ARTICLE IN PRESS

Transport Policy 14 (2007) 269274

www.elsevier.com/locate/tranpol

The behavioral science of transportation

Daniel McFadden
University of California, Berkeley, USA
Available online 7 September 2007

One can think of transportation as a technological

behemoth bedeviled by human behavior. Transportation
research contributes technological and management innovations that drive this beast forward, and can also offer
insights into the limits that human actors and institutions
can impose on implementation of an efcient transportation system. Transportation is affected by human behavior
through its consumers (drivers, riders, vehicle buyers, and
shippers); through its managers and workers; and through
the policy-makers and voters who determine transportation infrastructure and policy. In this presentation, I will
concentrate on consumers, and add some comments on
their inuence on policy. However, human behavior
impinges on transportation systems at many points. When
I was 8 years old, a neighbor was promoted to conductor
on the Southern Railroad. I asked him if he would be
working on the Southern Crescent, the premier passenger
train on that railroad. Oh no, he said, if I did that,
I would have to deal with people. Railroad men would
rather work with freight. Today, it is important for
transportation workers, and transportation researchers, to
recognize that there is no escape from humans and the
impact of their behavior on transportation systems. One
has to work with people.
Transportation researchers have modeled consumer
behavior at three levels. First, physical analogies have
been used, such as explaining trip volumes by the gravity
model for attraction between bodies, or trafc with
hydrodynamic models of uid and turbulent ow. Second,
there is extensive use of the economic theory of rational
behavior, in which individuals make choices to maximize
their preferences. Finally, there is increasing use of models
of behavior that is not exactly individually rational,
drawing on ndings from sociology, anthropology, cognitive psychology, and brain science. A question for
Tel.: +1 510 643 8428; fax: +1 510 642 0638.

E-mail address: mcfadden@econ.berkeley.edu

0967-070X/$ - see front matter r 2007 Published by Elsevier Ltd.
doi:10.1016/j.tranpol.2007.07.001

transportation researchers is what level of modeling of

behavior is appropriate for their problems. One answer is
that it depends on the grain of the problem. Physical
analogies may be adequate for aggregate, long-term
forecasting, economic optimizing models may be most
satisfactory for dealing with issues such as congestion
charges and fuel efciency standards, and the insights of
cognitive psychology may be needed to understand driving
behavior. A second answer is that economic and behavioral
sciences are progressing rapidly, and what works best in
transportation research may change as time goes on.
I will start with three historical examples of the role of
economic models of behavior in transportation. They are
the linking of demand and utility by the French bridge
engineer, Dupuit (1844); the application by Ravenstein
(1885) and Zipf (1946) of Newtons law of gravitation to
explain peoples movements; and the development by
Domencich and McFadden (1976) of disaggregate travel
demand forecasting models based on random utility
maximization.
Dupuit is one of the founding fathers of both transportation science and economic theory. He recognized that a
product will be demanded up to the point where the dollar
value of the marginal utility of an additional unit
purchased falls to the opportunity cost of that dollar
amount. He recognized that as a consequence, the area
behind the demand curve, the area A+B in the diagram
below, measured the relative utility of two situations
expressed in dollars. This was consumer surplus, and when
combined with the producer surplus, the area CA in the
diagram, obtained from the net increase in revenues
generated by selling the product at alternative prices, his
analysis allowed a quantication of the benets and costs
of policy changes, such as setting bridge tolls and
determining whether investment in a new bridge was
desirable. For example, in the diagram, the net benet of
reducing tolls on an existing bridge equal the consumer
surplus, areas A+B, plus the net producer surplus, areas

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D. McFadden / Transport Policy 14 (2007) 269274

