microeconomic

."in the neWS

Ihe Case for Toll Roads Many economists think drivers shourd be charged more for using roads. Here is why.

Why You'll Love Paying for Roads That Used to Be Free By Enrc A. Monnrs

fo end the scourge 0f traffic conges{isp, I Julius Caesar banned most cafis from

the streets of Rome during daylight hours. It didn't work-traffic jams just shifted to dusk. Two thousand years later, we have put a man on the moon and developed garments infinitely more practical than the toga, but we seem little nearer to solving the congestion probiem.

lf you live in a city, particularly a large one, you probably need little convincing that traffic congestion is frustrating and waste_ ful. According to the Texas Transportation lnstitute, the average American urban trave_ ler lost 38 hours, nearly one full work week, to congestion in 2005. And congestion is getting worse, not better; urban travelers in '1982

were delayed only 14 hours that year.

Americans want action, but unfortunately there aren't too many great ideas about whai that action might be. As Anthony Downs's exrellent book itl/ Stuck in Traffic: Caping With Peak-Hour Traffic Conge*ion chroni_ cles, most of the proposed solutions are too difficult to implement, won,t work, or both.

Fortunately, there is one remedy which is both doable and largely guaranteed to succeed. ln the space of a year or two we could have you zipping along the 405 or the LIE at the height of rush hour at a comfort_ abie 55 rniies per hour.

There's just one small problem with this silver bullet for congestion: many people seem to prefer the werewolf. Despite its merits, this policy, which is known as

,,con_

gestion pricing." "value pricing.,, or ,,vari_

able tolling." is not an easy political sell. For decades, economists and other

transportation thinkers have advocated imposing tolls that vary with congestion levels on roadurays. Simply put, the rnore congestion, the higher the toll, until the congestion goes away.

To many people, this sounds like a scheme by mustache-twirling bureaucrats and their academic apologists to fleece drivers out of their hard-earned cash. Why should drivers have to pay to use roads their tax dollars have already paid for? Won,t the remaining free roads be swamped as drivers are forced off the tolled roads? Won,t the working-class and poor be the victims here, as the tolled routes turn into ', Lexus lanes" ?

And besides, adopting this policy would mean listening to economists, and who wants to do that?

There's a real problem with this logic, which is that, 0n its own terms, it makes perfect sense (except for the listening to economists part). Opponents 0f tolls are ceffainly not stupid, and their arguments deserve serious consideration. But in the end, their concerns are largely overblown, and the benefits of toliing swamp the poten- tial costs.

Unfortunately, it can be hard to convey this because the theory behind rolling ii somewhat complex and counterintuitive.

-': : 100 bad, because variable tolling is i: rrcelient public policy. Here's why: the :r-: economic theory is that when you give :,-: ssnething valuable-in this case, road

:;;:r-for less than its ttue value, short- - ^-- -^-,,1+

riiimately, there's no free lunch; instead

:.' :aying with money, you pay with the :"';: and tirne needed to acquire the good. -" :c of Soviet shoppers spending their lives : :rdless queues to purchase afiificially low- ;r:ed but exceedingly scarce goods. Then :: :< of Americans who can fulfiil nearly any ::rsrmerist fantasy quickly but at a mon-

::i.,,cost. Free but congested roads have :: us shivering on the streets of Moscow.

io consider it another way, delay is i- externality imposed by drivers on their :"-:,s. By driving onto a busy road and ::.lributing to congestion, drivers slow the

';t:ds of others-but they never have to

;;, for it, at least not directly. ln the end, :. cOurse, everybody pays, because as we -i3cse congesti0n on others, others impose

: :n us. This degenerates into a game that -:sody can win.

lJarkets work best when externalities lr* internalized: i.e., you pay for the hassle ::,r inilict on others. ... Using tolls to help :::ernalize the congestion externality would

:lner,vhat reduce the number of trips made

ii lhe most congested roads at the peak ,isage periods; some trips would be moved

io less congested times and routes. and oth-

ers would be foregone entirely. This way we

Sowce: freakononics b/og, January 6, 2$09.

would cut down on the congestion costs we

impose on each other.

Granted, tslls cannot fully cope with accidents and other incidents, which are

major causes of delay. But pricing can largely eliminate chronic, recurring conges-

tion. N0 matter how high the demand for a

road, there is a level of toll that will keep it

flowing freely.

To make tolling truly effective, the price

must be right. Too high a price drives away

too many cars and the road does not func-

tion at its capacity. Too low a price and congestion isn't licked.

The best solution is t0 vary the tolls in

real time based on an analysis of cunent traffic canditions. Pilot toll projects on roads

(like the l-394 in Minnesota and the l-15 in

Southern California) use sensors embedded

in the pavement to monitor the number and

speeds o{ vehicles on the facility.

A simpie computer program then deter-

mines the number of cars that should be allowed in. The computer then calcuiates the level 0f toli that will attract that number

of cars-and n0 more. Prices are then updated every few minutes on electronic message signs. Hi-tech transponders and

antenna arrays make waiting at toll booths

a thing of the past.

The bottom line is.that speeds are kept

high (over 45 m.p.h.) so that ihroughput is

higher than when vehicles are allowed to

crowd all at once onto roadways at rush hou; slowinq traffic to a crawl.

To maximize efficiency, economists would like to price all lravel, starting with the freeways. But given that elected

officials have no burning desire to lose their jobs, a more realistic option, for now, is to toll just some freeway lanes that are either new capacity or underused

carpool lanes. The other lanes would be

left free-and congested. Drivers will then have a choice: wait or pay. Granted,

neither is ideai. But right now drivers have

no choice at all.

What's the bottom line here? The state

of Washington recently opened congestion-

priced lanes on its State Route 167. The peak toll in the first month of operation (reached on ihe evening of Wednesday, May 21) was $5.75. I know, I know, you would never pay such an exorbitant amount

when America has taught you that free roads are your birthright, But that money

bought Washington drivers a 27-minute time savings. ls a half hour of your time worth $6?

I think I already know the answer, and it

is "it depends." Most people's value of time

varies widely depending on their activities

on any given day. Late for picking the kids

up from daycare? Paying $6 to save a half

hour is an incredible bargain. Have tq ciean

the house? The longer your trip home takes,

the better. Tolling will introduce a new level

of flexibility and freedom into your life, giv-

ing you the power to tailor your travel costs

to fit your schedule.