If you want to predict how bad rush hour will be, there’s no need to look at traffic. Instead, just check out electricity use from the night before.
In a recent study, researchers found that lights from night owls indicated who would not be in rush hour early the next morning. Up late, they would be asleep rather than in the earliest morning traffic. On the other hand, those lights that go on at 5 a.m. or so are probably from the early birds Just awakening, they will soon be in their cars and on the roads.
Looking at road segments and electricity usage in Austin, Texas, analysts from Carnegie Mellon believe more research could show that they have uncovered a gridlock predictor. Rush hour peak congestion will occur later when the night owls dominate the electrical grid.
So, if we can predict gridlock, can we prevent it?
For an answer, we can look at rational expectations theory.
Our Bottom Line: Rational Expectations
Economics Nobel Laureate Thomas Sargent has been called a rational expectations pioneer. Explaining how expectations shape outcomes, rational expectations has provided insight about macroeconomic phenomena that range from inflation to bubbles. The theory suggests that people don’t just respond to what government decides. Instead, by acting strategically, they affect what will happen.
The theory of rational expectations can show why it’s tough to prevent inflation, bank runs (if there is no deposit insurance), and gridlock:
- When workers expect high inflation, they negotiate a raise that exceeds it…thereby creating the inflation they feared. Here, we have rational expectations at work. What we rationally expected determined the result.
- When depositors expect a bank will fail, they rush to withdraw their money. Such a rush creates the run that they had feared.
- I expect the Lincoln Tunnel to be traffic-free by 10 am. So I leave at 9 to be at the tunnel at 10. If everyone else has my expectation, then traffic remains heavy at 10. This is rational expectations. What we expect affects the outcome.
So where are we? Rational expectations can provide some traffic congestion insight. If analysts can use electrical usage data to predict gridlock, then their information will shape the outcome.
But if everyone has the information, there still might be congestion.
My sources and more: Thanks to City Lab for a daily email in which I learned about the Carnegie Mellon rush hour study. Meanwhile you can read more on rational expectations in my text, at econlib, and in this Thomas Sargent interview.