How Does Congestion Pricing Work?

Can I just say that this is an extremely bizarre Journal piece?

By requiring car drivers to pay a fee to drive in a city at peak hours, congestion pricing reduces traffic and raises money that can be used to support public transit—both worthy goals.

Yet congestion pricing has dubious environmental value. Traffic jams, if they’re managed well, can actually be good for the environment. They maintain a level of frustration that turns drivers into subway riders or pedestrians.

This is David Owen writing that congestion pricing is a bad idea, because congestion encourages drivers to switch to transit or otherwise get off the roads. But this misses the point that congestion pricing works by…encouraging drivers to switch to transit or otherwise get off the roads. And as a bonus, it creates revenue which can be used to build more transit alternatives for frustrated drivers.

Owen seems to be arguing that if the primary effect of congestion pricing may be to spread driving out over a longer period of time rather rather than to encourage a shift away from driving. But of course, the primary effect of traffic might be to spread driving out over a longer period of time rather than to encourage a shift away from driving, particularly in places that don’t have good transit systems (which makes the revenue question all the more salient).

Aside from that, the messaging here is just atrocious. Owen thinks it’s a bad idea to support measures that increase costs for drivers, specifically because those increased costs might lead to more pleasant driving conditions. And he wants transit supporters to embrace traffic as a good thing, because it leads people to switch to transit. This is completely backward.

If we want drivers to accept new fees (and we need them to, if we want to be able to support an appreciable amount of new infrastructure investment) we have to convince them that it is in their interest to pay more. Meanwhile, arguing that traffic is good is the kind of thing that gets urbanists tarred as detached from the realities of real Americans. I’m just imagining someone in Raleigh reading this, imagining that the government will go out and build a streetcar system, then do everything it can to make traffic worse in the area so that people are desperate to ride the thing.

A final point — greenness aside, it’s worth pursuing policy goals that improve economic efficiency. We want our cities to work better. Congestion isn’t good for workers or for metropolitan economies (and it might easily contribute to decisions to relocate away from a big city, generating a bad economic outcome and potentially increasing carbon footprints even more (depending on where they move). Solving problem congestion is a worth goal in its own right. Happily we can do that while, and by, making the city more convenient for everyone — drivers, walkers, and transit riders alike.


  1. Doug says:

    I remember the guy who taught the honors class in Econ saying “we don’t recycle because recycling kills trees and we like trees.” The world creates a lot of opportunities for irony and there’s no need to force it.

  2. monkeyrotica says:

    Hey, I know this guy! He sold me a rock that wards off tigers! And I have yet to be bitten by a tiger.

  3. Alex B. says:

    Let the bears pay the bear tax. I pay the Homer tax.

  4. Rob says:

    Ryan, I think it might be time to get out a pencil and some graph paper and start drawing marginal cost curves. If I’m thinking about this correctly, the marginal cost of using a highway is essentially flat (at zero) up to a point, at which time the curve turns up and grows exponentially. I think this will make it clearer to people like Owen that congestion reduction improves efficiency more than they might think.

  5. I think your blanket condemnation of “congestion” is dead-wrong and leads us to the very suburban, unrealistic, and unachievable goal of trying to get rid of congestion.

    MANAGING congestion is entirely different and reasonable goal but it is not a politically appealing phrase.

    Congestion is a sign of people competing to be in the same place at the same time. If I am a retailer that is exactly what I want so long as it is not TOO MUCH congestion.

    Nuance is important.

  6. Is it just me, or have there been a number of “it’s so crowded, nobody goes there anymore” arguments being made lately regarding urban transit?

  7. Ben Ross says:

    Wait a second.

    If, given a fixed number of roads, you compare a policy that eliminates congestion with one that doesn’t eliminate congestion, the policy the eliminates congestion necessarily removes more cars from the road than the other.

  8. Fred says:

    There is an incredible narcissism and arrogance among the “We know what’s best and will force it down your throats” crowd. Eventually, this leads to revolt.

  9. Wes says:

    Is this the first time you’ve read a WSJ editorial. They frequently argue that the correct course of action is to make people mad so those people become sympathetic to whatever the Journal is arguing for.

    I call it the Lucky Duckies editorial, after their most infamous editorial in the genre. That editorial stated that poor people are Lucky Duckies because they little in income taxes, and thus they don’t revolt against taxation. These poor people need to pay more taxes so that they hate government as much as rich people do.

  10. Dave says:

    Yes the WSJ piece is silly and foolish, but, as you hint at one point and ignore at another, there are a few ticklish problems that remain. Indeed, in American cities that lack decent mass transit (or even those with decent mass transit such as DC, but where they think it can run with something approximating full-cost pricing) the much ballyhooed shift-to-transit effect can’t really take place and the fee (or tax) becomes the principal issue. To say that we must ask new fees of drivers one way or another to pay for transit is to assume, incorrectly, that we have no choice between a progressive financing vehicle and a regressive one such as this. We always do have this choice, in fact, but we have simply turned our fascinated-with-sexy-market-based-schemes eyes from otherwise obvious choices, and fail to realize that Pigouvian subsidies can often work much better than Pigouvian taxes. The obvious choice is to invest in increasingly multi-modal systems and to pay for it with a more progressive income tax (at all levels–federal, state, and local).

  11. Jim says:

    The objective is to move as many people per unit time as possible on the road. There is an optimal occupancy, spacing and speed that does that. To allow more cars on the road than that is ‘congestion’. If on ramps and connectors start metering at that point, and stop down completely if necessary, drivers would seek alternate transportation and would see the efficacy of paying for it.

  12. BruceMcF says:

    Also note that even if exactly the same number of drivers were pushed into transit by the implicit cost of congestion compared to the explicit cost of congestion pricing – if the congestion pricing actually is funding transit, it is the more progressive, since even in the outer suburbs where public transport mode share is very low, it is focused at the bottom of the income ladder.

    And at the same time, those people stuck in traffic are still burning gas, especially in the “go” part of stop and go driving, so given current technology, we are environmentally better off even with the same reduction in motorists if the remaining motorists spend less time idling in traffic jams.