"U.S. Infrastructure, Government Deficits, Social Discount Rate," July 2025.

Paper: pdf file Abstract
This paper examines the history of U.S. infrastructure and in the process reports an interesting fact about the U.S. economy. Infrastructure stock as a percent of GDP began a steady decline around 1970, and the government budget deficits became positive and large at roughly the same time. The infrastructure pattern in other countries does not mirror that in the United States, so the United States appears to be a special case. At least part of the fall in infrastructure as a percent of GDP is likely due to an increase in environmental concerns that began in the 1960's. However, to explain the large government deficits beginning in 1970 requires more. One possibility, discussed in Section 5, is a taste change corresponding to an increase in the average social discount rate around 1970, triggered by the events around that time.