This paper seeks to provide a benefit-cost analysis of continuous loop busing service offered by The University of Toledo in Toledo, Ohio. The on-campus busing service is completely subsidized by the university through student fees and provided as a free service to students with less than one-quarter of students currently using the service. Using a contingent valuation survey, we estimate a lower bound mean willingness to pay (WTP) of about $6 per student user per semester. Multiplying by the student body population leads to a total WTP estimate of approximately $37,000 per semester. When compared solely to labor and fuel costs to operate the loop busing, costs outweighed benefits $41,000 to $37,000. This does not include maintenance costs on the buses, pollution from burning diesel fuel, or the opportunity cost incurred when students are riding instead of walking. There are no positive externalities from Toledo on-campus busing since it’s only a convenience service to shuttle students from parking and from building to building. Students use the service when it carries an artificially low cost of zero dollars, for which they could walk in approximately the same amount of time, with walking being an activity that would provide positive externalities to society through the known health benefits from exercise.
Russo, Anthony N. and Egan, Kevin J.
"Re-Evaluating Subsidies for Services That Carry no Positive Externalities: A Benefit-Cost Analysis of Convenience Loop Busing versus Walking,"
The Journal of Economics and Politics: Vol. 24:
1, Article 3.
Available at: https://collected.jcu.edu/jep/vol24/iss1/3