Taking a Toll

In the past, I've wondered if policies that allow a certain segment of the population to "buy out" of constraints designed to reduce carbon emissions, traffic congestion, etc. will find much popular support. This is an objection to the imposition of toll roads in LA along those lines, i.e. based upon the notion of fairness:

Diamond lanes for the rich, by Tim Rutten, Commentary, LA Times: ...When the Metropolitan Transportation Authority voted Thursday to convert carpool lanes to toll routes on as many as three Los Angeles freeways, ... Mayor Antonio Villaraigosa called the move "a great opportunity to think outside the box," and added: "Part of the reason Los Angeles has not been able to grapple with gridlock is because we've been unable to make the tough decisions."

Right. It takes unconventional and courageous thinking to come up with a plan that clears a highway lane for the well-off, while the middle class and working poor are left to inhale each other's $5-a-gallon exhaust fumes... making the daily lives of the hundreds of thousands of moderate-income commuters ... even more intolerable...

The worst thing about this ill-considered decision to allocate freedom of movement according to income is that it represents local public policy made for the worst of all possible reasons -- simply because there's federal money available to do it. ...

Federal transportation authorities have lately become enamored of imposing congestion pricing through toll roads, and have been offering the states funds to experiment with the concept. .... As a consequence, existing carpool lanes on ... will be converted to toll routes, with the highest charges levied at peak commuting times.

Carpool lanes are a sensible and equitable way to encourage responsible behavior. People who choose to ride to work with other people or those who purchase low-emission, high-mileage vehicles have the opportunity to travel more conveniently while reducing congestion, pollution and fuel consumption.

Note the word choose.

Congestion pricing will reduce traffic as well, but it will do so by allocating a precious resource by income. In California, we long have used everybody's tax money -- mainly from gasoline purchases -- to build and maintain roads.

Moreover, in Southern California, the middle class and working poor have no choice but to use the freeways to get back and forth to work and school because, decade after decade, public officials have encouraged urban sprawl while neglecting public transit. For most commuters today, the highway is the only way. ...

Now the MTA proposes to address the all-too-real problem of gridlock on the cheap -- and on the backs of working people.

Since when was that "a hard decision"?

It's the sort of thinking that will make Los Angeles and Southern California the sort of place [Michael] Harrington described in "The Other America" -- one where "life is lived in common, but not in community."

Economics analysis tells us that using a Pigouvian tax (or its equivalent) to solve these types of problems has desirable properties, and we can use the revenue from the tax to give rebates to lower income households so as to offset the losses from higher prices, tolls, etc., (see here). But when should you trade optimal for feasible?

For example, the connection between rebates given, say, once a year on tax forms and the frequent payment of the tolls, higher gas prices, etc., may not be direct enough to offset the perception of unfairness. If the connection is weak, or when equity considerations are important for some other reason, there may be something to the idea that, from a political point of view, non-price allocation mechanisms might be easier to implement, though I suppose the political difficulty depends upon the degree to which those who are most affected by price based allocation mechanisms - moderate and low income households - have a voice in the political process.

Comments

[Joe]

Mark's comment at the end of the article suggests there's ways to fine-tune the conversion of HOV lanes to toll-lanes to increase "fairness".

He's probably right, but fairness is not the purpose of these lanes. Their purpose, in their HOV incarnation, is to reduce the costs of commuting: fuel expense, time on the road, and pollution.

Changing the lanes to toll lanes will just shift some traffic into different lanes, reducing only one cost - time on the road - for a few people.

[a student of economics]

Fairness and efficiency need not be achieved by each policy independently. It may not even be possible.

It's better and simpler is to separate the tasks:

a) Establish efficient congestion pricing
b) Use progressive taxation (including a negative income tax) to achieve whatever income distribution is "fair". Feel free to use revenues from congestion pricing to help with this.

This approach puts extra money in the hands of the poor and middle class but doesn't constrain them to use it on driving. Maybe they'd be better off using it on something else.

