The Butterfly Effect of Transport Network Connectivity and Welfare Implication

A good transport network connects places better, but research traditionally contextualizes transportation as a line. Assessing transport connectivity's impact, we construct network indices derivable from Donaldson and Hornbeck's (2016) micro-foundations but propose better identification using a very short mass-rapid-transit line's opening in Singapore as a quasi-natural experiment. Difference-in-Differences identifies causal impact. The treatment boundary, treatment-control imbalance, common trend, reverse causality, parameter sensitivity, announcement effect, and falsification are addressed. Better connecting existing lines, the 4.3-km line servicing a small area triggers a “butterfly effect” island-wide. Overall, station-specific connectivity improves 3%. Housing price increases 1.14%. US$1.57-billion welfare benefit exceeds US$1.01-billion construction cost