An Exploratory Evaluation of State Road Provision to Commuters and Shippers using Data Envelopment Analysis and Tobit Regression

Abstract Due to mounting fiscal pressures over the last few years, the federal government as well as many state and municipal governments in the United States (U.S.) have had to re-examine their transportation policies and programs. Tax increases and/or spending cuts which aim to trim budget deficits are major preoccupations of most policy makers and legislative bodies nowadays. With regard to the task of building new or rehabilitating bridges, highways, and toll gates, cost-benefit analysis and economic impact studies are often undertaken by various government entities to rank and prioritize spending in the hopes of maximizing fiscal efficiency and road usage benefits. Since most highway construction and maintenance expenditures are absorbed by state governments, it is mostly up to state policy makers to decide transportation priorities. However, no research to date has been conducted to evaluate the comparative efficiency of state road provision to commuters and shippers. Such research would be useful to a state government’s budgetary allocation and spending plans. This paper is one of the first to assess and rank the comparative efficiency of all 50 states in the U.S. by using data envelopment analysis and then to explain variations in efficiency ratings by using Tobit regression analysis.