You can probably achieve something similar by rebating 100% of the congestion tax proceeds per capita or per capita up to an income cap if you want the progressivity to be more visibl, but if you start doing that with every policy, things get messy and complicated.

[spencer]

Establish efficient congestion pricing sounds like a great idea. But what does it mean?

Does it mean using the toll on certain roads to shift the congestion to other roads?

Does it mean using the toll to build other roads or other means of transportation to reduce overall congestion?

Does it mean that communing becomes so expensive that many people suffer a lower standard of living?

Establish efficient congestion pricing sounds like some bureaucratic gobbly-gook that deliberately has no meaning.

Would a student of economics care to explain what it means?

[bakho]

What if instead of a toll, they paid higher taxes to build and subsidize mass transit that would take more cars off the road? Isn't that just as Pigouvian? Would it be more of a win-win because the poor and middle class would get cheaper transportation? instead of more expensive gasoline wasted idling in traffic?

[spencer]

Establishing offsetting transfer pricing to reimburse the poor sounds a lot like the idea of help to manufactured workers who lose their jobs to foreign competition.

Does anyone remember when either political party actually offered legislation, let alone passed it, to provide compensation to those who are harmed by foreign competition?

[a student of economics]

Spencer, congestion pricing is more efficient than using congestion to ration road space. Congestion costs about $100 billion in the US each year, due to lost time, etc. In addition, there is the cost of more pollution, foreign oil dependence and additional accidents.

The cost of congestion is a complete waste, benefiting no one. It's equivalent to charging a price for the road, but then burning all the money.

If space on the road is priced, then some people would carpool, some would move closer to work, some would telecommute, some would use other forms of transport, some would change jobs, some would travel off-peak, some would combine shopping trips and some would make other changes at the margin. In each case, they would do this if the benefit outweighed the cost to them. The difference is that they would pay the cost themselves, while with congestion, OTHER people pay the cost they create by driving. That's an externality.

Congestion pricing internalizes this externality. That is more efficient.

If fact, that's why we generally don't allocate other goods and services by queuing people up and seeing who's willing to tolerate the most wasted time.

[a student of economics]

Bahkho: No, paying higher taxes and build mass transit might be a good idea, but it's not Pigovian.

A Pigovian tax is a tax on an activity that has an externality that is roughly equal to the cost of that externality. For instance, economists estimate that the externalities from each gallon of gasoline are $! or more, so a tax of that amount would make people realize the costs they are creating when they burn gas. In cases where the benefits were no longer greater than the costs, they would not burn that gallon of gas.

Using general taxes to build mass transit doesn't address the externalities from congestion on road. People would still drive too much relative to the costs they create by driving.

[Jay]

"The worst thing about this ill-considered decision to allocate freedom of movement according to income"

Dear god. Think about all the people that can not afford private jets. The federal government must redistribute wealth such that everyone that wants can afford a private jet, otherwise their "freedom of movement" is unjustly impaired.

The reason we drive too much, is that a fair portion (the non gas tax revenue) that goes to pay for road work comes from general funds creating the tragedy of the commons. But I guess as long as we have the "right" to drive down I-95 at the expense of others when we can not afford to pay our share, Americans will continue to over use our roads.

[Alex Tolley]

"and we can use the revenue from the tax to give rebates to lower income households so as to offset the losses from higher prices, tolls, etc."

How does that help them, when time to get to work, drop off the kids to school or daycare is the key factor? The HOV lanes were specifically set up to reduce congestion by getting cars off the roads. In silicon valley, very often those lanes were almost empty, so they weren't the most efficient. But just handing them over to people who can pay doesn't make much sense to me in terms of reducing traffic congestion. The system will just become another tax that is passed onto consumers by corporations, or a company perk.

Congestion pricing works in London, because there is a viable public transport choice for many car journeys. That is most definitely not the case in most of California.

