Tuesday, 28 June 2011

Better urban transport: equity versus efficiency

Yesterday the New York Times ran a story on how European cities have tried to make driving as costly and difficult as possible to induce people to take transit, walk, or bike. Whereas American cities synchronize lights to make automobile traffic move as quickly and efficiently as possible, some European cities actually sync lights to slow traffic down as much as possible, timing successive traffic lights to turn red just as drivers arrive from a previous stop at a traffic light. I'm in favor of making drivers pay more; it is difficult to believe that drivers pay for all the external costs of their automobile use, even at high European petrol prices. But this idea that cities should impose time costs instead of monetary costs to discourage driving is interesting. Why not just make drivers pay more?

There are several possible answers. First, gasoline prices are already high in Europe. It could be that pricing incentives are reaching diminishing marginal returns for affecting behavior. And if European cities truly want to make inner cores more pedestrian-friendly, then it must by force and not by price drive drivers out of their cars. It must not only be more costly in terms of money but also time to drive into the inner core. The article suggests that some inner core businesses have seen visitorship increase with a more pedestrian-oriented inner core. The second possibility is a little more speculative, but more interesting. Some people are uncomfortable with the idea that if driving is to be reduced, that it be allocated by ability to pay. Why should it be that driving is the privilege of the rich? There are a lot of responses to that question, but suffice it to say a lot of people feel that way and won't be persuaded otherwise. So the idea of pricing driving in terms of time instead of money is something that appeals a little more to this crowd: we are all endowed with pretty much the same allotment of time -- everybody has 24 hours in his/her day, so if driving is time-costly, it affects everybody the same, regardless of wealth. In fact, if wealthy people have higher opportunity costs of their time, a time-price is likely to affect wealthier people more. That might sound good, but giving less wealthy people greater access to driving doesn't actually effect any income redistribution, like a higher gasoline tax could.

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