Why ‘Economic Thinking’ is preventing us from tackling the real issues with transport

IN THIS ARTICLE I want to highlight the creeping dominance and normalisation of ‘economic thinking’ across the transport sector, as indeed in many parts of our professional and personal life. I fear it is leading us to be overly focussed on ‘economic’ priorities, marginalise other values or goals deemed subservient to ‘the economy’, and essentially lose touch with the fundamentals of what is essential to making life worth living.

In 2018 William Nordhaus received the Nobel prize in Economic Sciences for his work which undertook a cost benefit analysis of tackling climate change.

This essentially tells us that weighing up the cost of tackling climate change against the potential benefits means we should logically and rationally accept 3°C of global warming.

You’re probably aware of the catastrophic warnings from climate scientists if we go beyond 1.5°C. Because climate change impacts aren’t linear, the impact at 3°C of warming could be four times the impact of a 1.5°C change in global temperature. The likelihood of major heatwaves increases to 80%, the proportion of time in drought triples and river flooding doubles. Some scientists predict we would pass critical tipping points of no return, with some estimating a fifth of the world population, or 2 billion people will be climate refugees by 2100, with hundreds of millions dying due to climate related extreme weather.

But economics and its cost benefits analysis models, tell us that the human, non-human and planetary costs aren’t “worth” the investment. When I come back to this example I’m astounded that this finding was awarded the Nobel prize in 2018. It was applauded, put on a pedestal and the true “cost” and unequal impacts of climate impacts were glossed over. Valuing the return on investment above human and planetary life? This is economic thinking.

It is an idea I first came across through Jonathan Aldred, author of Licence to be Bad, How Economics Corrupted Us which dismantles many of the major economic theories taught in many UK undergraduate economics courses, and no doubt core components in post graduate transport teaching too. As a graduate of the neoliberal school of economics this book blew my mind.

Perhaps if you’re working with economists in your day job you might have picked up some of the jargon mentioned above. The clinical, scientific measurement and assessment of economic costs and benefits; the requirement for greater economic growth, productivity and efficiency; high rates of return (discounted to create a Net Present Value of course) and the vague demand to ‘improve living standards’. For the past almost hundred years economics has been cosplaying as a branch of science; the Chicago school of thought pushed for economics to become ‘value free’ and the narrative that we are all homo economicus, or rational economic man has created the idea that economics can be separate from moral, ethical or political considerations.

But this is a fallacy. Economics does impose values on society as anyone working in transport will know. Economic growth, productivity and efficiency imply that more and quicker is better. Efficiency trumps fairness and justice illustrated in the Nordhaus example.

Whilst working in the transport sector there was a lot of debate about taking buses and trains back into public control. Working with Local Transport Authorities across the North of England and DfT I saw the different approaches to local public transport all set within their own local circumstances. However one common theme was that services needed to be “financially viable” to run, or a special economic case be made for ‘socially necessary’ additions. This is a prime example of economic thinking. We’ve forgotten the fundamental basic purpose of public services. Isn’t the clue in the name? Public services should offer us, the public, a service or in this example a network that connects local areas; not be extinguished because it isn’t making a profit. Expand this out to all of our public services and you can see the painful effects of cuts to non-profit making services.

Of course matters of the economy are important. The economy is, in our current system, how we clothe, feed and house ourselves and our family. It is how we exchange our labour for goods and services, ensure we have public services and critical infrastructure. We are familiar with the ideas of markets, and supply and demand because humans have shared, bartered and exchanged for thousands of years. It forms the basis for most of our waking hours; schooling that paves the way to employment before we hope to reach retirement.

But in recent years ‘The Economy’ has morphed into an entity in its own right, with needs we must attend to and something we must make tough choices on behalf of. Its definition has broadened out to include money and finance, receiving endless airtime with constant reminders that we must increase economic growth, indeed our Chancellor told us recently; “Without economic growth, we cannot improve the lives of ordinary working people”. Really?

This narrative dominated and permeated my career as a public sector economist. If economic growth was the beating heart of policy making, productivity and efficiency was the blood pumping through its veins. Despite evidence to the contrary we would cling onto the belief that the economic uptick was just around the corner and with it, the answer to all of the policy issues we were trying desperately to solve.

Productivity and efficiency sounds good. Getting more output for a set amount of inputs. Great! But what if the ‘inefficiency’ is part of what makes a good or service of value to us? If I see a doctor I want their undivided attention for my 15 minute appointment, I don’t want a barber cutting two people’s hair simultaneously, I want my 60 minute massage to be the full 60 minutes. Whilst productivity gains in manufacturing can and have increased over time; these examples demonstrate the challenges of increasing productivity in labour intensive service and allow us to question the dogma of ever increasing productivity. Despite the push from politicians to shift towards a service based economy, they seem unaware of Baumol’s cost disease; the proven theory that the proportion of national income spent on labour intensive services will continually increase over time due to this contradiction of productivity vs quality when it comes to labour intensive services.