[jamzo]

the results of math formulations don't change the fact that economic class preferences are implemented in public policy when politicians create tiers of public service based upon who cannot pay

"if you cannot pay you are not part of the public this service serves"

[Denis Drew]

Taxis in toll lanes?

When I was a San Francisco cab driver ('97-'04) the only time I observed diamond lanes in action was when returning from Oakland airport in the early morning rush hour. I could be wrong, but the only pollution effect I could discern was diamond lanes seeming to initiate bump-to-bumper crawl earlier and making it last longer while (to my admittedly shaky estimate) an insignificant number of three or more passenger vehicles slipped by. Diamond lanes seemed a marginal tradeoff at best (but I could be wrong).

One arbitrary enforcement note seemed to be bending the basic rule for pickups with only two passengers and motorcycles with only one -- because those vehicles haven't room for more.

BTW, I wonder if a two passenger rule might not be much more practicable. Seems it might be exponentially easier to come up with one fellow traveler than two. Then those diamond lanes might actually begin to carry significant (to my unsure eye) traffic.

Now to my main point: a taxi cab has two rows of seats but certainly has no control at all over how many passengers it carries (on the way back from OAK my SF cab may not carry any passengers -- by law. But, unlike pickups and motorcycles, allowing taxis in the diamond lanes would serve both a pollution and a more general public transportation purpose: it would recycle (a good anti-pollution word) more public vehicles back into use -- making public trans' instead of your own car a more attractive option. And, since diamond lanes operate in the rush hour, they can re-circulate taxis back to public availability at their most needed time of day.

[jamzo]

are we approaching the day when the automobile is considered a "legacy" asset

in many communities the long term problem of too many automobiles on the roads at any point in time is being framed as a "let's tax bad behavior" problem

if you cannot pay a "congestion tax" you do not have the right to be on the public roads at the times and places where it would be most convenient for you

if you can pay a "congestion tax" we will protect your right to be on the public roads at the times and places where it would be most convenient for you

our presidential candidates, college and professional sports teams, business executives, and many more now travel long distances in the two-tiered air travel system (private tier, public tier)

is the two-tier air transporation system being implemented in the road and highway transportation system?

[save_the_rustbelt]

Somewhere in my early morning reading I saw a proposal in the Senate to slap a fuel surcharge on jet fuel pumped into private aircraft.

How would that fly? (really bad pun)

Are we whacking the rich? Is that fair? Will this reduce air lane congestion?

[spencer]

A student of economics -- you are going to have to do better then that.

I have to pay a toll now to drive into Manhattan -- I know of only one bridge onto the island that is toll free -- so according to what you said they already have congestion pricing in Manhattan.

I am not opposed to congestion pricing. But I am opposed to virtually every proposal I see about implementing it. It worked in London because the imposition of the toll was preceded and/or accompanied by a major investment in improving bus and other transportation services. Yet, all I see is you and others advocating the imposition of a toll along with some vague comments that the market will provide alternatives. Guess what, that is not good enough. Before I would favor any congestion tolls I want to see specific actions already implemented to improve other forms of transportation.

[bp]

what happens if the $8/vehicle proposed congestion tax for NYC does not reduce congestion? - no one is better off and everyone is worse off

does that mean externalities are always bad? - no, it could be a hidden positive externality if everyone agrees not to price congestion and tolerates the imposed slowdowns from each other as offsetting

if the $8/vehicle does reduce congestion, who is most likely eliminated from the peak traffic? - the less well off who already tend to have multiple passengers per vehicle in HOV fashion, for the benefit of more space to single-passenger vehicles

what should be priced, if anything? occupied road space, for which one reaction is to add more passengers/vehicle, for which $8/vehicle comes close; HOV lanes are an implicit higher price on single-occupant vehicles than two or more occupants in the HOV lane at an implicit lower price; major alternatives to congestion, like buses would receive in effect, "negative congestion prices" with more passengers

what should not be priced? differential pricing for highly substitutable road space like a fast-lane toll road, which confuses in part the opportunity cost of time with the opportunity cost of displaced road space and easily results in under/over utilized road space due to prediction and adjustment problems and adds to transaction costs - already a serious problem with congestion pricing

as for public transit, consider the example of Wash DC, where congestion (unpriced) essentially forced an efficient metro system, coupled with groups of commuting passengers who meet in spontaneously organized locations to add more passengers/vehicle

