Commute Distance and Prosperity

There is an interesting report on The Hindu Blogs about commute distance and prosperity. Referring to a World Bank report in 2005, the blog post talks about richer people commuting longer distances to work. Rukmini S, who has written the piece, also finds from the latest NSSO data that richer states in India have a higher proportion of people commuting more than 5 km to work.

I didn’t like the visualization (or the lack of it) in Rukmini’s article, and hence this post. I thought the point about long commutes to work and richer states would be better made in a scatter plot, and that is what I produce here:

commutegsdp

 

On the X axis is the proportion of the Urban population in each state that commutes over 5 km to work each way. The data is from the latest NSSO Survey (page 28-29). On the Y axis I have a measure of the level of economic activity in a state Рthe per capita Gross State Domestic Product. The advantage of this measure is that it takes out from the equation the size of the state itself, and instead focuses on the level of economic activity per person. The figures are from 2011-12 and the numbers are based on 2004-05 prices. The data is from the RBI website.

The correlation is clear – barring a few small states, the above plot clearly shoes that more the proportion of people that commute long distances to work, the greater the economic activity in that state. The question, however, is whether there is a causal effect and if so, in which direction – does people traveling longer distances cause greater economic activity or does greater economic activity lead to people commuting longer distances?

The world bank paper proposes that the more well to do commute longer distances only because the cost of local transport in Mumbai is high and the poor cannot afford that. This is a view that Rukmini endorses in her piece in the Hindu. The argument doesn’t particularly make sense, though. Do the world bank researchers intend to say that transport costs outstrip housing costs in prime areas in Mumbai? If so, it is extremely hard to believe.

At the state level, one possible reason why people in richer states travel more is because greater economic activity happens in bigger urban agglomerations. The economic activity of a town or village is a super-linear function of the number of people living there. And when you have larger urban agglomerations, people tend to live farther from their workplaces, and thus commute more.

Again – this is a chicken and egg problem – a level of economic activity in a town or village leads to increase in population, which results in greater commutes. Increase in population leads to even greater economic activity, and this sets off a virtuous cycle. The 20-fold increase in Bangalore’s population in the last 70 years can be attested to this cycle, and it is hard to put a direction of causation to it.

The above explanation, however, doesn’t explain the following graph. This graph is identical to the one above except that here we look at the proportion of rural residents who commute over 5 km to work. And this is again positively correlated with economic activity!

commutegsdprural

 

What can possibly explain this? One way to explain this is that when people stay close to a town or city with high economic activity, they might prefer to participate in that rather than working in the village itself, and thus they might be commuting longer distances. States with high economic activity are likely to have a larger number of villages close to urban/semi-urban centres of high economic activity, and thus people are likely to travel longer distances.

When more people are willing to travel longer distances for work, it leads to people coming together to work at a higher rate than it normally happens in a village, and this leads to higher economci activity! Again, it is hard to put a directionality to the causation!

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