But even on the conventional measure, our current economic model fails miserably. Our current approach to transport is highly inefficient. Private car ownership is the epitome of inefficiency with most cars lying idle for the majority of the day, languishing on driveways or taking up valuable space on public roads with no value created. Car sharing or rental would be much more efficient, but it would cut into the profits of car manufacturers, whose sales ‘boost the economy’, and hurt shareholders so isn’t pursued as a viable option. Add in the congestion and pollution from private cars, which could easily be cut by a switch to public transport or active travel and it really highlights how selective we are in our understanding of efficiency.

If we base productivity on the value you can produce, then a builder that constructs a 1 bed flat in London that sells for £350,000 is more productive than a builder that constructs the same flat in Manchester which only sells for £150,000. Materially they have created the same thing; Clearly location is important and the access it offers to employment, transport and leisure etc but if we focus only on property prices as our measure of productivity, value and its contribution to GDP then we end up funnelling money endlessly into London because it has ‘higher productivity’. This challenge of measuring productivity was a recurring theme whilst working in transport and forced us to confront that “economically neutral” models were compounding rather than alleviating inequality.

Questions like the above got me a reputation for being challenging, but why don’t we welcome diversity and debate in our policy making? In our notionally democratic society we are theoretically permitted to have strong views on all sorts of things. Wars, personal and sexual identity, immigration, how to raise children, what is a nice neighbourhood, how to enjoy our free time and socialise. We form these strong views despite not being formally trained in law, international relations, health, law or pedagogy. However when it comes to economics we’ve been trained to be deferential, even subservient, to economists or regurgitate the standard script which was written by a handful of white, male experts who claim to know what’s best for us all. By conceding our power to the economic ‘experts’ we are working towards a future none of us had a say in shaping. This is what I mean by the power and curse of economic thinking.

Since moving away from neoliberal economics I’ve realised it’s a desert of ideas, completely unable to respond to the polycrises we face today. Politicians, economists and the media argue we need more of the same; more austerity, more privatisation, more economic growth. But wait? Haven’t we tried that already? Look at your local area, your community, the country; is it working? As Einstein actually said; “We cannot solve our problems with the same thinking we used when we created them,” and this is where I invite you to unlearn everything you thought you knew about economics.

“Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage... It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl.... Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play.... It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.”
Robert F Kennedy, speech 1968

Rather than chasing economic metrics which we can’t be sure will achieve the goals we are actually seeking (if we ever bother to explicitly name them) let’s have a much wider discussion, because economic growth doesn’t actually mean anything. Robert F Kennedy nailed it sixty years ago in 1968, as you can see in the quote at the top of the page.

Yes we could augment the measures; look at GDP per capita, disaggregate by region, income deciles, Index of Multiple deprivation, ‘high skill’ jobs; but the fundamental flaw of our political and economic system is that central Government has severely limited its ability to significantly shift many of these metrics. We create industrial strategies and transport plans but heavily rely on the private sector to deliver and invest in their creation. With the privatisation of many public services and the overreliance on foreign investment we have to face to reality that in its current form both central and local government have limited levers to have a real impact on many of the things we care about. We have become victims of our own economic thinking; leaving critical decisions at the mercy of the market.

Myself and many others are now arguing that ‘the economy’, or more accurately the nature of our material world, is much too important to be left to the economists, with their hidden values glossed over with technical jargon and pretence of scientific approach.

I want to finish with a rallying cry. This article may have seemed somewhat downbeat, but that isn’t my intention at all. My intention is to provoke, enrage and encourage. If you’re having thoughts outside of standard economics, or transport policy making, you aren’t alone! There are countless organisations working for systemic change and there are many diverse and interesting ways towards a more hopeful and regenerative future.

I invite you to reflect on what your purpose is; whether you are working in transport planning, economics or policy making, what is the core object of your work? Is there a way to shift it towards the most ambitious and important of all purposes; an economy that is in service of people and a flourishing planet?

Emma Woods describes herself as a neurodivergent mother of two, and a recovering mainstream economist. She joined the Government Economic Service after studying economics before joining Transport for the North in 2017, working on the Northern Powerhouse Independent Review, then acting head of Economics and Research. In 2023 she set up Flourish Economics, researching alternative economic models from around the world and offering regenerative economics courses and new perspectives of value and sharing in communities.

This article was first published in LTT magazine, LTT911, 19 March 2025.