[William SMith]

Prof Thoma,
I think that the key to maximizing the utility derived from the tax depends entirely on making the tax a true luxury, i.e. making it more expensive.
However, a better alternative to this policy would be to designate the inner lanes for trucks, vans and other larger, slower and more dangerous vehicles in an effort to get them out of the lanes used by smaller vehicles who either get stuck behind them or dodge around them constantly.

[ScentOfViolets]

To the 'Student of Economics': reality trumps theory, every time. Do you have any examples where congestion pricing has worked as advertised? With no other viable transportation alternatives?

Second: as someone else as pointed out, there really wouldn't be that much connection between who uses the fast lanes, and who pays for them, at least imho. Many of the people who 'needed' these lanes would end up receiving this as a perk at no cost to them; the working stiffs would be told to get up at 4 a.m. if that's what it took to be at work on time. Is this 'efficient'? No, it most definitely is not.

[macquechoux]

"What if instead of a toll, they paid higher taxes to build and subsidize mass transit that would take more cars off the road?"

I can't speak for where you live but all the mass transit that that I am aware of is already subsidized to Hell and gone. When given more money lots of communities spent money on boondoggles like light rail and some actually cut back on buses to try to get more people to use the light rail lines. I do believe that some sort of congestion pricing plus increase in bus availability might be workable in some cities.

[Bruce Wilder]

There's an obvious counter-frame to this argument, based on modeling the details of this proposal.

If this were a proposal to impose a toll on the whole highway, the arguments about income redistribution might have some force. There would be, of course, the counter-argument about reducing the deadweight loss of congestion costs, of course, already made in comments.

But the proposal is to impose a toll only on the HOV lanes. That makes the proposal more like price discrimination in its effect, and price discrimination, while it improves the ability of the seller to extract revenue, tends to have an equalizing effect on the real incomes of consumers.

A little queueing theory, or, alternatively, actual experience driving in Southern California where HOV lanes are commonplace, would be sufficient to show that HOV lanes are remarkably ineffective in improving transit times for people, who use them.

Charging a toll to people, who use the HOV lanes is really a sucker's bet. The people, who pay the toll reduce congestion for people, who use the highway but don't use the HOV lanes, and get pretty much nothing for their cash dollars.

Mr. Rutten, in short, is being an idiot. Building toll roads, which are exclusively available to those, who pay, is a very dubious policy, especially when the toll road is financed by such congestion tolls. They are bad, because it is necessary to maintain the congestion to maintain the tolls to finance the already constructed highway; you've created an incentive for public policy to create congestion.

But, this proposal is to allocate one or two lanes to toll payers. That's price discrimination. It won't be very effective in reducing congestion for the people, who elect to pay the tolls. The people, who pay the tolls will reduce congestion for everyone else. That's a downward redistribution of income. We like that!

There's a lesson here: try not to be stupid.

[Hmmm]

Why doesn't an increase in the price of some lanes displace traffic onto the remaining free lanes? It's not clear how raising the price of some lanes would reduce traffic on the others...

[Jim Harrison]

Since the next dollar spent on transportation is less valuable to the rich than to the poor, why not devise a progressive congestion pricing system? Equity considerations aside, don't you have to charge the rich more in order to provide them with an equivalent disincentive to drive into the city?

[Bruce Wilder]

My general view on congestion pricing for highways is that everyone already pays a very efficiently collected "use fee" in the form of the gas tax. Transportation authorities have to allocate that revenue in a efficient investment plan: so much for mass transit, so much for freeways, so much for local streets, etc., to balance resources.

