Is congestion pricing fair to the poor?

By Michael Manville

Ask most transportation scholars how to alleviate congestion on LA’s traffic-clogged arterial streets, and you’ll probably get one answer: charge tolls. Traffic congestion occurs because road space is valuable, and cities give it away free. Anyone who has taken an economics class probably remembers that when valuable goods are underpriced, too many people want them, and the result is a shortage. Congestion is basically a shortage of road: a crawling queue where lots of us slow each other down trying to get where we’re going.

Tolls solve this problem by charging rent to use the road. When people who want to drive on valuable public land must pay fair prices to do so, some of them will drive less. And because congestion is nonlinear — the last few drivers entering a road contribute disproportionately to the delay everyone experiences — convincing just a small number of people to forgo a trip can greatly improve speed and flow, which translates into less congestion.

We know that such tolls, which are called congestion pricing, work. London, Stockholm, Milan, and Singapore have all used them and have seen traffic delay fall quickly and substantially. A more persistent question is whether congestion pricing is fair.

There’s a few ways to think about this question. Tolls would be regressive — their burden is larger for lower-income people. On the other hand, not all low-income people drive. The poorest people generally can’t afford cars, so tolls would not hurt the most vulnerable — and might even help them (if reduced traffic congestion let buses travel faster).

That said, many low-income people do drive, and tolls may burden them. Fortunately, tolls also come with a built-in solution to this problem: revenue. Toll revenue can offset costs for low-income drivers. This is how we help low-income people afford other forms of priced public infrastructure, like heating, gas, electricity, and public transit. We identify people who can’t afford the service and dedicate a portion of our own payments to help them.

One might argue that it is fairer to just keep roads free. But very few social policies are built on the idea that all goods should be free. No one, for example, argues that all food should be free because some people are poor. So it isn’t clear that all roads should be free because some drivers are poor.

Further, arguing that congestion pricing isn’t fair implicitly assumes that the status quo is fair. But that’s not obvious. It’s easy to think of free roads as a subsidy for the poor, but it’s more accurate to call them a subsidy for the affluent that some poor people are able to enjoy. Driving is expensive: it requires a car, gas, insurance, registration, maintenance, and so on. All of these are easier for the affluent than the poor to afford, and as a result, the affluent drive much more than the poor. This means that the benefits of free roads accrue disproportionately to wealthy people. Free roads function like a matching grant for drivers: the more money people can invest in driving, the more benefit they get from unpriced streets. If, conversely, you can’t afford to drive at all, free roads don’t help you.

“Arguing that congestion pricing isn’t fair implicitly assumes that the status quo is fair. But that’s not obvious.”

Moreover, free roads get congested, and congestion exacerbates vehicular air pollution. Vehicular pollution has been linked to health problems ranging from cancer to asthma to preterm birth, and it most affects people living near congested roads — who are disproportionally likely to have lower incomes. So poorer people are not just less likely to benefit from free roads, but more likely to suffer from them.

Maybe the best way to think about congestion pricing’s fairness is to imagine a world where the roads are already priced — a world where we allocate road space like we already allocate water or electricity or other infrastructure. In this world, drivers would pay for the valuable public land they used; congestion would be far lower and so would pollution; transit would run faster; and governments would use some of the toll revenue to mitigate congestion pricing’s burden on low-income drivers.

Now imagine a proposal to make all roads free. Free roads would let the poor and rich drive free, but the rich drive much more than the poor. Congestion would rise, buses would slow, and pollution would increase. The pollution would fall most heavily on the poor, but without tolls, there would be no revenue to redistribute and compensate the people it fell on. Making the roads free would undermine efficiency (the transportation system would work less well) and equity (free roads would harm the disadvantaged and reward the more advantaged).

In the real world, this unequal proposal is not a proposal at all. It’s the status quo, and its normalcy prevents us from thinking about its fairness. It is appropriate to worry that priced roads might harm the poor while helping the rich. But we should also worry that free roads do the same, and think about which form of unfairness we are best able to mitigate. People who worry about harms to the poor when roads are priced, and not when roads are free, may be worried more about the prices than the poor.

Michael Manville is Assistant Professor of Urban Planning at the UCLA Luskin School of Public Affairs. Both his research and teaching focus on the relationships between transportation and land use, and on local public finance. Dr. Manville’s research has been published in journals of planning, economics, urban studies, and sociology. Dr. Manville has an MA and PhD in Urban Planning, both from UCLA Luskin. Prior to joining Luskin as a faculty member, he was Assistant Professor of City and Regional Planning at Cornell University.

One clap, two clap, three clap, forty?

By clapping more or less, you can signal to us which stories really stand out.