Like Felix Salmon, I was bothered by this Megan McArdle comment:
Thereâ€™s a real tendency to tell drivers that congestion pricing is great for them: less traffic! I can kind of buy that argument, and then I notice something: almost no one making it commutes by carâ€¦
All the people commuting by car seem to think they will hate it. And that makes me think that they probably will.
And the later comment:
I still think that congestion pricing is a good idea for a lot of reasons, but letâ€™s not kid ourselves that it makes everyone better off. It makes affluent people who can afford taxis and congestion fees better off, and poorer folks who can commute by bicycle.
But I was just as bothered by Felix’s response:
Congestion pricing will hurt people who commute by car. Thatâ€™s the whole point. If you currently commute by car, then youâ€™ll either end up spending more money, or else youâ€™ll use public transit. Neither is an obvious improvement. Some richer commuters will like their faster commute, but car commuters who arenâ€™t wealthy will absolutely be the biggest losers here. We tax what we donâ€™t want, and what we donâ€™t want is car commuters. Most advocates of congestion pricing are pretty clear on that point.
This is wrong. We tax what we don’t want, and what we don’t want is congestion. And since drivers are the individuals most directly and negatively impacted by congestion, drivers are most likely to benefit from congestion pricing.
With a congestion charge, if you continue to drive, then you’ll need to pay money you didn’t previously have to pay. As compensation, you receive useful time that you previously spent stuck in traffic. Now it is possible for there to be losers in this arrangement. Commuters who didn’t value their time as much as they valued a marginal dollar (and these will tend to be lower income individuals) will feel some loss from this shift. But it’s unlikely that there will be BIG losers; even the poorest automobile commuters out there (and you can’t be that poor and still be an automobile commuter) place a positive value on their time.
Meanwhile, there will be enormous utility gains elsewhere. Some subset of commuters would have preferred to use transit to driving, but found the bus system too slow and unreliable to be a reasonable option. Bus riders, current and potential, also benefit substantially from congestion pricing. Poor riders who never had the financial option to drive will experience huge gains from faster and more reliable bus transit. And just as the positive value of time ensures that there will be no big losers among drivers, it also means there will be some very big winners. This includes the rich, obviously, but also those with pressing needs. Any given day, there are many, many drivers who need to get somewhere in a hurry: for economic, or medical, or other reasons. These drivers would likely be willing to pay tens or hundreds or thousands of dollars to avoid congestion, but before congestion pricing they wouldn’t have that option. The consumer surplus generated for these drivers from an effective congestion price is simply massive.
So yes, drivers will benefit from congestion pricing. Meanwhile, it’s equally unclear whether cyclists and subway riders — the assumed chief beneficiaries and supporters of a pricing plan — would gain, in the short term anyway, from pricing. The charge would obviously generate revenues that could be used to fund transit and bicycle infrastructure, benefiting them down the road. And if some drivers turn to cycling, then cyclists would experience some safety benefit from the safety-in-numbers effect. On the other hand, traffic speeds would increase, which would make cycling more dangerous. And until new transit capacity could come online, packed subway cars would get even more crowded. Ultimately, pricing would be good for non-drivers, but the argument that pricing is green-transport enthusiasts’ scheme to soak drivers is full of holes.
Why then, as Megan says, are drivers so opposed? Well, I don’t know that they are, generally speaking. I can attest that I never want a congestion price more than when I’m stuck in traffic. But let’s assume, for the moment, that drivers don’t favor pricing. Does that mean it’s bad for them?
No. For one thing, as Tom Vanderbilt has ably documented, people are terrible judges of how traffic works and where it comes from. Ask a typical driver to explain a back-up and he’s likely to cite:
– Bottlenecks. But of course, the removal of a bottleneck would either lead to a delay at the next bottleneck or speed the flow of traffic, thereby encouraging others to begin driving, up to the point at which congestion again takes hold.
– Insufficient capacity. But of course, new capacity will simply attract new drivers who will use the underpriced resource up until the point at which congestion makes it unattractive to do so.
– Idiots. And he may have a point. But the issue continues to be the unpriced externality.
That negative externality isn’t an intuitive concept. Voters in recession may not favor stimulus — another counterintuitive concept — and earthlings might not like the idea of carbon pricing, but that doesn’t mean that those things are bad for those people.
Meanwhile, if 30% of drivers hate the idea of congestion pricing, 50% are indifferent, and 20% would benefit massively from it (see the above consumer surplus point), then drivers on net would likely benefit from the charge, but you still wouldn’t see a majority calling for one.
And then there’s also the point that drivers tend to underestimate the cost of daily congestion. They dislike the idea of a congestion charge, because they’re not doing a very good job of accounting for the impact of congestion on their budgets and happiness.
So I think it’s right to make the argument that congestion pricing is good for drivers. It is. And the fact that many drivers have a tough time imagining how that might be isn’t relevant.