The argument for congestion pricing is really an argument for a premium on top of the gas tax general use fee.

The key factors to be aware of in such a scheme are:
1.) the autonomous power of the potential payer;
2.) the incentives to the transportation planners.

An ideal system of congestion pricing would be dynamic and exactly proportional to actual congestion, with good anticipation feedback, available while alternatives were still viable. In other words, a driver would know the choice she faced at the point of deciding whether to add to the congestion. This kind of consideration of feedback to distributed decision agents is often neglected, but is vital to the technical efficiency of the arrangement.

I use the Hollywood (101) Freeway every damn day. There are very few entrance ramps, especially southbound, where a driver can observe congestion on the freeway, before deciding whether to take the freeway. They don't need congestion tolls, so much as they to create line-of-sight or mirrors or electronic signs, that would allow drivers to/from local destinations to know how congested the freeway was. But, the marginal "local" driver has no way to know, just before deciding whether to take the freeway. Distributed decision-making is defeated.

Expressways, generally, can be very efficient relief for congestion on local streets. The ideal planner is going to try to find a balance in transportation resources, knowing that an expressway or bus route or transit reduces congestion on other routes. Everyone is paying a use fee, so the question is investing to achieve the optimal balance of available resource. Charging for congestion on expressways makes a revenue stream out of local congestion -- a potentially perverse incentive to planners to create local congestion, to force some drivers to pay the toll on expressways. This is what happened in the Orange County experiment with tollways. Private interests required public authorities to covenant to maintain local congestion, in order to ensure that the tollway remained profitable. It is insanity.

[peterbob]

Seems that there are lots of cases where resistance to legislation takes the form "the poor cannot afford it." Examples include the above proposed toll lanes, lowering benefits for Social Security recipients, and trade policy that results in jobs off shored. It seems like there are a lot of folks talking about the poor, so there would seem to be a very large constituency pushing for income tax progressivity.

If "fairness" is really such an issue, then why not have a progressive income tax and be done with it? Why hold other issues hostage when the roadblock has to do with general issue of poverty?

Think about it. If income taxes were progressive, then we could tackle other issues (like reducing carbon emissions, fixing the S.S. budget problem, and encouraging more trade) without the constant cries that such efforts will "hurt the poor."

[Bruce Wilder]

Hmmm: "Why doesn't an increase in the price of some lanes displace traffic onto the remaining free lanes? It's not clear how raising the price of some lanes would reduce traffic on the others..."

Of course, it depends on how many lanes, what the toll is, how many drivers elect to pay it, etc.

In other words, you need to apply queueing theory to build a model. It is not hard to do. But, the Austrians are not going to be able to help here. You need maths.

In general, though, queueing theory would suggest that segregating some lanes from others would tend to increase transit times, especially for those using the few lanes. And, if at least some drivers can choose, at the margin, which lanes to use, a balance will be achieved, which pretty much leaves everyone worse off, in terms of transit time. If you limit your consideration to setting tolls at levels that will tend to bring in a lot of revenue, you are looking at a balance of congestion -- some reduction in congestion for those in the more numerous public lanes, and some increase in total cost (toll + slightly-reduced-but-still-positive congestion) for those in the less numerous toll lanes.

You can see the principle at a store, where they consolidate the checkout lines for the cash registers into a single line. Things move much quicker and average wait time is reduced remarkably, than if there's a single wait line for each register, and everyone takes a chance that their particular server will get hung up.

If you drive in Southern California, you'd get to observe the ineffectiveness of the HOV lanes. If anything slows down traffic in general, then it also slows down the HOV lane. And, if traffic is moving briskly, the single HOV lane tends to be slower than traffic in general (because the single HOV lane, and it is usually a single lane, is only as fast as its slowest vehicle). Double HOV lanes generally work a bit better and there are some other design considerations, like creating paced-by-meter choke points at interchanges.

