Krugman: Costs of Driving Deserve Way More Attention

Two of the nation’s leading lefty commentators weighed in on transportation incentives last Friday, when both economist Paul Krugman at the New York Times and Matt Yglesias at Slate went on a congestion pricing kick.

Krugman kicked things off by remarking that the surest way to reduce the costs imposed on society by drivers is to “get the incentives right, and charge large fees for driving in congestion.”

Yglesias took it one step further, pointing out how a variable fee on roads could lead to a virtuous cycle of better transit service and higher ridership:

Congestion fees are a kind of force multiplier for transit. After all, in some big American cities the peak congestion charge would have to get quite hefty at some times of the day. Some folks will respond to that by paying the fee, some by time-shifting their driving to a less-crowded hour, and some by riding transit. A bus, after all, is a great mechanism for spreading the cost of road access across a large number of people. And while with highways the quality of the service provided declines with the number of users (traffic jams), with well-designed transit it goes the other way. The more people who want to travel on a particular transit route, the more financially viable it is to provide high-frequency service. And high-frequency service is the key to real-world transit useability.

As Krugman noted, congestion pricing is an important mechanism to account for the cost imposed by drivers on society in the form of lost time. Anything that brings the actual price of our transportation decisions in line with the cost to society will be a boon for transit, biking, and walking relative to the status quo.

The flipside of congestion pricing would be to account for the social benefits of non-automotive modes by subsidizing them. The European Cyclists Federation currently has an interesting proposal on this front. With the European Union examining the “internalisation of external costs for all modes of transport,” the ECF is advocating for a policy that would function as a kind of carrot, rewarding cyclists through tax rebates and incentives. Meanwhile, in America, we actually have a “symbolic” bike tax gaining traction in Washington state.

16 thoughts on Krugman: Costs of Driving Deserve Way More Attention

  1. Congestion pricing is probably the best hope for our funding-starved transit agencies. It sure makes more sense than hiking fares year after year.

  2. What’s with all the loony comments on the Krugman piece? Looks like all the global warming deniers came out to play, even though he only mentions global warming in an aside.

  3. It’s par for the course. Krugman has an entire army of anti-Krugman groupies following him. Some are just illiterate Fox News drones, others probably conclude their triple digit IQ makes them John Galt. Whatever the motivation, they’re doing their best to counter all Krugman’s heresies against Ayn Rand, Milton Friedman, the Free Market™, the Republikan Party, austerity, “deficit scolds” (Krugman’s phrase, not mine), Ludwig von Mises, neoconservativism, neoliberalism, and somewhat more credible classical liberal economics.

    (Not to say I’m a big fan. I find Krugman’s politics annoyingly milquetoast. Meanwhile, I find, say, Yglesias to be a pedantic light-weight. Still, that Krugman sends the some of the foulest blocs in American politics into conniptions is worth watching.)

  4. Krugman’s link to the (time) costs that drivers impose on society goes to a terrific 2009 post by Reuters finance blogger Felix Salmon that in turn is based on my NYC-traffic spreadsheet model, the Balanced Transportation Analyzer. Folks wanting further details on how that model leads to the finding that a single additional car journey into (and back out of) the Manhattan CBD during peak periods can impose over $100 worth of time costs on other New Yorkers, should go to this article that a colleague and I published a year or two later in the New York Transportation Journal.

  5. Remember Glenn Beck? Andrew Brietbart? Rush Limbaugh? There’s a whole army of extremely gullible people who follow these guys and their conspiracy-of-the-week bandwagon.

  6. Certainly, but are they so stupid that they don’t realize that this piece has nothing to do with global warming in the first place?

  7. … and it’s more than just a nice revenue stream—congestion pricing can actually make the city a nicer place to be. It’s such a no-brainer that it boggles the mind to see any resistance to it…

  8. Couple of things to consider:

    1) It’s dangerous to draw too many conclusions based on outliers in the data set. Yes, all cities have some amount of congestion, but NY (and LA) are definitely on the extreme end. Congestion pricing would certainly be more effective where the problem is already critical, adequate transportation alternatives exist, and there are not substitute urban/sub-urban centers. However…

    2) Congestion pricing may actually increase sprawl. In the case where the cost of moving out is low (say Dallas for example), congestion pricing is only going to push businesses and homes away from the sources of congestion further hollowing out the urban core.

  9. The virtuous cycle that Matt Y mentioned is only possible when the majority of the congestion pricing monies are used to fund the transit (think Golden Gate Bridge, Highway and Transit Authority). Unfortunately, most cities snag the funds for other “priorities”.

  10. The “please don’t confuse me with facts” trolls come out in force whenever climate change is mentioned. Krugman may have mentioned climate only in passing, but one cannot deny that congestion results in massive numbers of cars emitting greenhouse gases, not to mention other pollutants, while moving at a crawl if they are moving at all. This is yet another social cost, quite aside from time lost to congestion. NYC recently got a taste of that indirect cost courtesy of Superstorm Sandy, a harbinger of things likely to come as sea level rises and more energy is trapped in the atmosphere and oceans.

    Hello to CK, by the way.

  11. #1: we can’t draw too many conclusions based on outliers, but we can study outliers.

    #2 is probably a complete crock. CP would actually reduce the cost in wasted time of driving in urban cores. A more likely result is driving businesses toward urban cores.

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