The Bicycle Dividend

As New York City began rolling out extensive bike lanesthis spring, John Cassidy of The New Yorker raised staunch opposition, suggesting that the point has been reached where the additional costs of bike lanes to motorists and pedestrians are greater than the benefits they provide to cyclists. The Economist promptly published an article addressing the economic fallacies of Cassidy’s crusade, delineating the dramatic externalities of urban auto use, including respiratory damage from auto-generated ozone, climate changing carbon dioxide, road breakdown, and congestion, not to mention accident fatalities and obesity. As fuel taxes are too low to cover road maintenance, let alone the rest of these externalities, none of which bicycles exhibit, New York would be better off encouraging fewer cars and more bicycles, The Economist argues.

Nancy Folbre, of UMASS Amherst, takes her economic analysis a step further, positing a concept of “The Bicycle Dividend.” She turns the traditional economic concept of demand stimulating supply on its head, showing that increased supply of bike lanes encourages more cyclists, which makes cycling safer, which in turn attracts more cyclists, which begins to shift cultural perspectives on cycling, which in turn attracts more cyclists, which encourages businesses to offer showers and other resources for their bike- commuting employees, which in turn attracts more cyclists, etc. This virtuous cycle, while taking time to evolve, can be spurred by increased supply of bike infrastructure. Finally, she quotes a study by her colleague showing that each dollar spent on bike paths creates more jobs than each dollar spent on roads, in addition to providing more public welfare.