The HOV lanes are not completely ineffective, but not because they are an effective highway design (single HOV lanes are almost always bad highway design with either no net effect on transit times for anyone or actual increases) -- they may be effective in the political/psychological scheme to encourage car-pooling.

[Bruce Wilder]

peterbob:

Seems that there are lots of cases where resistance to legislation takes the form "the poor cannot afford it." Examples include the above proposed toll lanes, lowering benefits for Social Security recipients, and trade policy that results in jobs off shored. It seems like there are a lot of folks talking about the poor, so there would seem to be a very large constituency pushing for income tax progressivity.

If "fairness" is really such an issue, then why not have a progressive income tax and be done with it?

Great comment.

Politically, the thing to note is that there is both a constituency for progressivity and egalitarianism, and a constituency against. (And lots of individuals can be creatively and maddeningly ambivalent -- just glance at Save-the-Rustbelt's comments sometime).

The constituency against generally has the upper hand, and these kinds of protests, and games of political policy hold-up, are resentment-filled rear-guard actions by the habitual losers.

[wogie]

Student of Economics makes the economics case for user pay. A more pragmatic case for Federal policy on tolling is that the Federal Highway Trust Fund is projected to become insolvent before 2011. Fed gas taxes have not been raised since 1992. Roughly 75-80 percent of highway construction is financed from the Trust Fund. So, user fees on existing local roads curb use as well as raise needed funds

Outright Tollways, e.g., Indiana Tollway, are a separate situation, but driven by the same funding problem. Investment is private money -- about the only relief the Feds can see for the problem. Some states are already selling tollways to private interests, while others plan new private toll roads.

[wogie]

Bruce Wilder

I haven't experienced the speed/congestion outcomes you lay out. During rush hour congestion I see the HOV lane cars speeding along, providing shorter transit times than the rest of us in the herd.

[Meh]

Bruce Wilder goes much deeper into the mechanics of the situation than I have time to, so I'd say read all his comments before giving my proposal the time of day, but:

Why not keep the HOV as a HOV lane, but let other users use it if they pay a toll?

i.e. Have a toll lane, that you can use for free if you're a HOV.

That encourages carpooling, but also makes gives a way for you to raise revenue from those who will pay to avoid a jam on the normal lanes (I don't know about CA, but in other areas, jams in the normal lanes and an empty HOV lane are all too common.) The extra revenue can be put into improved public transport to further address congestion down the track.

It's not perfectly equitable, but it might be palatable overall.

[mrrunangun]

Our political system is not responsive to the economic needs of the people. It is responsive to the wishes of the key political contributors. The recent support of the usually progressive Sen. Schumer for the egregiously lenient tax treatment of the income of the hedge fund kings (a measly 15% on their tens of millions year after year). Just one of these guys makes as much as 100-200 successful doctors or lawyers who each pay 35% on the top dollar of a $200,000 income. As long as progressive legislators can behave like this without effective objection, they will continue to talk the talk without walking the walk. Similarly, progressives are generally very protective of the tax favors enjoyed by the hollywood types and the privileges of the trial bar and the public employee unions, not especially progressive policies, but since their hearts are thought to be in the right place progressive legislators are seldom called on them. In recent years the only difference in the parties has been which sorts of well-off folks benefit.

Public transport is economically feasible in proportion to the population density. It works great in NYC and the cities of Western Europe. It does not work well in Chicagoland where it constantly loses money despite generous public subsidy and year after year fares increase, service lines are cut, and infrastructure breakdowns become increasingly common. The public transit workers are well-paid, generously pensioned, and never crossed. The public does not support calls for ever more generous subsidies for transport of a small minority of citizens and pay and benefits far more generous than for privately employed bus drivers. It works beasutifully in DC because it is subsidized by the country at large.

