The Leaflet: States Battle Traffic Congestion

Published June 16, 2016

State and local lawmakers continue to deal with increased traffic congestion across the United States. In Chicago, a trip that would typically take 30 minutes in free-flowing traffic can now take more than 60 minutes during peak driving times. Drivers in Los Angeles spent an average of 81 hours in traffic in 2015, ranking as the worst cumulative delay of any U.S. metropolitan area, according to a study released by the data company Inrix. To battle the growing traffic problem, states are considering a policy known as “congestion pricing” – also called “value pricing” or “variable tolling.”

According to the Federal Highway Administration’s website, “Congestion pricing is a way of harnessing the power of the market to reduce the waste associated with traffic congestion. Congestion pricing works by shifting purely discretionary rush hour highway travel to other transportation modes or to off-peak periods, taking advantage of the fact that the majority of rush hour drivers on a typical urban highway are not commuters.”

In a recent Mercatus Center study, George Mason University economist Robert Krol examines the problem of highway congestion and how congestion pricing strategies have been successful in the past and why they would be beneficial in the future. In the study, Krol argues, “There is mixed evidence about whether congestion pricing is regressive, but governments implementing congestion pricing could use several policy solutions to help reduce inequity. These include reducing other regressive taxes such as the gasoline tax and giving commuters the option to choose between toll lanes and toll-free lanes.”

Eric A. Morris, a researcher at UCLA’s Institute of Transportation Studies, argued in a recent Freakanomics blog post one way to end the problem of traffic congestion is to impose tolls that vary with congestion levels on roadways. “Unfortunately, it can be hard to convey this because the theory behind tolling is somewhat complex and counterintuitive. This is too bad, because variable tolling is an excellent public policy. Here’s why: the basic economic theory is that when you give out something valuable — in this case, road space — for less than its true value, shortages result.”

Robert Poole, director of transportation policy at the Reason Foundation and Reason’s Searle Freedom Trust transportation fellow, discussed best practices in congestion pricing in a Policy Study published in 2012, stating, “Research suggests that social welfare would be maximized not with a single price for all freeway users but with several choices of price and service level for various categories of user. One way to implement such a system, with separately priced lanes for premium service motorists, regular motorists and heavy trucks.”

Poole’s study sketched out a possible evolutionary approach to implementing such a system, in which each step can be justified on its own merits and each creates preconditions for moving on to the next step at a later time.

Krol says tolls offer a broad-based benefit for society, are no more regressive motor-fuel taxes, and he says technological advances can reduce costs and protect privacy. “Congestion pricing schemes have been unpopular, but as people become more familiar with the idea and see its benefits, public support may grow. Since congestion pricing becomes more acceptable after it is implemented, one policy option is to impose a temporary toll that could be made permanent later.”

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