By Pedro Farias
Can public transportation help local businesses and save lives and costs? My thesis seeks to understand this dual question by considering a natural experiment in Boston. From March 2014 to March 2016, the MBTA expanded public transportation service on weekends from 12:30am to 2:30am for certain routes. With data on MBTA service, I can understand which stops benefited from increase public transportation supply and on what days. Pairing this with Massachusetts crash data, Twitter data, and Yelp data during this period provides a way of understanding whether public transportation did reduce crashes and help local businesses. This could help guide urban policy as cities continue to gain in importance in the economy and our lives.
My thesis provides two main contributions. The first is evidence from a differences-in-differences design that businesses may benefit from late night service, as the number of Yelp reviews for businesses near stops with late night service increased between 2.5% and 8% and the number of late night tweets in areas with the service increased 4%, with these estimates statistically significant at the 99% level. Yelp and Twitter data serve as proxies to estimate changes in foot traffic (and thereby revenues) for local businesses, and the analysis indicates that businesses close to late night service stops did see an uptick in customers.
The second contribution is that the service helps reduce the number of car crashes by 4% on average, though this estimate is not statistically significant. Areas with a high proportion of young individuals and minorities experienced a stronger treatment effect of around 12%, with statistical significance varying based on each of the three empirical strategies employed, which include differences-in-differences, propensity score matching, and geographic proximity analysis.
I also calculate that the cost-savings resulting from a reduction in crashes could offset the cost of the late night service if the treatment effect led to 17% fewer car crashes. Indeed, the heterogenous treatment effect does reach this level in certain areas of the city, indicating there could be routes whose costs are offset by the reduction in car crashes, notwithstanding the additional benefits to local businesses.
My thesis shows that there could be relevant benefits to increasing the supply of public transportation, yet economic literature has not yet fully explored these benefits and other impacts of public transportation. Much work can still be done studying public transportation and crime, traffic, and business. I therefore hope this work will serve as a foundation for future exploration on the impact of public transportation in the city economy.