McArdle’s objections to congestion pricing

By Felix Salmon
June 3, 2010
Megan McArdle for giving me something to push back against with respect to congestion pricing. Megan, like me, favors congestion pricing, but she does see some problems with it.

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Many thanks to Megan McArdle for giving me something to push back against with respect to congestion pricing. Megan, like me, favors congestion pricing, but she does see some problems with it.

The first, I think, is a bit of a straw man:

There’s a real tendency to tell drivers that congestion pricing is great for them: less traffic! I can kind of buy that argument, and then I notice something: almost no one making it commutes by car…

All the people commuting by car seem to think they will hate it. And that makes me think that they probably will.

Yes, this is absolutely true. Congestion pricing will hurt people who commute by car. That’s the whole point. If you currently commute by car, then you’ll either end up spending more money, or else you’ll use public transit. Neither is an obvious improvement. Some richer commuters will like their faster commute, but car commuters who aren’t wealthy will absolutely be the biggest losers here. We tax what we don’t want, and what we don’t want is car commuters. Most advocates of congestion pricing are pretty clear on that point.

That said, it’s worth pointing out a couple of mitigating factors here, beyond the simple idea that the cost of the toll might be balanced by the benefit of faster traffic. First, car commuters already pay for commuting into the central business district of New York, which has no on-street parking: they have to pay to park somewhere, and parking in the CBD is expensive. Megan talks about a car commuter paying $200 a month in congestion charging, and she’s right that that is “a lot of money for most people”. But on the other hand, we’re talking here about people who are already paying much more than that just for parking.

Secondly, where the congestion charge makes the biggest difference isn’t with commuters, so much as it is with through traffic and trucks. Insofar as commuters end up driving more quickly, it’s not mainly because there are fewer car commuters. Instead, it’s because truck traffic will end up moving from peak times to off-peak times, and because through traffic — cars which have no business in Manhattan but just drive through on the way somewhere else — will take alternate routes. Charging is pretty much the only way to make these things happen, and they’re clearly necessary.

And thirdly, car commuters are in the minority in every district in the New York metropolitan area: not just in the boroughs generally, but even in congressional districts in eastern Queens or in Westchester or even in New Jersey. Today, without congestion charging, the number of people who commute by car from any given area into New York’s CBD is smaller than the number of people who commute by public transit from the same area. It’s not like these people have no choice in their mode of transportation.

Megan continues:

I still think that congestion pricing is a good idea for a lot of reasons, but let’s not kid ourselves that it makes everyone better off. It makes affluent people who can afford taxis and congestion fees better off, and poorer folks who can commute by bicycle.

Well, under the Komanoff plan, there’s a hefty 33% taxi surcharge, so let’s not jump to conclusions about whether people taking taxis will be better off. And most of the bicycle commuters I know are actually pretty affluent — for starters, it’s generally much easier to commute by bike if you live in Manhattan than if you live in Queens or the Bronx. And living in Manhattan, for the most part, ain’t cheap.

Certainly every city with congestion pricing has used some of the freed-up road space for bicycles, and the rate of bike usage in New York is rising fast. The more bicyclists there are, the safer and more pleasant biking becomes, and the more everybody wins: as someone who commutes either by bike or by subway, depending on the weather, I can assure you that biking is much more pleasant. And London is just one of many examples of cities where a large number of people have switched from the subway to a bicycle, not because biking is cheaper, but just because it’s a much more efficient way of getting from A to B. In New York, a congestion charge would be extraordinarily helpful in terms of increasing the number of bicyclists.

Megan then says that reducing subway fares “is a terrible idea”, on the grounds that rush-hour subways are already at capacity. But again, if you look at London, subway ridership went down after the congestion charge was introduced, because it made buses so much more attractive. Subways are capacity-constrained, but buses really aren’t.

But more generally, New York’s subways are woefully underused. For a couple of hours a day they’re crammed to capacity, and for most of the rest of the days there’s huge amounts of space. If you reduced the fare at off-peak times, that would do wonders in terms of maximizing the utility provided by the subways — while at the same time reducing congestion on the streets above.

What’s more, rush-hour subway traffic is very price inelastic. The people who brave the subway at 8am are the people who have to brave the subway at 8am, and that’s true whether it costs $4 or $2 or $0. Reducing the fare at peak times might increase peak-time ridership a little, but it wouldn’t increase it a lot. And in fact, if it were done in conjunction with putting a lot of new free buses on the road, there’s a very good chance that, just as in London, subway ridership at peak times would actually fall.

Finally, Megan says that “if you want to reduce auto traffic, you need more capacity on the [transit] system–and you cannot build that capacity if the system has no reliable source of revenue other than the largesse of the city government.” Well, yes. That’s exactly why congestion-charging revenues should be earmarked for transit.

Of course there are some losers with congestion charging. But everywhere that it’s been implemented, it’s been a bit like the smoking ban: people hated it before it was enacted, and then actually kinda liked it afterwards. There’s no reason that the U.S. should be any different.


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It’s worth remembering that many rush-hour commuters use “unlimited ride” metrocards and bear no marginal cost in the status quo. For these people, eliminating subway fares will be a windfall but will have no effect on behavior (except to the extent that riding the subway becomes easier when stations don’t have turnstiles, which must be a pretty minor effect).

Of course, this is not to say that usage won’t increase, just that a lot of people already regard the marginal subway ride as free.

Posted by minderbender | Report as abusive

“Congestion pricing will hurt people who commute by car. That’s the whole point.”

I hope not. The idea of congestion pricing is aligns the private cost of car travel with the public cost. One might find that commuters are less price sensitive than business trucks and through traffic. But the point is once you get the price right, you don’t care.

