Beware of the Naked Man Offering You His Shirt

The Iowa DOT is planning on building a roundabout in Muscatine to help the flow of traffic along Mississippi Drive. The DOT is footing the bill with state and federal grants. If the round about is free, why do taxpayers like Louise oppose it?

The answer is Louise knows more about her driving habits in Muscatine than the Iowa DOT. She seldom drives along Grandview so she won’t receive any benefit from it. But she will receive benefit from street repair. Louise knows that the roundabout would have some benefit, but the city would benefit more if they did not construct the roundabout.

If you ask a taxpaying citizen if they want a longer bike path, for example, they will say yes. If you ask them how much benefit they will receive from the construction of a new bike path, they will likely understate the benefit for fear of having their taxes raised. Take Louise. If her cost in increased taxes is $1 and she explains to the city council that she’ll receive $2 in benefits from walking along the river, watching the barges, and listening to the ducks, the city will build the bike path and increase her taxes $2. But if Louise says she will only get a little bit of benefit from the path, then maybe the city won’t build the path at all and she’ll see no increase in her taxes. So there’s an incentive to understate the amount of benefit she’ll received from the bike path. There has to be a way to find out exactly how much benefit users of the roundabout will receive.

May I suggest that the city install a counter to find out how much traffic flows along the proposed round about and compare the benefits of fixing the streets to the benefits of a roundabout. This is like getting a poker player to show you her hand so you know how to bet. After you have usage data, then you’ll have a basis for making a policy decision.

Louise also believes that she is paying for the roundabout despite the fact that the funding comes from grants and money previously budgeted in the form of spillover costs. When she drives down Cedar Street there are several manhole covers that she swerves to avoid. Likewise on Sycamore Street, there’s a patch of street that’s been torn up. When she drives to Head First to get her hair styled, her car bears the cost of detours and potholes in the streets. She worries about accidents while avoiding the potholes. Louise is likely to go the roundabout way to get downtown to avoid these streets.

The whole problem as I see it is that citizens know more about how they’ll use the round about than the city council or the DOT. Which ever has the greatest benefits should be the council’s recommendation. Harvey MacKay taught me to beware of the naked man offering you his shirt. Something that is given to you like the roundabout isn’t always free.