Roads to Prosperity or Bridges to Nowhere? The Impact of Public Infrastructure Investment
During business downturns, governments often use investments in infrastructure to stimulate the economy, and the 2008-2009 recession in the United States was no exception: The $840 billion stimulus package enacted by Congress contained $105 billion for infrastructure, including work on highways, bridges and railroads, as well as wireless networks, power transmission lines and water projects. Such programs aren’t without their critics, however — one politician’s job-creating project is another’s “pork,” after all.
A 2012 paper from the Federal Reserve Bank of San Francisco for the National Bureau of Economic Research, “Roads to Prosperity or Bridges to Nowhere? Theory and Evidence on the Impact of Public Infrastructure Investment” (PDF), uses data on state-level highway projects from 1993 to 2010 to better understand the impact of federal infrastructure grants.
The paper’s findings include:
- Federal funding for infrastructure projects had positive effects on local GDP both immediately and after six to eight years. Local economies immediately benefited at three times the amount of the funding (known as the multiplier effect) as the monies spent moved through communities. An even larger multiplier occurred six to eight years after the initial investment.
- The initial GDP boost occurs only for spending during recessions, not when the economy is expanding. However, the long-term effects occurred after spending during both recessions and expansions.
- While the effect was positive, it wasn’t permanent: 10 years after the initial investment, local economies tended to return to their previous level of activity.
- GDP increases happened because federal spending temporarily boosted private-sector productivity and local demand across the economy.
Overall, the authors conclude that federal grants had a strong effect on state infrastructure projects and, subsequently, local economic activity.
Tags: infrastructure, economy, mass transit
Read the issue-related Washington Post article titled "Infrastructure Projects Need Public Support, Transportation Experts Say."
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Read the full study titled "Roads to Prosperity or Bridges to Nowhere? Theory and Evidence on the Impact of Public Infrastructure Investment" (PDF).
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- Evaluate the study's limitations. (For example, are there weaknesses in the study's data or research design?)
- How could the findings be misreported or misinterpreted by a reporter? In other words, what are the difficulties in conveying the data accurately? Give an example of a faulty headline or story lead.
Newswriting and digital reporting assignments
- Write a lead, headline or nut graph based on the study.
- Spend 60 minutes exploring the issue by accessing sources of information other than the study. Write a lead (or headline or nut graph) based on the study but informed by the new information. Does the new information significantly change what one would write based on the study alone?
- Compose two Twitter messages of 140 characters or fewer accurately conveying the study’s findings to a general audience. Make sure to use appropriate hashtags.
- Choose several key quotations from the study and show how they would be set up and used in a brief blog post.
- Map out the structure for a 60-second video segment about the study. What combination of study findings and visual aids could be used?
- Find pictures and graphics that might run with a story about the study. If appropriate, also find two related videos to embed in an online posting. Be sure to evaluate the credibility and appropriateness of any materials you would aggregate and repurpose.
Class discussion questions
- What is the study’s most important finding?
- Would members of the public intuitively understand the study’s findings? If not, what would be the most effective way to relate them?
- What kinds of knowledgeable sources you would interview to report the study in context?
- How could the study be “localized” and shown to have community implications?
- How might the study be explained through the stories of representative individuals? What kinds of people might a reporter feature to make such a story about the study come alive?
- What sorts of stories might be generated out of secondary information or ideas discussed in the study?