CA, giving a total net social surplus from the toll

reduction equal to the areas B+C. Marshall (1895), Hicks
(1939), and Frisch (1926) showed that this calculation is
exact if the marginal utility of money is constant and social
welfare is judged using a utilitarian calculus in which the
marginal value of a dollar is the same for everyone (Fig. 1).
The gravity model put forward by Zipf (1946) postulates
that the number of trips Tij kPiPj/Dijb between two zones
i and j with populations Pi and Pj and separated by a
distance Dij is proportional to the product of the
populations divided by some power of the distance. This
model was adopted widely for transportation planning in
the 1960s, and is still used for long-range travel forecasts.
It ts aggregate trip tables fairly well, and may give
reasonable forecasts of response to policies that affect
zones in a homogeneous way and can be quantied in the
generalized distance Dij, such as a change in the gasoline
tax. However, the model lacks sensitivity to policy changes
that have a heterogeneous impact within zones or interact
with sociodemographics, such as changes in bus routes that
affect people differently depending on their location
relative to bus stops and the circumstances of their travel
needs and car availability. Also, the model is not easy to
reconcile with individual transport choice data or decision
models.
My last historical example is the random utility model of
discrete choice, applied by Domencich and McFadden in
1972 to construct a model of urban trip generation,
destination, scheduling, and mode choice. The premise of
this model is that individuals obtain utility from activities
that require travel, and make travel choices to maximize
utility. Different people have different tastes, and this is
captured by making utility random. Observed discrete
choices are then used to estimate the distribution of utility
and its dependence on transportation variables. This
analysis was implemented with special assumptions on
utility structure that produce multinomial logit and nested
logit models for trip generation, timing, destination, and

mode. These particular models have been widely used in

transportation and many other applied elds, so that
transportation researchers encounter them regularly. However, applied researchers may be less aware that the logit
models used in everyday practice are quite special cases of a
general approach to modeling behavior that can be
articulated and adjusted to the grain of policy applications
ranging from very detailed analysis of household activities
to broad questions of transportation system investment
and operation.
In their early days, disaggregate behavioral travel
demand models were met with skepticism, and in the
Urban Travel Demand Forecasting Project that I organized at Berkeley in 1972, I set out to give the approach an
acid test. At that time, BART was under construction, and
scheduled to open in 1975. I collected data on a sample of
631 commuters in 1973, and based on detailed construction
of the attributes of alternative transportation choices,
estimated a multinomial logit model of mode choice. I then
used this model to predict mode choices in the sample in
1975 following the opening of BART. The columns of the
Table 1 below are the choices predicted for 1975, based on
1973 pre-BART behavior, and the rows are the observed
choices in 1975. The cell counts are sums of the predicted
probabilities for the alternative for those observed in a
certain outcome. Thus, 15.2 in the northeast corner is the
sum of the predicted probabilities of taking BART for
those actually observed to drive alone. The diagonals in the
Table 1 are the cases where the forecast was exactly right
53% successful predictions. The model predicted that 6.3%
of commute trips in 1975 would be on BART. This was
well below the ofcial prediction at the time, which was a
15% BART share, but it turned out to be a very good
prediction of the actual BART share of 6.2%. There was a
element of luck in this, as our forecast had a standard error
of 72 percentage points, and not all of our detailed
forecasts were as accurate, but the test illustrated the power
of making efcient use of individual choice data and
describing carefully the attributes of the choices that
individuals face. By the way, BART did not appreciate
our low estimate of ridership, and to this day has never
Table 1
Prediction success table, work trips (pre-BART model and post-BART
choices)
Post-BART actual
choices in 1975

Pre-BART predicted choices from 1973

Auto
alone

Fig. 1. . Dupuits analysis of bridge tolls.

Auto alone
Carpool
Bus
BART

255.1
74.7
12.8
9.8

Total
Predicted share
Actual share

352.5
55.8%
59.9%

Carpool

79.1
37.7
16.5
11.1
144.5
22.9%
21.7%

Bus

BART

28.5
15.7
42.9
6.9

15.2
8.9
4.7
11.2

94.0
14.9%
12.2%

40.0
6.3%
6.2%

Total

378
137
77
39
631
100%
100%

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D. McFadden / Transport Policy 14 (2007) 269274

adopted or acknowledged disaggregate travel demand

modeling as transportation policy tool.
One of the current lively topics in transportation policy
is the use of congestion pricing, particularly the use of toll
rings and high-occupancy toll (HOT) lanes, and the use of
taxes on gasoline or carbon to reduce oil dependence and
greenhouse gases. I will outline a simple economic analysis
of ring tolls that builds on the random utility model.
Consider a simple general equilibrium model of an urban
area with consumers indexed n 1, y, N who have riskneutral indirect utility functions of Gorman (1961) polar
form:
un V yn sn ; p; c; n  Ap1 fyn sn  Bn p
 min0; c n  m=lg,

where yn is income, sn is a net subsidy, p is a nitedimensional vector of prices of private market goods, Bn(p)
is a committed expenditure on private goods that is
heterogeneous across consumers, A(p) is a price index, c
is the generalized cost of travel across a ring and into a city
center, including out-of-pocket costs and tolls and the
value of time, en is a standard normal disturbance that
reects individual distaste for travel, and l and m are
positive parameters. This consumer will travel into the ring
if c+(enm)/l is negative, and an indicator for travel, given
by Roys identity, is
d n 1lc  m n o0 qV =qc=qV =qyn .
The share of the population that travels into the ring is
then given by a cumulative normal, or probit, evaluated
at an argument that is decreasing in the generalized travel
cost c:
S Problc  m n o0 Fm  lc.

