Abstract:The demand for rail transit funds greatly exceeds available monies. Worse, there is widespread disagreement over the wisdom of building rail systems in American cities. The Urban Mass Transportation Administration's (UMTA's) transit analysis methods have relied on cost-effectiveness measures with little attention devoted to the analysis of economic efficiency. We survey the literature on transportation evaluation and propose a model method based on economic theory and on practice in other federal agencies. We review UMTA's past methods and recommend changes.