[jamzo]

i have been paying tolls in pennsylvania, new jersey and new york since i was old enough to drive

tolls have a long history

they are a traditional political means of raising funds

they are also traditional means of political patronage

a treasure chest of jobs and contracts - turnpike boards, toll collectors, highway contractors, etc...

some states now sell toll collection to private companies as a means of raising money for general funds instead of trying to legislate tax increases

tradition does not make tolls a good way to make public policy decisions

especially since they favor one group over another based upon willingness and ability to pay

tolls provide politicians with "rationale" for increasing the funds available to them for governing and tolls make ti seem as though something is being done to solve the problem they are associated with

using relative wealth as a way to decide public policy is no more rational than other means of deciding one public policy versus another

mathmatical forumulations which derive the relative numeric efficiency of one public policy are one way of looking at a problem

mathmatical forumlations which calcuate theoretical costs that predict the behavior of a population of people are another way of looking at a problem

these perspectives are useful, they provide insight but they are not determinative perspectives

in the computer industry - the term "legacy" evolved as a means of describing older technology

congestion pricing is a marker for an emerging problem

the automobile and its technology has limits as a preferred mode of transportation for both congestion and environmental reasons in many population centers

"congestion pricing" will do little to help the flow of traffic in the short or long term

a better question for the politicains who are proposing collecting these monies might be:

"what do you plan to do with the money you want to collect?"

[ScentOfViolets]

Another thought occurs to me. I believe it is the customary practice of day labor companies to pick up their employees and drive them to their work sites. Seems to be a good idea, as often these people have no other viable transportation.

So why don't other businesses do the same thing? It strikes me that partly this is a matter of historical inertia, but also a consequence of making employees bear as much of the cost of their employment as possible. I suspect that if it ever became the cultural norm to expect businesses to provide transportation for their employees, then 'public' transportation wouldn't be in the state it's in now.

Secondly, as I mentioned in another post, the electric car isn't really well suited to replace the Otto-cycle auto. Partly this is because of consumer expectations, but this is also because of current city planning. Small electrics work fine within a ten mile radius. Not so well much further out. If there were residential clusters that had their own shopping centers, dry cleaning, etc. that fed into a central hub where the larger businesses were located, it might be feasible to have the inter-cluster and hub connections serviced by rapid transit.

A far future idea: pneumatic tubes that carry products either right to your door, or to a service center no more than a block or two away.

[jefff]

It seems to me that in order for this to be a 'fair' deal the tolls for the toll roads must be high enough to buy the lane for the toll payers alone. Anything less and they are being given more than they are paying for on the backs of those who don't have the money to participate in the giveaway.

I think the situation is somewhat different in, for example, the london congestion price zone, where all drivers are affected and the effect is to favor all non-driving modes over driving ones (provided that driving isn't receiving an overall subsidy despite the congestion charge).

As to everyone complaining about transit being subsidized: so is car travel in the US. Drivers like to tell themselves it is all paid for by gas taxes, but not even highway construction and maintenance is paid for completely by the gas taxes, let alone local roads, emergency response, parking, externalities, resource wars, the original highway system, etc.

[Dickeylee]

I'm guessing that $8-10/gal gas will thin out the "herd" soon enough, as everyone will either be out of a job, or car pooling in the HOV lane. Now that we've got rid of all those peacenik Generals and Admirals, our crusade against Iran can commence!

[Jay]

"Since the next dollar spent on transportation is less valuable to the rich than to the poor, why not devise a progressive congestion pricing system?"

Jim: Why do the rich pay the same price as the poor for anything?

[Jim Harrison]

Public goods are different than private goods, otherwise it would be legal for the wealthy to openly buy favorable rulings from judges. If access to cities were just another perk of wealth, I'd have no problem with the rich buying it for the same dollar amount as everybody else; but that's not the case in L.A. where public transportation is lousy and many people have to drive over roads that are public works.

By the way, the rich don't pay the same price as the poor. They get many things quite a bit more cheaply. Have you ever looked at the prices in an inner city grocery store?