(2)

To complete the model, assume that generalized cost

rises with the ring toll t, declines with infrastructure
investment k, and through the effects of congestion, rises
with the share S traveling into the ring. For simplicity,
assume generalized cost is linear in these factors:
c t a bS  gk
t a bFm  lc  gk,

where a, b, g are non-negative parameters. Balance in

equilibrium requires that the average net subsidy equal toll
collections less investment:
s Esn tS  k tFm  lc  k.

(4)

Use the property of the standard normal that

j0 (e) ej(e), and hence that
E min0; c n  m=l
Z

lc  m jd=l
omlc

m  lcFm  lc jm  lc=l.
A related result is
qm  lcFm  lc jm  lc=qc lFm  lc.

271

A consequence of the model of individual preferences is

an exact expression for utilitarian expected welfare per
capita, depending on net tax x and on generalized cost c:
w Ap1 fy s  B p
m  lcFm  lc jm  lc=lg,
Ap1 fy  B p  k tFm  lc
m  lcFm  lc jm  lc=lg,

where y* is per capita income, and B* EBn.

The optimal toll and optimal level of investment in
infrastructure are obtained by maximizing (5) in t and k,
taking into account from (3) of the impact t and k on c:
qc=qt 1 lbjm  lc1 and
qc=qk g1 lbjm  lc1 .
Then,
qw=qt Ap1 fFm  lc  ltjm  lc
 1 lbjm  lc1  Fm  lc
 1 lbjm  lc1 g,
Ap1 1 lbjm  lc1 ljm  lc
 fbFm  lc  tg.
The optimal toll satises t bF(mlc) bS. It is zero
when congestion externalities are zero (b 0), and in
general, it charges each traveler the incremental cost
imposed on others due to this travelers contribution to
congestion.
Similarly,
qw=qk Ap1 f1 gltjm  lc1 lbjm  lc1
gFm  lc1 lbjm  lc1 g,
Ap1 1 lbjm  lc1
 f1  lb  gtjm  lc gFm  lcg.
When the toll is set optimally to t bF(mlc), this
reduces to
qw=qk Ap1 1 lbjm  lc1
 1 lbjm  lcgFm  lc  1g.
Then, optimal infrastructure investment satises
gF(mlc) 1, so that the dollar value of the reduction in
generalized cost for travelers equals the unit cost of the
incremental investment. If the toll is above optimal,
equaling t bF(mlc)+D with D40, then
qw=qk Ap1 1 lbjm  lc1
1 lbjm  lcgFm  lc  1
lgDjm  lcg,
and investment higher than the jointly optimal level results.
The reverse is true when the toll is below the optimal level.
These are the textbook results that an optimal congestion
charge equals the added cost that a traveler imposes on
other travelers due to his contribution to congestion, and

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D. McFadden / Transport Policy 14 (2007) 269274

