Federal Highway Administration FAQ link

Part of the FHWA’s printable series “Congestion Pricing: A Primer.” Very neutral. The PriceRoads FAQ below is more philosophical.

PriceRoads FAQ

Is road pricing just another tax?

With road pricing, drivers pay money to drive their cars around on government property. Is a parking meter a tax? Are the fees at public parking decks a tax? Ordinary usage of the word “tax” is a charge levied on private property (real estate, capital gains) or private activities (retail sales, payrolls, dividends).

If road pricing were a tax, then conservative thinkers would not support it, but they do. Dr. Milton Friedman, who supported road pricing, also said, “I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.”

Return to top

Didn’t we already pay for the roads?

Only in the sense that you already paid for Disney World, since ticket money long ago recovered the land costs. Like Disney World, roads require maintenance. They are also continuously improving through investments in safety, traffic monitoring, landscaping, widening of bottlenecks, noise barriers, etc.

We buy road maintenance and improvement mainly through gas taxes. But the gas tax is not indexed to inflation, and higher gas mileages are eroding its revenues anyway.

Return to top

Why don’t we just build more roads and transit?

The “build more” objection is wrong on two levels:

First, roads and transit are expenditures. Congestion pricing is a revenue source. There is no trade-off. You might as well say, “Why do we need higher property taxes when we can just build more schools?”

Second, as this animation shows, roads and transit barely affect congestion, because demand for travel isn’t fixed; it depends on travel time. In 1962, uber-economist Anthony Downs posited his Law of Peak-Hour Traffic Congestion: “on urban commuter expressways, peak-hour traffic congestion rises to meet maximum capacity.” Flash forward 50 years, and two U. Toronto* economists recently found the Law holds, not just for expressways, but for all road and transit investment in US metros:

Increasing lane kilometers for one type of road diverts little traffic from other types of road. We find no evidence that the provision of public transportation affects [vehicle kilometers traveled]. We conclude that increased provision of roads or public transit is unlikely to relieve congestion.

Logically, the Law can’t be true at all levels of investment or, as Randall O’Toole argues, “Interstate 80 would be as congested in Rawlins, Wyoming as it is in Chicago.” But it’s true near the margin, so we need to manage demand as well as supply.

Return to top

What if the revenues are diverted to bus, trains or other big government spending?

The use of revenues is a different question than whether we should price roads. If you hate “big government spending,” please advocate for a good use of revenues—like a tax cut— rather than opposing road pricing. I personally support using tolls to reduce vehicle registration fees out of fairness to drivers.

Return to top

Will road pricing help stop climate change?

None of the strategies proposed in America (HOT lanes, express lanes, cordon charging) would reduce CO2 emissions to a non-symbolic degree. However, Germany’s nationwide truck tolling has reduced carbon emissions from its freight sector, so it is theoretically possible.

Return to top

If road pricing is so great, then why is it extremely unpopular?

Paying money is unpopular, but ultimately everything spent is paid for. Customers hated ATM fees. Now there are checking fees. New Yorkers hated congestion pricing. Now they have a payroll tax dedicated to saving the MTA.

The average person doesn’t understand the role of a price as an allocative device. This is not a knock on the common man—just a recognition that the average person is too busy to read economics books and blogs.

Return to top

Is road pricing fair?

We all want an equitable society. That’s why every major country has a progressive income tax, and even the Heritage Foundation’s top free market bastions—like Singapore, Australia, and Denmark—ensure health care, housing and pensions for all. But we should also be rational about our priorities.

Somehow, our society is fine with pricing cars, gasoline, insurance, motor oil, auto maintenance, and tires. Is the road the one part of driving that’s unfair to price? Why is it fair for genuinely poor people—those too poor to own cars—to pay $2 bus fares, but unfair for car-owning poor people to pay $0.50/mile at certain hours of day? On road pricing, equity concerns are the status quo bias disguised. America has not priced roads before, because it has not been technologically feasible. Now it is feasible to price certain roads, and we should have a reasonable debate without using the poor as human shields against progress.

Studies show that the most important determinant of equity is how the revenues are used. Todd Litman of VTPI provides a great summary of the research here. Dr. Thomas Light of RAND provides another excellent summary here.

Overall, remember that no one’s value of time constant. An unemployed single mother who’s late to a job interview has an extremely high value of time, and would gain immensely from paying $100 to save five minutes. Other times, her value of time is low, and she would be better off paying nothing and sitting in congestion. HOT lanes actually allow both scenarios, in which case there’s no problem. Return to top

Will only rich people be able to drive?

Under congestion pricing, tolls rise only until congestion subsides. We can also frame this rule as the converse: tolls fall until congestion starts to get bad. If only rich people drove, there would be so few people on the road that the price would fall.

Again, this is clearly status quo bias. The most expensive HOT lanes in America are cheaper than seeing a movie on Friday night. If we lived in a world of free movie theaters, how would we respond to the idea of charging $10 to see movies? “Only rich people will see movies!”

Return to top

Is congestion pricing a form of social engineering?

Yes. When airlines charge more for trips on Thanksgiving, they are driving out those with the lowest willingness-to-pay, so people who really want flights can have them. When stores offer sales Monday-Thursday, they are smoothing out demand so weekends aren’t so crazy. When hotels offer off-season rates, they are rewarding people with flexible schedules.

These are all forms of congestion pricing. Private firms are social engineering—that is, steering behaviour in a way that improves welfare. It makes no sense to believe:

a.) Congestion pricing by profit-maximizing private firms demonstrates the virtues of free enterprise.

b.) Congestion pricing by welfare-maximizing road authorities is top-down bureaucracy at its worst.

Return to top

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>