An Animated Argument For Congestion Pricing

In 1951, Milton Friedman coauthored a paper on road pricing. It would be a mere footnote in both Friedman’s career and in the intellectual history of road pricing, if not for one sci-fi flourish: The authors propose painting radioactive material alongside expressways, so that road operators can charge drivers using car-mounted geiger counters. Obviously, this suggestion was never heeded, but it says something about the economics profession’s hunger for pricing roads that a future Nobel laureate would set his imagination to Bradbury mode to advance the cause. Ken Livingstone, mayor of London, later credited Friedman with inspiring London’s pathbreaking congestion charge.

Since the 1920’s, economists have nurtured an elaborate theory of road pricing rules, but until recently, it has never been very practical to price roads on a per-mile, time-variable basis. The time and money wasted collecting the money weren’t worth it. The digital revolution, however, has recently given us E-ZPass, online bill-pay, database computing, and even plate-reading cameras. Putting a price on roads that varies according to demand, or “congestion pricing,” is suddenly practical.

To economists, the problem with congestion is that some drivers are harming other people to get something they don’t even need. It’s like if you were slightly hungry but you ate a starving child’s Thanksgiving dinner. For a congested road, an extra car harms travelers already on the road by slowing down their cars and buses. I’ve illustrated this time cost with the following cartoon:

Of course, it’s all right to consume other people’s time if your benefit from driving is sufficiently large. We just want to make sure your trip is “worth it,” and the way our society makes this determination in the division of other resources is by charging money.

Obviously, the test of “willingness-to-pay” is unhelpful when the price tag is impoverishing — surgery, for example. But the rush-hour congestion price typically hovers in the movie ticket bandwidth of $5-12. American society comfortably asks drivers to purchase cars, insurance, and gasoline, so there’s no compelling social justice argument against a price for road use — especially at hours when the marginal car wastes hundreds of minutes and begets carcinogenic pollution via the start-stop of pistons in gridlock.

Some people assume that only an extraordinarily high price could curb rush hour driving. After all, people need to go to work. This is where a economist’s view most sharply diverges from an average person’s. Economists assume that, as the price rises, a continuously growing number of would-be drivers will forgo or delay a car trip. To lay folk, on the other hand, there’s a high and sudden tipping point: below this price, everyone drives; above it, only millionaires hit the road.

I believe this error is due to our tendency to let the most “representative” member of a set stand for all members. The representative driver is a working stiff with no other options. Fortunately, the benefits from congestion pricing don’t require such a person to stop driving at rush hour. They only require some would-be drivers to stop. You can see how in this cartoon:

Others say adequate public investment in transit and/or roads would render pricing unnecessary. Fundamentally, though, pricing is a revenue source, while added capacity is an expenditure, so there is no trade-off between the two solutions. Imagine someone at a school board meeting saying, “Why raise property taxes when we can build more schools?”

The more enduring mistake, however, is believing that the amount of traffic is a fixed quantity. In reality, traffic volume expands to fill capacity, because how much people want to drive depends crucially on how bad driving is. Two University of Toronto researchers recently studied U.S. metros and found:

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].

You can see my animated take here:

Finally, even though we normally talk about congestion pricing in the United States, road pricing can also curb pollution and roadwear on uncongested highways. Germany has used road pricing to manage truck hauling, as illustrated:

Lewis Lehe is working toward a Masters in Transport Economics at University of Leeds in England. He’s created a website, PriceRoads, to raise awareness about congestion pricing and other types of road pricing, He’d appreciate your views and comments, at priceroads@gmail.com.

  • Glenn

    The problem right now is that the income inequality is such that any extra user fees to deter driving actually does hit working folks the most as a real $$$ cost rather than a loss of time. Losing time is actually progressive and leveling. A rich person feels that pain just as much as a working class person since we all only have so many hours in a day. But a fee could strip away a good % of a working person’s net take home income while leaving the rich person essentially untouched. The benefit can’t just be deterrance of driving by lower income people. The income generated should feedback to a known benefit, not just the general revenue for the government. The best approach I believe is to use a fee-bate. All fees generated get divided up evenly by users and non-users in a monthly check. Then you actually can feel good about avoiding a trip because that means not only are you saving money, but ther other users are paying you to stay home or carpool or take transit.

  • Benjaminkintisch

    Wow great website, great animations. go Lewis Lehe.

  • The easier answer Glenn, is of course to short circuit that money direct to transit, which benefits people who aren’t driving in solo occupancy vehicles, and has a positive feedback loop in that it reduces the time benefit from driving by providing a more time competitive alternative.

  • Station44025

    This is also the idea behind price and dividend proposals for carbon reduction. I think it is the only workable way to turn things around. Anything else is a waste of time politically.

  • Cberthet

    This is brilliant …. The illustrations are so perfectly executed to explain complex system..

    Road and bridge pricing is probably the most ancient form of taxing , it’s time proven. The fact we do not have it shows how powerful and smart the car industry has been in selling the concept of car as freedom – free being the key word there.

    Instead of pushing for congestion pricing maybe we should push for a BRA, bridge and road authority, that would have the same financing structure as the MTA : to self finance with dedicated revenue streams and to balance their budget. . That would level the playing field with transit.
    An additional benefit would be that when the governor wants to dip in the MTA funds, he would have toi dip for the same amount in the BTA funds. That would completely deter this kind of shenanigans

  • HamTech87

    These are awesome.

  • Ted

    This is awesome. I didn’t know that traffic volume would expand to fill available road space– I’d always (intuitively, and incorrectly) thought that adding marginally more public transit or roads would help congestion

  • Lewis Lehe

    @Ted, to clarify: this doesn’t mean there are no benefits to expanding roads and transit. 5 congested lanes move more people than 4 congested lanes. the point is that expanding capacity by plausible amounts won’t decrease congestion much in the long run.

  • These are so freaking cool! Snappy pacing, appealing style, and jam-packed with good information, of the kind that’s really hard to convey outside of an animated context. Some issues are too dynamic to be easily conveyed in a static form. 

  • I especially like the idea of Truck Tolling for Georgia. Like Germany, most of the traffic in Georgia is thru traffic to ports, etc.

  • Manuel Boim

    this animations are so clear!! you could easly not need the text that sourrounds them and explain them just by this animated means. and it’s such an interesting issue i makes you want to watch them non stop.
    how many do you have so far???? you should make a feature!!

  • Lee Munnich

    Great job Lewis!  John Doan showed these videos a the TRB Annual Meeting during our Sunday workshop on Multimodal Pricing: Interplay of Transit, Managed Lanes, and Congestion Pricing.

  • Johnqdoan

    Awesome work Lewis.  Good luck with your studies at Leeds. 

  • how about we just phase out cars and expand railways an promote use of bikes in inner cities?

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