Small things, big impact: The network-mediated spillover effect through a transport connectivity enhancement project

Abstract

This study examines a 4.3 km expansion of Singapore's metro transit system. Despite a short line, it better connected existing lines and improved the connectivity levels of numerous stations across the city, as evidenced by connectivity indices. The improvement allowed residents living near those stations to access other places more easily, leading to greater convenience and higher home value in those stations' neighborhoods. Using difference-in-differences to compare housing price and connectivity changes in all neighborhoods with or without a station, we find that a 1% improvement in connectivity can increase local housing prices by 0.37%. The identification is anchored to the broad impact of the network reconfiguration, which was caused by the new transport infrastructure, on the connectivity changes in distant areas. Several techniques and tests enhance robustness. These include an estimation of the treatment boundary that defines proximity to stations, propensity score matching or weighting to mitigate sample imbalance, event study for the parallel trend, parameter sensitivity tests, etc. The research highlights that a small transport project can generate broad impacts on the whole city.