Posted by mjturner | Report as abusive

I think it’s worth noting that “earmarking” congestion funds for transit is absolute nonsense. Money is fungible and the current shenanigans involving the state and the MTA’s budget shortfall are ample proof of it.

Posted by mushr00m | Report as abusive

If you’re going to earmark it, why not earmark it so it’s used for a tax break? Then you could sell it as revenue-neutral, and legitimately argue that it’s not a tax, but a fix.

The goal here should be to change behavior, not raise money.

Posted by absinthe | Report as abusive

“But on the other hand, we’re talking here about people who are already paying much more than that just for parking.”

Does this make you wonder how effective a congestion charge is going to be?

Posted by Mr.Do | Report as abusive

As Mush00m says, I think you’re assuming away the political problem. The political problems with freezing/lowering subway fares are real, and historically they have been accompanied by promises of revenue from elsewhere that have been repeatedly broken. In theory, earmarking is great. In practice, the way it has always worked out in New York State, it has seriously undercut the system.

I also think you’re a bit optimistic about the effect of pricing on peak traffic. People said the same thing about unlimited metro cards, but my understanding is that this is not how it worked out in practice. Maybe it will go down the way it did in London, and maybe it won’t–but then what’s happening to the commuters? You certainly can’t count on that as the only possible outcome, or even the most likely one.

Posted by MeganMcArdle | Report as abusive

In fact with the exception of express buses that cost more than double (closer to three times) the basic fare, few interborough bus options exist, especially connecting the boroughs outside Manhattan to the Central Business district. As a result, perhaps unique to NYC, added bus capacity and less crowded buses rarely will result outside Manhattan. Buses in Manhattan have redundancies to the subways. Other boroughs have buses to funnel riders to the subways. Those buses run crowded midday as well as rush hours. Only buses that have low ridership at all times have few off hour riders. And several subway lines serving Manhattan can be crowded midday.
Adding more bus and subway riders will just further crowd buses and subways and further inconvenience those who already commute via those modes. Those who advocate the congestion tax care not one iota about the average riders and clear lack a knowledge of the entire city. It is not just looking at a Hagstrom’s (Clearly, the way NYC2012 conceived how to site sports facilities for their failed Olympics bid); it is not looking at and misusing statistics. While it might be nice to delay truck deliveries to overnight hours, in much of the CBD, that remains impractical. NYC is so different and to just drop other models here just does not work. See for more information.

Posted by CoreyB18 | Report as abusive

Comparing the London and New York buses is a fallacy. Even before congestion pricing, the utility of the London bus sytem far surpassed that of New York’s. Its all the stops, the grid system, and the time it takes to pay that makes the NY system nearly intolerable. Saying that people chose the London buses rather than the tube says nothing about what New Yorkers will do when faced with the same choice.

And I am not sure I understand the logic of lowering the price of subways off peak. If they are underused (and thus more comfortable), and driving and parking is already so expensive, don’t we already have the incentives set up to take the subway at offpeak times?

It really seems as that the only winners here are bikers.

Posted by Ledbury22 | Report as abusive

Rush hour toll pricing makes a lot of sense, as long as you don’t get miles long lines at toll booths.

Dynamic price levels make it hard to plan and are an economic bad idea.

Adding toll lanes to existing roads, creating many more choke points is a horrible idea. HOT lanes must die.

Posted by mattmc | Report as abusive

It is interesting to note that the London experience appears to have had very little long term impact on traffic. The initial drop in mileage and travel seems to have reverted to mean once the congestion charge was internalized in company budgets. The drop in subway usage was probably idiosyncratic,as it was accompanied by the transfer of bus operations to a new operator.

The key issue in considering congestion pricing in New York City should be to understand who is actually driving into the Manhattan core at what times and to what purpose. There does not seem to be any systematic examination of these issues in the latest approach to the issue. In studies undertaken some years ago it was clear that most of the people who drove daily into the core were there for business reasons, not for commuting reasons. Many were sales people who used their cars to make sales calls and were expecting to make more than one trip during the work day. Being in the core was a business trip and that trip is not likely to end if there is a congestion price on top of the parking charges already felt. We also know that most of the people that drive into the core have their parking charges paid by their employer. When you raise the charges, the employer will simply pay more.

Many people firmly believe that there is no economic value to the trips that arrive into the core by automobile or truck. They see it as easy to tax these trips out of existence. But that is not likely to happen without economic cost. What research that was released before the latest venture revealed that most of the people who were driving into the core from elsewhere in New York City were coming from areas that were underserved by mass transit,many from areas originally intended to have subway access in the planning done in the 20s. People in these areas, whether in Bayside or southeast Brooklyn, make a rational choice between a relatively short trip from home to work by car and a multi-leg,much longer trip by public transportation. If it is a business trip,the choice is a no brainer. If their parking is subsidized as a commuter,as happens for people from nurses to surgeons, then it also probably a no brainer. Time is worth money.

Until we know who will be adversely affected by congestion pricing in New York City, then we should be cautious about its introduction. It may turn out to be the last straw for some people who are job generators. We should not forget that New York City’s belief that it could tax manufacturing without effect in the late 60s accelerated the deparure of manufacturing from New York City.

Posted by FrankMcArdle | Report as abusive

I don’t have a dog in this fight but it just looks like a state trying to squeeze more money out of their population AND make them “feel” good about being squeezed. This is just another way the politicians take your money and attempt to convince you it is for a good reason.

Posted by Pantalones | Report as abusive

I have yet to ever meet even one smoker who thinks any type of smoking ban is good. The fact is, these types of taxing and bans are why we overthrew the english anyways…if the governments keep it up, what exactly do they think will happen to them? That applies to cirty, state, and federal governments.

Posted by BWilsonSr | Report as abusive