[James Killus]

In some places, the HOV lanes are already used in the fashion described. Specifically, single occupant vehicles ride in the HOV lane, and, if caught, simply pays the fine. I remember a newspaper story where one such driver noted that he was caught on the average of about once every month or two, and since he could easily afford the fine, he would continue to ride in the HOV.

I will also note that one those times when I've had the passengers to be in the HOV lanes, it was often much quicker than the other lanes. This is in Northern California, which may explain the difference with Bruce Wilder's experience.

[gordon]

I’m reliably informed that a Pigovian tax doesn’t imply actually spending the tax revenue to rectify the previously uncosted externality. The Pigovian tax is supposed to work by making the socially costly choice just as expensive as the socially costless choice, ie the alternative which doesn’t create (or already incorporates the cost of) the externality. But of course, this in turn implies that such a choice exists. So comments on this thread about congestion pricing being ineffective if public transport is poor imply that a Pigovian solution is impossible; the consumer doesn’t have a socially costless or lower-cost alternative. In the London example, Spencer points to previous expenditure to create a public transport alternative.

It seems to me that subsidising a socially lower-cost alternative is conceptually equivalent to taxing a socially higher-cost alternative. Perhaps this is what Bakho is aiming at when he says “What if instead of a toll, they paid higher taxes to build and subsidize mass transit that would take more cars off the road?” It might not be Pigovian (as defined by economists) but maybe it’s the way out of the situation where no Pigovian solution is available because of lack of alternatives.

[a]

"we can use the revenue from the tax to give rebates to lower income households so as to offset the losses from higher prices, tolls, etc., "

Reminds me of the argument for free trade. Make free trade agreements now, with the promise of help for the displaced workers later. But the latter never seems to arrive.

So maybe we should give the rebates to lower income households first, then talk about raising taxes which primarily will impact the quality of life of the less well off.

[Real Person from the Real World]

No one likes to actually pay for anything. It seems easier to sell a tax that targets somebody else, .....So we have sin taxes, speed traps, buy off credits for pollution, and now special lanes. Those with the money are continually able to opt out, while those with low paying jobs, are the ones that pay and pay and pay. But these taxes seem so "fair" - after all someone else pays for committing a sin.... Think of that next spring, when the police cars are out to "nab speeders." How come they seem to be more active in the spring? AND they never seem to catch the lane changing jockey's and lead foots out on the main roads going 80+, while they sit somewhere in a village or town main drag and nab people in old jalopies trying to get to work, and predictably exceeding a speed limit of 35 or 40 mph, like others at rush hour, by maybe 7 to 10+ miles an hour? And of course, to make sure that the prey, excuse me, PERP, is made as miserable as possible, they charge fines grossly mulitplied by mileage and/or make people sit thru lectures.

[Real Person from the Real World]

And don't tell me you have never had a ticket. I haven't had one in years, but I see what is going on. My brother-in-law claims he has never had a ticket, but he took the train to work, and he drives at a average of 20 miles an hour to go shopping. You can almost walk faster then he drives, and even in some areas the speed limits are ridiculously low. Don't tell me they don't want the option to send the cops out to collect a little revenue, in some towns and villages. Especially from those who don't live in the area.

[gordon]

The Brotherhood of St Laurence (an Australian charitable organisation) recently released an estimate of the carbon emissions of poor households in the Australian State of Victoria. They found that rural and outer metropolitan households emitted more carbon than inner metropolitan households of similar income, mostly because of poorer public transport and greater travel distances. The report estimates that poorer households will have to pay an estimated average extra $A938 annually when an emissions trading scheme is introduced (currently planned for 2010) - more if they are rural or outer metropolitan. Unless some improvements are made in service provision and/or carbon-efficient transport, rural and outer metropolitan households in particular will have no option but to pay up - taking the bus/train or reducing travel distances won't be viable options. This tends to support my earlier comment that Pigovian solutions don't work unless alternative options are available.