by Dick Lemieux
May 3, 2016

Unable to make a convincing case for commuter rail based on transportation benefits, for more than a year, rail proponents have been wowing legislators with jaw dropping predictions of jobs and economic growth, as if it is possible to lose money on every passenger while creating jobs and economic profits out of the losses.

It’s a safe bet that few legislators have any clue where the predictions came from.

They are the product of a computer model called “IMPLAN” which economist Jon Sanders has called the “lobbyists’ model of choice for impressing politicians.”

“Whenever someone wants to make preposterous claims about the benefits of his pet project, he’ll inevitably turn to IMPLAN,” says Matt Rognlie, another economist.

Models like IMPLAN can be – and too often are – tweaked for ulterior motive. With IMPLAN, the tweak of choice is the multiplier. The higher the multiplier (garbage in) the more jobs and benefits can be claimed (garbage out).

The New Hampshire rail study is silent about multipliers. That hasn’t stopped the rail fans who comprise the New Hampshire Rail Transit Authority (and too many politicians, candidates and newspaper editors) from latching on to preposterous predictions as if they are indisputable.

The NHRTA is essentially a taxpayer-funded lobbyist for rail. As long as it exists, we will not see an end to such shenanigans.

Rather than double down on the bad rail investments of the past, the New Hampshire Senate should cut taxpayers’ losses on rail, then dissolve the NHRTA.

And another version…

The strange math of commuter rail
by Dick Lemieux

Unable to make a convincing case for commuter rail based on transportation benefits, rail proponents have been wowing legislators for more than a year with jaw-dropping predictions of jobs and economic growth.

It’s a safe bet that few of the legislators have any clue where the predictions came from, except that they originated from a consultant study. Taxpayers paid $3.8 million for the study, so the predictions must be good, right?

The more skeptical among us question the reasonableness of the predictions, which boil down to 3.8 rail and real estate construction jobs, 5.9 permanent jobs, 3.8 new residential units, and nearly 2,123 square feet and $796 thousand worth of new commercial development per daily round-trip passenger by 2030.

How does one individual, merely by changing his or her commuting mode from bus or car to rail, result in the creation of 5.9 jobs and the building of 3.8 houses? Possibly voodoo.

The economic predictions are the product of a computer model called IMPLAN. Economist and self-described “classical liberal” Jon Sanders has called IMPLAN the “lobbyists’ model of choice for impressing politicians.”

“Whenever someone wants to make preposterous claims about the benefits of his pet project, he’ll inevitably turn to IMPLAN,” says Matt Rognlie, economics doctoral candidate at MIT.

“IMPLAN is an economic hoax and a mathematical fraud. You can quote me on that,” says Robert Malt, of Malt & Company.

“IMPLAN is a widely accepted and utilized model,” says the New Hampshire rail study.

Politicians seldom read beyond executive summaries. They see jobs; they vote yes. They should be more skeptical. My hat’s off to those who are.

Models like IMPLAN can be – and too often are – tweaked for ulterior motives. With IMPLAN, the tweak of choice is the multiplier, which can be – and too often is – wildly exaggerated and unsupported. The higher the multiplier (garbage in) the more jobs and benefits can be claimed (garbage out).

Many an economic consultant has selected high multipliers solely to generate exaggerated results for their clients, making bad projects look good to the ignorant, gullible, uninformed and uncurious.

The most recent New Hampshire commuter rail study used IMPLAN but is silent about multipliers, leaving curious readers no way to validate the conclusions.

Maybe there’s nothing amiss. Maybe it really is possible to lose money on every rail passenger while creating jobs and economic profits out of the losses. But, if you use a model that has been broadly panned as being susceptible to manipulation, why would you not acknowledge that and defend your use of it? If you believe your assumptions are reasonable, why wouldn’t you document them?

Nevertheless, the rail fans who comprise the New Hampshire Rail Transit Authority – and too many politicians and newspaper editors – have latched on to these economic predictions with blind faith, as if they are indisputable and as if the consultant was too expensive to be fallible.

This is what happens when a legislature creates an “authority” and charges it with advocating an idea that has not yet been totally vetted. It creates a taxpayer-funded lobbyist that can, without checks and balances, lobby against the best interests of taxpayers.

The authority is more interested in advocacy for its special interests than it is in stewardship of public funds. It begins to think that (or at least claim that) government money comes from somewhere other than taxpayers.

As long as there exist special interests charged with forcing unaffordable 19th-century transportation into 21st-century New Hampshire, we will not see an end to such shenanigans.

Rather than double down on the bad rail investments of the past, the New Hampshire Senate should cut taxpayers’ losses on rail, then dissolve the NHRTA.