infrastructure investment should rise to the point that a

dollar of investment reduces aggregate generalized cost to
travelers by a dollar, with an additional adjustment if
congestion tolls are not set optimally and investment is also
used for second-best mitigation. For further review of this
theory, see Diamond and Mirrlees (1971), Atkinson and
Stern (1974), Small (1983), Dixit (1985), King (1986),
Mayeres and Proost (1997), McFadden (1999, 2004).
My reason for going through this simple toll ring model
is that it demonstrates how the economic tools of random
utility, and general equilibrium welfare and balance, can be
used to carry through a standard congesting pricing
exercise, and obtain the optimal toll in a model that can
be tted using data on individual trips. Here is a numerical
example based on stylized data in which generalized cost
absent a toll is $15 per day under uncongested conditions,
and $45 per day with maximum congestion. In the absence
of a toll, 30% of people travel into the ring, and their
elasticity of demand for trips with respect to generalized
cost is 0.2. The optimal ring toll, calculated by maximizing the previous formula for per capita welfare, is $8.42,
leading to a 6% reduction of trips into the ring. Of course,
this toy calculation does not account for heterogeneity in
tastes and circumstances. A realistic calculation for, say,
Manhattan, would require a lot more detail. Nevertheless,
the example illustrates several points. First, it implements
Dupuits (1844) program for benetcost analysis of
transportation policy, and corresponds precisely to the
case where exact, unambiguous measurement of consumer
welfare is possible. Second, it builds on individual random
utility foundations, and facilitates efcient tting from
individual travel data. Third, it is a template that can be
expanded to analyze a wide variety of transportation policy
alternatives.
Ring tolls and other congestion charges should be
ubiquitous. Economic efciency requires that resources
be priced at their marginal cost, including marginal
congestion cost. The cost burden of collecting tolls is a
problem historically, but current technology, using transponders, GPS, cell technology, and satellites, can meter
vehicle location on specic roadways and lanes at specic
times, and communicate and charge articulated tolls
inexpensively and practically. Tolls can be revenue-neutral,
or net revenues can underwrite worthwhile public transit
and infrastructure projects. Because congestion is a
frictional loss of economic efciency, pricing it correctly
frees resources that can in principle be reallocated so that
everyone gains, a win-win situation. Finally, where
congestion charges have been implemented, the Bergen,
London, and Stockholm ring tolls, and HOT lanes in
various locations, they seem to work well. Further,
gasoline and carbon taxes can work to lower vehicle use,
can be combined with redistribution to be equitable, and
are more efcient economically than CAFE standards.
Given that pricing transportation services makes so
much economic sense, why is consumer resistance to
pricing so strong? In the UK in 2007, a BBC poll found

that 74% of the adult population oppose road pricing.

An anti-pricing petition sponsored by Peter Roberts
was signed by 6% of all the drivers in the UK Why?
Three common arguments are that the toll revenues
will be used inefciently, that tolls are regressive and
inequitable, and that the individual consumer is more likely
to lose than to gain by obtaining transportation services
in a market. The rst of these, inefcient use of toll
revenues, is a real problem that can be addressed either by
making the toll system revenue-neutral, or by earmarking
the revenues for projects that voters want. Issues of
regressivity need to be addressed by adjusting other taxes
and subsidies to avoid shifting the standard of living
distribution. However, some equity realignments are
necessary because existing uncompensated congestion
costs are inequitable, and heavy contributors to congestion
need to see the stick in order to get the adjustments in
behavior needed. I will now turn my attention to the third
source of consumer resistance. I will expand on fear of
markets as an explanation for the difculty of getting
consumers to understand and accept market pricing of
transportation services. We are challenged by market
choices. In the words of a Dutch proverb, He who has
choice has trouble.
Psychologists use the term agoraphobia for a psychosis that means, literally, fear of the marketplace, and is
characterized by fear of leaving a safe place, fear of being
in situations from which escape might be difcult or
embarrassing; fear of losing control in a public place such
as a restaurant or shopping mall. Most consumers display
some degree of agoraphobia in their attitudes toward
markets and market solutions to problems of resource
allocation, distrusting markets and their own decisionmaking ability.
Markets present risks, of three types. Market risks are
shifts in product attributes, uncertainty about prices and
supply, and ambiguity surrounding products and information that the market provides. Personal risks are the
mistakes an individual can make in choices, due to memory
lapses, errors of perception and calculation, and mistaking
ones own tastes. Social risks are the stresses of interactions
between people under the contentious conditions of market
transactions, including the stress of information gathering
and search, bargaining, pressures from social norms,
accountability for choices, and possible social sanctions,
including the potential embarrassment of performing less
well than ones peers.
Markets punish consumer inconsistencies. However,
markets are inconsistent teachers, and provide no road
map to success. They thrive on consumer failures, and are
quick to exploit them. As a result, consumers learn to be
defensive, refusing trading opportunities that are of
uncertain merit or are ambiguous. The result is a
conservative bias toward the status quo: The devil you
know is better than the devil you dont. Critically, market
punishment of poor decision-making breeds paranoia and
agoraphobiaI perceive my losses as outweighing my

