Congestion Toll Research
Have I linked to this paper before? I can’t remember. Here’s the bottom line:
[W]hile there are certainly potential issues with equity associated with road pricing, those issues can be addressed with intelligent mechanism design that provides the right incentives to travelers and uses the raised revenues in a way to achieve desired equitable ends. These include cutting other taxes and investing in infrastructure and services.
Here’s a line I thought was amusing:
Viegas (2001) posits that the reluctance of politicians to adopt road pricing despite receiving ideas along these lines suggest they are “seeing dimensions of the problem that the economists are not considering.”
Never! Also:
From an equity perspective, HOT lanes are the pricing strategy least likely to raise public concerns, especially if it involves conversion of underutilized HOV lanes or construction of new lanes without taking new right-of-way. While there is a slight bias in use towards wealthier individuals, all travelers benefit from the additional usable capacity, and the revenue can be recycled to benefit transit users in the corridor.
However these are not as effective as more extreme pricing that is more comprehensive at the urban or national level. More comprehensive pricing (at the metropolitan, and especially at the national level) is not optional in the same way as HOT lanes with parallel free lanes are. Thus it raises more equity issues as to avoid the toll, drivers must switch modes, destinations, or time of day. Revenue recycling offers a way of
ameliorating adverse equity impacts.
True enough, but there’s still the money issue. As in, if you build new capacity, it costs money. Money which could instead be used to offset any distributional issues, or otherwise facilitate the process of switching modes, destinations, etc. I guess it’s just hard to me to understand how offering the choice, “We could build new tolled lanes for $3 billion, OR we can toll existing lanes for $100 million, spend $2 billion on transit, and cut your taxes,” doesn’t lead to a happy bunch of constituents saying give us the latter. But there might be dimensions of the problem I’m not considering.
June 19th, 2009 at 11:00 am
I don’t think the politicians see a dimension that the economists aren’t considering. People want stuff for free. Economists know this already.
Your proposed framing of the question for the public presumes that there’s a level of government controlling all the levers you refer to (funding road construction, setting tax rates, and setting tolls) and can therefore ask the public the question and implement the answer. Tangles of authority between state, regional, and local tend to bedevil this kind of effort.
Perhaps Vermont could pull it off.
June 19th, 2009 at 1:38 pm
Combine the inability to actually offer a coherent toll/tax/transit policy noted above with the general cultural notion that money for building roads (like money for building military hardware) is not really money, and is available in infinite amounts, while money for other stuff (like transit) is something to fight bitterly to avoid spending. So building more lanes doesn’t seem costly because somehow roadbuilding costs don’t count, but congestion pricing sounds like a tax and transit sounds like a huge costly expense.
June 20th, 2009 at 9:00 am
What you’re missing is that the American people are basically insane. Most of us believe that someday we’ll be rich enough to drive a Cadillac, but still too poor to pay a toll.
And besides, the roads are free! It’s like the tooth fairy, who leaves you a dime, and you still get a new tooth!
I once had a senior editor of a Seattle paper e-mail me that “roads don’t wear out” at a time when a major bridge in the city had been bottlenecked for months by resurfacing work. Insanity- a powerful force, for good- or for evil!
June 20th, 2009 at 3:14 pm
Thank you for posting the link to this very interesting and useful paper!
But I am very puzzled by the statement you quote that for HOT lanes there is a slight bias in use towards wealthier individuals. What is the author’s basis for “slight”?
The “Review of Empirical Findings” section on HOT lanes is about peoples’ opinions about the fairness of HOT lanes, not about their actual distributional effects. The only mention of actual distributional effects is this, quoted approvingly from a San Diego study:
Equity
issues did not emerge despite the fact that FasTrak users came from the highest income
groups.
which might be paraphrased with only slight unfairness as “We don’t mind mistreating poor people if they don’t realize they’re being mistreated.
The author cites public opinion data from Sullivan’s very valuable 2000 study of SR-91 in California. He does not, however, describe Sullivan’s findings about usage of the tolled lanes, which I discussed here. My conclusion (Sullivan has a different take!) from the data was:
These survey results suggest that the “Lexus lanes” moniker is well deserved. Who uses pay lanes is mostly determined by income. For most of the people in the free lanes, consumer sovereignty is a fiction. They haven’t made a voluntary decision that their time isn’t worth the price of a quicker commute. They are sitting in traffic jams because the toll exceeds what they can afford to pay.
Finally, one very depressing observation from this literature review is the paucity of empirical data in comparison to the proliferation of theoretical and computer modeling studies. The equations are worth very little if you don’t know what parameters to put into them. Sullivan’s ten-year-old study stands alone as a source of data to answer many crucial questions. It’s fortunate he did such a good job (this sort of data collection and analysis is much harder to do well than one might think). But more data, even just a repeat of the Sullivan study (the tolls have tripled since the study - what did that change?), would be really valuable before more billions of dollars are spent on these projects.