An article in Sunday’s Washington Post takes a look at mooted plans to expand the D.C. Streetcar’s route network. For the fortunately uninitiated, the D.C. Streetcar is a 2.2 mile form of “transportation” that 1) is slower than walking 2) cost upwards of $200 million to construct and was years late on delivery 3) terminates in the middle of a bridge that is slated to be demolished 4) causes frequent traffic problems on the thoroughfare it crawls along, and 5) is so poorly designed and managed that even those of the “new urbanist” school can’t help but heap scorn on it.
The article is alarming for a number of reasons. For one, it reveals that the D.C. Streetcar has no plans to ever actually charge fares; this despite the fact that, as the Post reports, “the District is spending more for each passenger it carries than do many other streetcar projects. It incurs $9 in operating expenses per rider, compared with $2 in Kansas City, Mo., $3 in Portland, Ore., $4 in Tucson and $8 in Atlanta.” (Taxpayers, naturally, pick up the tab.)
But the system won’t charge riders, the local District of Transportation honcho Leif Dormsjo says. Why? Because, the Post recounts, “[Dormsjo] cited the case of Atlanta, where service was free last year. Ridership dropped by half . . . after fares were imposed early this year.” Well, sure: And if Cartier bracelets and Mercedes Maybachs were free, more of them would fly off the shelves. That’s hardly an argument against charging a fare. Moreover, if the service is so shoddy that people aren’t even willing to pony up a normal transit fare to ride the streetcar, perhaps that says something about the “quality” of service it provides. People have no problem forking over $1.75 for an effective bus service that gets them from point A to point B, after all.
Then things get worse. Under a section headlined “Streetcar’s sunk costs,” the Post reports that “District officials say that since the city has already sunk significant sums into the effort — more than $200 million thus far, with millions more to come — it makes sense to expand the system into a true commuter resource rather than simply maintain it as a limited neighborhood attraction. ”
That’s right. “District officials” are evidently unaware of a basic tenet of Econ 101—one so well-known there’s a principle named after it: The Sunk Cost Fallacy. The basic idea is the $200 million is already gone—it can’t be recovered. Therefore, whatever the District spent on its overpriced bauble is completely irrelevant to future decisions. All that matters now is future return on investment.
Translated into more basic English, what District officials are saying is, “Well, we’ve already dug ourselves deep into a hole. Might as well keep digging!”
