale capital upgrades. Despite near-universal agreement on the issue, remedies have not come as policymakers are largely unable to determine where funding will come from. As legislation is postponed and Bostonians continue to deal with service delays from inadequate infrastructure, they suffer economic losses. This paper quantifies these losses through a consumer logit model that calculates the difference in consumer surplus between the present MBTA reliability (88.47%) and a counterfactual reliability (95%). The estimation is the lower bound for true costs because it accounts only for the welfare of riders and not third parties (car drivers, employers, city planners, environmental effects, social equity effects). The results show that the short-term annual welfare difference is between $54 and $163 million.