Decisions Have An Opportunity Cost That Require Tradeoffs

Street Smarts

Apr 6, 2012 • 227 Views

Through 2 stories, I learned how the design of a road can convey information about the people who live nearby.

Here are the stories…

Baltimore:

  • Greenmount Avenue in East Baltimore separates Waverly whose median income is $40,000 from Guilford, a much more affluent community. On the Waverly side, a right-angled grid of numbered streets continues and it is easy to make a turn to enter the community. Inside, you can park along the street. Meanwhile, accessing Guilford is much more challenging. Walking along more than a mile of Greenmount, you would find only 2 crosswalks. Driving, it is almost impossible to turn into the community from Greenmount because most of the streets are one-way, in the wrong direction. And once you did discover an entry point, you would soon be on narrow, winding roads that snaked unpredictably. To park, a permit is required.


Haiti:

  • With fewer mosquitos and cooler breezes, up the hill from Port-au-Prince is where affluent Haitians live. Their roads, though, are terrible. Not really roads, they are just mud and gravel and ruts and rocks that only a 4-wheel drive can navigate. Economists Daron Acemoglu (M.I.T.) and James Robinson (Harvard) explain that residents do not want good roads. They know that they could pressure government to build a road or pay for one themselves. However, their government is unable to guarantee law and order. Bad roads obscure their affluence and make a criminal’s fast get-away somewhat daunting.

 

You can see the connection. In Baltimore and Haiti, by shaping access, roads reflect income and status.

Our bottom line: Inequality has been in the news. A recent report from the Organization for Economic Cooperation and Development (OECD) tells us that the gap between the rich and poor has widened. Even in Germany, Sweden and Denmark, traditionally egalitarian, the income gap has moved from 5 to 1 during the 1980s to 6 to 1 now. For Italy, Japan, Korea and the UK, the multiple is 10 to 1 while for the US, Israel and Turkey, it is 14 to 1. The biggest spread? Chile and Mexico at 25 to 1.

My Sources: The story about Haiti is from a blog by the authors of Why Nations Fail. You can listen to the Baltimore road story in this 99 % Invisible podcast and the Guilford real estate description is here. This is the OECD report on inequality.

« »