I kinda hate that this topic almost always devolves into similar arguments about what exactly is induced demand. Despite that, these conversation threads did give me a new perspective on induced demand that I feel is worth sharing.
That new perspective - I would now say that induced demand relates the efficiency of how well a resource is used to the cost of using that resource. If cost of use is high, then the resource is used more efficiently, and the inverse is also true.
An example, if going to the grocery store takes a literal minute, then buying one item at a time per trip is very viable. OTOH, if that travel time takes one hour, then a person is likely going to avoid that trip, and when they do make it - they'll buy two weeks of groceries at a time and be very careful not to forget anything.
In the latter case, the number of items transported per unit distance increases, usage efficiency goes up. If the cost goes down, then the number of people for whom it is economical to use that resource inefficiently will increase. That's induced demand.
Induced demand gets thrown around a lot, without understanding why it is invoked.
Inducing demand can often be good. We build things so that we can use or sell them. A railroad should induce new trips just as a highway should.
The problem with highway expansion in 2024 in the US is that each new mile of highway gets ever increasingly more expensive and hard to build and produces diminishing returns, at high cost to the neighborhoods that will be bulldozed and divided. And these high costs are sucking the money away from not only the development of alternative modes which could be good backup options, but also the maintenance of the current network. It is not unheard of for a single highway interchange to now cost nearly $2B+: https://en.m.wikipedia.org/wiki/Zoo_Interchange
I would quibble here, it depends. Another example I am thinking of is toilet paper during the pandemic when it was in short supply. At that time, when we were counting squares of toilet paper and predicting when you were going to run out, people used their toilet paper very efficiently. When it is plentiful, suddenly you don't care about using every last bit as efficiently as possible.
In my previous example in the parent post, everyone is still making it to the grocery store and/or work, but it's a question of how efficient people are incentivized to be when making those trips.
When it comes to highways, I'm guessing that it's more the case that inefficient/unnecessary trips become more economical than typically enabling people to make a given trip at all. I know a lot of people are pretty lazy about planning their trips, I'm guessing there are a lot more of those people than those that cannot go to a city because it requires 45 minutes instead of 30. Just my guess there though, and certainly that is context dependent.
I like your points regarding efficiency of cost for expansion as well. Though, my point is more that induced demand is the minimum efficiency of a resource someone is willing to incur for it to be worth the cost of using that resource. That latter part, is a bit independent of the cost of building that resource in the first place, though that construction cost is still an important thing to consider.
It's just Jevon's paradox. High prices suppress demand because possible use cases are infeasible/unprofitable, but lower costs make them possible until you have total oversaturation (but e.g. subsidized US corn results in it used in all products!)
Indeed, not only is total demand a function of cost, but so is frequency of that demand. If my analogy were an actual hypothesis, it could be tested by checking that those who live closer to a grocery store will have on average a lower grocery bill (per visit) than those that live farther away (normalized by the number of people per household and household income), and the absolute total number of trips taken by those that live close by will be higher.
Which is to say, it's profitable to go to a grocery store for very few items if you live close by. Live farther away, and it's less profitable, perhaps to the point where it's not worth doing unless you buy a lot.
I agree that latent demand becomes a factor for sure as well.
It all depends on how you define "efficiency". For the grocery example, getting food items Just-in-Time would result in fresher food, less wastage and more flexibility.
I would define it as simply number of items per distance traveled. How much you get from a location X is a function of how often you are willing to travel to location X. As the cost of travel goes down, your willingness to increase frequency increases.
Food spoilage does come into play and creates a lower limit on the frequency. At some point you'll buy so much you can neither store it nor consume it before it spoils. At some other point on the other side of the spectrum - the cost to travel is not worth the convenience of buying exactly what you want each day. All in all, people would indeed prefer to go more frequently for less, but there are reasons to not do so.
Thus, high frequency does give flexibility, and that is really important. It's a big reason why people like to have their own car, and do things like buy one weeks of groceries and not a full months at a time. That same flexibility is why people rationally choose to make multiple trips when they could make fewer. I do find it quite interesting to think about the various 'sweet spots' in these equations, and the various constraining factors.
That new perspective - I would now say that induced demand relates the efficiency of how well a resource is used to the cost of using that resource. If cost of use is high, then the resource is used more efficiently, and the inverse is also true.
An example, if going to the grocery store takes a literal minute, then buying one item at a time per trip is very viable. OTOH, if that travel time takes one hour, then a person is likely going to avoid that trip, and when they do make it - they'll buy two weeks of groceries at a time and be very careful not to forget anything.
In the latter case, the number of items transported per unit distance increases, usage efficiency goes up. If the cost goes down, then the number of people for whom it is economical to use that resource inefficiently will increase. That's induced demand.