Join the Club: Club Goods, Residential Development, and Transportation

A good and sustainable city requires compatibility between the various functions and services that it provides its residents. This study examined the relations between the development of new residential neighborhoods and transportation infrastructure by applying Tiebout’s model of club goods. Thus, we introduced the spatial dimension into the theory of club goods by referring to neighborhoods as clubs and their residents as the club’s members, who make location decisions. Specifically, we explored how residents behave spatially in response to the problematic transportation infrastructure of the neighborhoods. That is, to consider the socioeconomic implications of inadequate transportation infrastructure, we used data from newly developed neighborhoods in Israel to examine the extent to which an increase in traffic congestion can reduce a neighborhood’s size. Our findings show a negative correlation between increases in travel time and the number of housing transactions undertaken in a given neighborhood, thus confirming Tiebout’s assumption that people vote with their feet: When traffic congestion increases, residents prefer to leave the neighborhood and move, in all likelihood, to a place with less congestion. The paper also discusses the results with respect to the social consequences of these trends and warns against the expected socioeconomic consequences, namely that those who can afford to do so will leave in favor of a club with better conditions. The key lessons derived from this study of the Israeli experience are considered relevant to many other countries experiencing similar situations.