Let’s Have a Daniel Hall Day

Posted by on . 5 comments.

In the comments of this post, Common Tragedian Daniel Hall says something very smart:

I think about this sometimes when I drive around, because buying a tank of gas sucks but then once I have the gas I tend to treat it like a sunk cost and don’t really think much at the margin about what my driving costs.

This is spot on. It also has important policy implications. Gasoline prices, and by extension gasoline taxes, function very weakly as a means to price driving marginally. That’s one reason why I think that congestion is primarily responsible for urban revitalization and increased mass transit ridership (as opposed to higher pump prices). It’s also why I believe that congestion pricing will be far more effective at reducing vehicle emissions than carbon pricing–the more so if the proceeds fund automobile alternatives.

Comments

  1. Alex B. says:
    April 2, 2008 at 1:30 pm

    It’s not just congestion. In my experience working with transportation, the single biggest factor to get people out of their cars and onto transit, especially in a city like DC, is the cost of parking. It’s not a sunk cost when you have to shell out $15 a day. At that rate, even the max Metro fare plus parking is about equal.

  2. Daniel Hall says:
    April 2, 2008 at 3:48 pm

    Best post title ever.

    And one additional comment.

  3. Dan Miller says:
    April 2, 2008 at 4:05 pm

    I notice a similar pattern w/ regards to my Metro usage–I never think about the amount of money on my smart-trip card until it gets to the low single digits.

  4. Daniel Hall says:
    April 2, 2008 at 4:24 pm

    I never think about the amount of money on my smart-trip card until it gets to the low single digits.

    Interesting. Maybe it is just me, but when I think about going somewhere (particularly on weekends) this is my natural inclination:

    Metro = $1.35 (or more)
    Car = free!

    And I am supposed to be an economist! (Or something like one, anyway…) Maybe this is slightly mitigated by cases where the gas tank is nearly empty and I think “Car = $40″ but this is not often.

    This is why I think it would be cool to have a meter in my car that continuously displayed in real-time how much I was spending on:
    Gas
    Tolls
    Insurance
    Accident risk

    And maybe it could even show the external costs. Here is how much you are costing society in:
    Air pollution
    Congestion
    Accident risk
    Climate change damage
    Oil dependency
    Noise

    I suspect I would drive even less if I could see all this in real time. Or at least I would feel guiltier.

    (Of course maybe Metro should show this too? Here is how much air quality is suffering in western PA because of the electricity being used to run this train…)

  5. Dan Miller says:
    April 2, 2008 at 5:36 pm

    I think the difference might be that I don’t own a car. Also, this is probably one aim of the smartrip concept, the same way that credit cards make it psychologically “easier” to spend money.