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D. McFadden / Transport Policy 14 (2007) 269274

gains, and blame this on everyone but myself: the greed of

corporations, conspiracy, fraud, corrupt politicians, inside
information. I vote against market solutions that require
me to make choices, even if rationally I concede that they
are actuarially fair on paper, and instead vote for the status
quo, or alternatives that restrict choice.
To understand how market and personal risks affect
consumers attitudes toward choice and toward markets,
turn to cognitive psychology and brain science. Consumers
show asymmetries, with losses from their reference points
looming larger than gains, and future, uncertain, or
ambiguous events heavily discounted relative to the
present. For example, a majority of drivers queued on a
congested highway have the perception that other lanes
move more quickly than their own. This is caused by loss
aversion, the fact that falling behind the truck one lane
over is more noticeable and more painful than the
satisfaction from gaining equivalent ground. This leads
drivers, and consumers more generally, to mistrust
proposed changes from their status quo, and to fear
markets that confront them with these choices.
Brain science establishes that these phenomena are
substantially a result of how our brains are wired, how
we parse and process information, and how we experience
pleasure and pain. We are products of an evolutionary
history that leads us to handle threats at a more primitive
level than we handle most rewards. Communication and
reconciliation between different brain levels is incomplete.
Trade arose early in our evolution, and perhaps because of
the trust and communication skills it requires, it may be
substantially responsible for making us what we are. One
result is that trade stimulates the brain at a surprisingly
primitive level, and involves a signicant emotional
component. A picturesque but true characterization is that
shopping and sex share the same neurotransmitters and
receptors. Trade is a contest, involving its own stresses,
pleasures, and pains. Trust is an essential element in
commercial transactions, and again there is a long
evolutionary history linking trade and trust. Ernst Fehr
and his colleagues in Zurich nd that giving subjects the
peptide oxytocin that is associated with maternal bonding
leads them to be more trusting in economic transactions.
Humans are on a hedonic treadmill, quickly habituating to
homeostasis and forming reference points, and experiencing particularly acute pain from losses relative to these
reference points.
Personal and social risks are additional reasons to
mistrust markets. Consumers may legitimately fear that
lapses in memory, reasoning, or understanding of the
choice process and their own goals will put them at a
disadvantage relative to skilled traders. Further, trade
involves dealing with adversaries, and for trading outcomes, facing comparisons with peers, accountability, and
approval. Herb Simon said that a wealth of information
creates a poverty of attention. Douglas and Wildavsky
point out that humans internalize social pressures and
delegate their decision-making processes.

273

People make interpersonal comparisons, judging the

desirability of options from the apparent satisfaction and
advice of others. While personal experience determines the
utility of familiar objects, our primary sources of information on novel objects comes from observations on others,
and their advice. The consequence is that discussions and
votes on transportation projects may be shaped by a great
deal of imitative behavior. Then, a small but loud core of
opponents of congestion pricing or other transportation
market solutions may have impacts well beyond their
numbers.
Afliation with social networks, limiting choice by
accountability to network norms, can be an efcient
decision-making strategy for individuals. An example is
the pellaton, a tightly packed groups of riders in bicycle
racing that creates an energy-saving, choice-limiting
environment. I consider the pellaton an instructive model
of consumer choice behavior more generally, with most
consumers associating voluntarily with groups that guide
and limit their choices, a device that conserves scarce
attention time and provides, through a sort of hive
intelligence, outcomes that are usually satisfactory and
certainly socially acceptable. There will be occasional
break-aways, with new pellatons forming, when some
participants see a clearly preferred alternative to the old
pellatons choices, but most of the time staying with the
pellaton is defensive and protective. I suggest as a research
problem that understanding the behavior of pellaton
members and the effectiveness of the pellaton as a
collective decision-making group would be useful for
understanding of how social welfare is inuenced by
voluntary afliations, and how consumers pack together
when they drive, ride transit, or vote on transportation
projects. Perhaps by understanding the formation and
stability of anti-tax, anti-road-pricing pellatons, one might
see how to encourage pellatons that support efcient
market solutions to congestion in transportation.
Summarizing, economic and behavioral science provides
insights and models that are useful at the many points of
human interaction in transportation systems. The behavioral science useful for transportation research depends on
the grain of transportation policies studied, and needs to be
updated regularly with the progress of economic and
behavioral science. Consumers are likely to resist market
solutions for transportation problems, and careful education and framing may be needed to overcome agoraphobia.
Finally, transportation research can benet from continuing close connections to economic and behavioral science,
and active pursuit of new ideas and ndings from the
behavioral sciences that can improve your ability to
understand and predict the effects of human behavior in
transportation systems.
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