Andrés Moya

The Economics of Transmilenio, a Mass Transit System for Bogotá

By the end of the 1990s, inefficiency, excess supply and low service quality characterized the mass transit system of Bogota. The average travel time to work was one hour and ten minutes, obsolete buses provided public transport, traffic generated 70 percent of air pollution and there were frequent traffic accidents. To address all of these issues, the municipal and national governments designed and put in place a new mass transit system named TransMilenio (TM), which came into operation in January 2001. The purpose of this paper is to analyze Bogota´s mass transit system before and after TM, study the political economy of its adoption process and conduct a cost-benefit analysis (CBA) of the first phase of the system. The new transit system is a hybrid model that combines public planning of the network structure, route tendering conditions, regulation and supervision, as well as private operation of the separated functions of revenue collection and transport service. The adoption of this new model needed to resolve delicate political economy issues that characterized private transport systems in many developing countries. The new organization had a sizeable impact on TM users´ by improving traveling conditions significantly. In addition, congestion, pollution and traffic accidents plummeted in TM corridors. However, the type of transition adopted for the remaining transport corridors not covered by TM caused unforeseen negative spillovers, as a consequence of slow scrapping rates and bus and routes relocation. Consequently, although the CBA for the first phase of the corridors covered by TM is positive, once these additional measures are taken into consideration, the net effect is negative due primarily to increases in travel time for passengers using the traditional transport system. In order to minimize the negative spillovers during the full implementation of TM, expected to last until 2015, integration of the traditional and new systems should be carried on, and strict regulation of the traditional public transport system should be crafted.

The Impact of Intra-State Conflict on Economic Welfare and Consumption Smoothing: Empirical Evidence for the Displaced Population in Colombia

Intra-state conflicts and forced displacement impose a heavy burden upon the civil population, and produce severe welfare losses. Using a household level data administered to 2.322 Colombian displaced households, we estimate welfare losses for displaced households, as well as the determinants of labor income and aggregate consumption in reception sites. We also asses whether households are able to smooth consumption, and analyze the strategies they are compelled to adopt. Our results indicate that forced displacement entails a significant asset loss, limits the ability of household to generate income, disrupts risk-sharing mechanisms, and obliges households to rely on costly strategies in order to smooth consumption. Thus, the short and long-term consequences of forced displacement are large, and the need to design and implement specific policies for victims of internal conflict is evident. These policies, in particular, should provide mechanisms to prevent substantial welfare losses and to create conditions for sustainable income generation processes.

Parenting, Scarcity and Violence: Theory and Evidence for Colombia

During early childhood, children develop cognitive and socioemotional skills that predict success in multiple socioeconomic dimensions. A large part of the development of these skills depends on the child’s context during the first years of life and, in particular, on the quality of parental care. Grounded on recent literature in psychology and behavioral economics, we discuss a theoretical framework for understanding why some children receive adequate care, while others do not. Within this framework, we identify a determinant of the quality of parenting that has not yet been explored in-depth: the availability of parents’ mental resources, which are depleted by the subjective feeling of scarcity and the stress generated by adversities. Using cross-sectional data from a household survey in Colombia and administrative data on crime and violence, we find that a greater subjective feeling of scarcity (?=0.45, IC95%: [0.082, 0.979]) and greater exposure to violence (? =0.09, IC90%:[0.004, 0.182]) are associated with a lower likelihood that parents engage in stimulating activities with their children. At the same time, the results show that receiving information on childrearing is correlated with better parental practices (? =-0.48, IC95%:[-0.822, -0.136]).

Violence, Psychological Disorders, and Induced Changes in Risk Attitudes in Colombia

Shocks and traumatic experiences can alter individual behavior and deplete the ability to make economic decisions. Using data from individuals residing in two war-torn regions in Colombia, I analyze how direct exposure to violence induces changes in risk attitudes, and find that more severe and recent episodes of violence bring about higher levels of risk aversion in the gains and ambiguity domains. Consistent with evidence from psychology studies, the effect is driven by the incidence of anxiety disorders. Violence can thus thwart the economic recovery of victims and have transcending impacts on poverty dynamics through a behavioral channel.