The Butterfly Effect of Transport Network Connectivity and Welfare Implication

52 Pages Posted: 21 Dec 2017

See all articles by Kecen Jing

Kecen Jing

School of Economics, Nankai University

Wen-Chi Liao

NUS Business School, National University of Singapore

Date Written: December 17, 2017

Abstract

A good transport network connects places better, but research traditionally contextualizes transportation as a line. Assessing transport connectivity’s impact, we construct network indices derivable from Donaldson and Hornbeck’s (2016) micro-foundations but propose better identification using a very short mass-rapid-transit line’s opening in Singapore as a quasi-natural experiment. Difference-in-Differences identifies causal impact. The treatment boundary, treatment-control imbalance, common trend, reverse causality, parameter sensitivity, announcement effect, and falsification are addressed. Better connecting existing lines, the 4.3-km line servicing a small area triggers a “butterfly effect” island-wide. Overall, station-specific connectivity improves 3%. Housing price increases 1.14%. US$1.57-billion welfare benefit exceeds US$1.01-billion construction cost.

Keywords: transport connectivity, connectivity index, willingness to pay, cost-benefit analysis, welfare implication

JEL Classification: R4, R21, C21, D61

Suggested Citation

Jing, Kecen and Liao, Wen-Chi, The Butterfly Effect of Transport Network Connectivity and Welfare Implication (December 17, 2017). Available at SSRN: https://ssrn.com/abstract=3089360 or http://dx.doi.org/10.2139/ssrn.3089360

Kecen Jing (Contact Author)

School of Economics, Nankai University ( email )

Weijin Road 94
Tianjin, 300071
China

Wen-Chi Liao

NUS Business School, National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 119245
Singapore

HOME PAGE: http://bizfaculty.nus.edu.sg/faculty-details/?profId=663

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