MANAGEMENT OBJECTIVES AND THE CAUSES OF MASS TRANSIT DEFICITS

This paper uses time-series data from 1948 to 1997 for the Chicago Transit Authority (CTA) to answer two related questions that have interested urban mass transit economics for many decades. The first concerns the objectives of management, and the second is the relative importance of various endogenous and exogenous factors in the industry's financial decline. In current process, the CTA earned an $84 million operating surplus in 1948 and suffers a $458 million operating deficit today. Decomposing this financial decline into its constituent parts suggests that a $423 million loss was caused by exogenous demand factors that have worked against transit in cities, and a $484 million loss was due to increased unit costs. Partly counteracting these negative effects were decisions made by the CTA to reduce bus service and raise real fares leading to positive financial effects of $182 million and $192 million respectively. Most of the increases in unit costs occurred between 1965 and 1980 when subsidies were increasing rapidly, and organized labor shared in the cash infusion. The purpose of this paper is to answer two related questions that have interested urban mass transit economists for decades. The first concerns the objectives of management and the second is the relative importance of various endogenous and exogenous factors in the industry's financial decline.

• Corporate Authors:

  Transportation Research Forum

  One Farragut Square South, Suite 500
  Washington, DC  United States  20006-4003
• Authors:
  • Savage, Ian
• Conference:
  • Proceedings of the 42nd Annual Meeting of the Transportation Research Forum
  • Location: Annapolis, Maryland
  • Date: 2000-11-29 to 2000-12-1
• Publication Date: 2000

Language

• English

Media Info

• Features: Figures; References; Tables;
• Pagination: p. 573-598

Subject/Index Terms

• TRT Terms: Decision making; Economic analysis; Financial analysis; Management; Mass; Operators (Persons); Passenger transportation; Quality of service; Regression analysis; Urban transit
• Geographic Terms: Chicago Metropolitan Area
• Subject Areas: Administration and Management; Data and Information Technology; Economics; Finance; Operations and Traffic Management; Passenger Transportation; Public Transportation;

Filing Info

• Accession Number: 00804796
• Record Type: Publication
• Files: TRIS
• Created Date: Jan 11 2001 12:00AM