Response on Traffic Congestion-BECKER

I will respond briefly to this rich set of comments. Several of you raised the issue about whether potential drivers would have the information if a more complicated congestion pricing system were implemented. But clearly, information is abundant that congestion is greater during peak hours, on Fridays, during snowstorms, etc. so higher prices at these times would be an enormous improvement. Note that in many cities, parking on certain streets is restricted during snowstorms, and that usually works since parkers anticipate when the no-parking rules go into effect. The old adage "the best is the enemy of the good" is applicable. I am not advocating a perfect system, but one that would greatly improve congestion and reduce the time wasted in traffic. London pricing is based on its central city as a hub, but the principle of charging for traffic during peak times is applicable to suburbs, Los Angeles, and other areas without hubs. Electronic pricing makes that relatively easy. Parking fees are not a good substitute for congestion pricing because no parking lot owner incorporates all the costs imposed on others of driving into or in highly congested areas. Delays caused by people looking for on-street parking raises additional issues. These delays are created by parking fees. It is not obvious that congestion fees are regressive since poorer persons are more likely to take buses or subways to work than to drive. Moreover, labor force participation rates are generally lower at the bottom end of the income distribution. So the regressive issue is more complex. Moreover, avoiding congestion pricing because of income distribution effects is a bad way to deal with inequality issues. It would not be effective to charge employers since that requires keeping track of which company each driver works for, and whether their employees drive to work. It also ignores driving during congested times by shoppers. Otherwise, as someone commented, it generally does not matter whether employees or employers "pay" congestion taxes since the incidence of a tax would be the same. I do not know if downtown property would increase or decrease in value. For example, the number of shoppers going downtown could increase if the reduction in travel times by car makes shopping in downtown areas more attractive.

Comments

[Arun Khanna]

"It would not be effective to charge employers since that requires keeping track of which company each driver works for, and whether their employees drive to work. It also ignores driving during congested times by shoppers."

It seems tracking employers should be as easy as tracking cars. Employers already assign parking lot decals. So using cars with employer parking decals (or license plates) it should be pretty easy to track employer's represented by each car. You are correct that shoppers would have to pay as individuals.
By charging employers, one could even make employee car usage more sensitive to congestion charges. If an employer stops reimbursing certain categories of employees for congestion charges, then employees (following behavioral economics house money effect versus own money effect or standard agency theory based explanations) would be more reluctant to bear such out of pocket congestion charges.

[anon]

Buffett figured it out. He moved to Omaha and became very successful with only 30-40 employees.

And Walton did not do too bad in Bentonville.

[anon]

"Moreover, labor force participation rates are generally lower at the bottom end of the income distribution."

Some high-paid people are some of the most unproductive, destructive people in the world. It is called overemployment. If you see this up-front and personal, you will have newfound empathy for low-income people given boondoggles.

[Dude]

Drivers could get information about current toll fees by cell phone.

[Joe Merchant]

It is not obvious that congestion fees are regressive since poorer persons are more likely to take buses or subways to work than to drive.

This perspective works in New York, Washington D.C., parts of Metro Atlanta, and a handful of other high-density cities in the U.S. The majority of the U.S. population lives in areas where buses or subways are impractical, or non-existant.

Miami, Florida, even after enacting a local "transit" sales tax, still has 1 hour intervals between city buses on most routes, rail service within a 20 minute walk of about 10% of the Metro population, and a generally dismal park and ride system. At least they have a rail service....

I'm sure a majority of U.S. readers can think about what it would take to get from their home to, well, anywhere via public transit and find that it's impractical, unless they wish to spend more time in transit than on the job, errand, or whatever they are doing.

[emma]

That's true, but I must admit that its just the way you view the issue.

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