Transport economics – for the benefit of society

What is right or wrong is ultimately a matter of values. But VTI’s transport economists can explain how society can make the best possible use of limited resources. Looking ahead, they would like to see more research on electrification, more evaluation studies, and perhaps even a little economic history.

So, what exactly is transport economics? At its core, it is a field of economics that studies how transport is planned, priced and provided. A central question is how resources can be used as efficiently as possible while taking into account transport policy objectives such as accessibility, the environment and safety.

Typical research questions include how much travellers and businesses value travel time, which infrastructure investments generate the greatest benefits to society, and how congestion in urban areas can be reduced. Other examples include how the transport sector can contribute to climate targets and how new technologies, such as electric cars and automated vehicles, affect demand and behaviour.

“A common misconception is that it is all about money, or perhaps even about maximising profits. But money is often simply a common measure that allows us to compare effects that would otherwise be very different. Fundamentally, it is about priorities and understanding the consequences of different measures,” says Elisabeth Lång, senior researcher.

“We can analyse the effects of different measures, how those effects are distributed across different groups in society, and how society’s resources can be used in the best possible way. However, it is not our role to decide what is fair, good or bad.”

VTI’s Transport Economics Unit comprises just over 20 people, including two professors and four doctoral students, based at the offices in Linköping, Stockholm, Lund and Gothenburg. One stated ambition is to develop the research environment in Lund, which currently consists of three researchers, into a group of at least five economists, both senior and junior.

When Research Director Jan-Erik Swärdh describes the unit’s work, he usually divides it into three broad areas.

Cost–benefit analysis: Methods for assessing and comparing the benefits and costs of different measures, such as investments in roads and railways or regulations that restrict traffic in a particular area. At VTI, the work mainly focuses on developing and refining methods for such analyses rather than carrying out the calculations themselves.

Pricing and policy instruments: Research on how taxes, subsidies and charges – such as congestion charges and carbon pricing – can influence behaviour and reduce problems related to congestion and emissions.

Organisational economics: Research on procurement, contract economics, incentives, financing, and the operation and maintenance of transport infrastructure.

A distinctive feature of the research is that it cuts across different modes of transport and often draws on large amounts of quantitative data. Two examples are Sweden’s vehicle and population registers, which are veritable gold mines for researchers.

The research is also applied and quite often controversial. Cost–benefit analyses, for example, assign monetary values to road safety, which can be perceived as ethically problematic. An investment may generate positive net benefits for society as a whole while still benefiting some groups more than others. Measures that reduce emissions may conflict with objectives relating to accessibility and regional equity.

Many studies also concern politically contested issues on which citizens and political parties may hold very different views.
“In those situations, it is important to remain as objective as possible,” says Elisabeth Lång.

“I don’t think it should be that controversial. Everyone should understand that not all objectives can be achieved at the same time. We never say that different measures are ‘right’ or ‘wrong’, but we can point out whether different proposals contribute to the objectives that society has set,” says Jan-Erik Swärdh. He adds that economics, much like education, is a subject on which most people have opinions.

But do decision-makers pay attention to what researchers find? The answer is both yes and no. Many transport policy proposals run counter to findings from economic research. The VTI researchers mention several current infrastructure investments that generate negative net benefits to society. One example is the planned railway between Gothenburg and Borås.

On the other hand, VTI’s research has also had a direct influence on several occasions. Examples include the approach taken to the Swedish Transport Administration’s track access charges and the design of various analytical tools and forecasting models used by the agency. A clearly worded statement on the former electric vehicle bonus probably also contributed to its eventual abolition.

“It was a bonus that went straight into the pockets of affluent residents of major cities,” says Jan-Erik Swärdh.

Looking ahead, both researchers see a need for more research on shipping and aviation and, more generally, for more projects that cut across different modes of transport. There is also a need for more evaluation studies. The decision to halve the price of monthly public transport passes is interesting and will undoubtedly generate research, but it would be even better if such studies could be planned before the decisions are made.

“It is difficult to get motorists to switch to public transport using carrots such as lower fares. It is more likely to be pedestrians and cyclists who are attracted to public transport, in which case the climate policy effect will be limited. Influencing motorists requires more of a stick – in plain terms, higher taxes and fuel prices,” says Jan-Erik Swärdh.

More research is also needed on electrification. So far, the focus has been almost entirely on emissions and climate, while aspects such as road safety and congestion remain considerably less explored.

What are your dream projects?

“I’m curious about whether economic history can be linked to transport economics. There are substantial differences in mobility between women and men that we cannot fully explain, but perhaps historical developments could help us get closer to an explanation,” says Elisabeth Lång.

Jan-Erik Swärdh:

“There are many possibilities, but one particularly interesting area is the link between economics, resilience and preparedness. One of the most difficult challenges is how to put a price on events that are highly unlikely to occur but would have enormous consequences if they did – such as natural disasters and war.”

Footnote: This article has been published (in Swedish) in VTI aktuellt 3-2026