- 1 What is Productivity?
- 2 Macroscopic Productivity
- 3 Microscopic Productivity
- 3.1 Beyond Benefit/Cost
- 3.2 Gauges
- 3.3 Definition

- 1 What is Productivity?
- 2 Macroscopic Productivity
- 3 Microscopic Productivity
- 3.1 Beyond Benefit/Cost
- 3.2 Gauges
- 3.3 Definition
- 3.4 Example Measures
- 3.5 Defining Inputs and Outputs
- 3.6 Outputs
- 3.7 Behavioral Shifts
- 3.8 Transit
- 3.9 Highway
- 3.10 Partial Productivity
- 3.11 Partial Factor Productivity
- 3.12 Total Factor Productivity
- 4 References
What is Productivity?
The question of what is productivity in transportation has several interpretations. One line of research, beginning with research by Aschauer (1988)  and continuing through Boarnet (1998)  and Nadiri (1996)  examines how transportation investment affects the economy at large. These papers tend to treat transportation (or highways) as a black box, and make no distinctions between different kinds of transportation investment.
The input is state or national investment in transportation, and output is gross domestic product. While this research, which we refer to as macroscopic productivity provides useful rhetorical tools (transportation investments provides an X% return, compared with Y% for other investments) important for large budget debates, it provides no assistance in actually making management decisions, which requires an understanding of microscopic productivity.
- - Gross Domestic Product
- - Kapital
- - Labor
- - Transportation Investment
Nadiri's research claims that "the average cost elasticity with respect to total highway capital for the U.S. economy during the period 1950- to 1991 is about -0.08. " That is, increasing highway investment by 1% will reduce costs by -0.08%. The average net rate of return from highway capital fell from 54% in the 1960 to 27% in the 1970s to 16% in the 1980s, the last number is close to the private rate of return, indicating a near optimal level of highway investment. Does this indicate declining productivity or an infrastructure shortfall? Nadiri suggests declining productivity of new investment. Aschauer argues that we are dramatically underinvested.
- Which one is right?
- What do what we know about S-Curves have to say about this?
(based on Levinson, D. (2003a) Perspectives on Efficiency in Transportation. International Journal of Transport Management. 1 pp.145-155)
Firms try to maximize profit, society attempts to maximize overall welfare. In determining whether to build a project, select a policy, implement a system, or provide a service, it is possible to estimate the net present value of the future stream of profit or welfare with a cost/benefit analysis. However, those estimates depend on assumptions about demand and supply that may or may not pan out. For instance, the number of customers (passengers or trips, for example) depends on the money and time costs of a service, user preferences, competition or alternatives available, the availability and quality of complementary services, and other quality attributes. Money and time costs themselves depend in part on demand. User preferences and attitudes can be shaped for the better or worse depending on the service quality and number of alternatives. Competitors will emerge to provide services that replace previous needs with new ones, depending on the market strength of existing services.
Imagine a world where the only instrument your doctor had was a thermometer. He could diagnose fever, but not much else. Would you stay with him or change doctors? This is analogous to having only one Measure of Effectiveness (Consumers surplus, Benefit/Cost ratio, Volume/Capacity ratio, etc.) to understand a complex system like transportation.
So while a benefit/cost analysis may be necessary to make good decisions, it may not be sufficient to manage a complex system such as a transportation network. Thus there is a desire to monitor the transportation network on multiple dimensions, to understand how well it is performing (and how thus accurate were previous projections), and to steer future decisions. These measures can be made at the level of a road segment or a particular transit route, or they can be appraised at the level of the local highway or transit network or technology deployed systemwide, or they can even be assessed statewide or nationally.
These metrics might assess how efficiently labor or capital is employed and change in the system (to gauge where future labor or capital will be employed). They might consider market share against competitors, the state of complementary services (for instance, access to transit or parking in the case of a transit system) or the satisfaction of customers and vendors (to gauge future market share and the price and quality of inputs).
All of these gauges are important to monitor, but transportation in the public sector is only at the early stages of implementing such a complete management system. The most basic efficiency criteria are not routinely collected or analyzed, much 