Putting Prices on Mobility
By Geoffrey F. Segal
Debates about tolling our highways traditionally focus on the potential revenues they’ll
raise and how the money will be spent once it is raised. While this is an important piece of the
overall equation, it falls short of detailing the full benefit tolling can bring.
To begin, we must understand that a toll is no different from any other service charge we
pay. It is nothing more than a price. Second, technology is moving us rapidly away from the
traditional toll collection model with long lines of commuters waiting to pay their toll—Smart
Pass and EZ Pass systems are already utilized by many of the Commonwealth’s toll road users
today. However, cutting-edge technologies enable us to monitor traffic flows and make realtime price adjustments based on those flows. A simple concept—as demand increases, so does
price and vice versa.
As consumers we’re generally willing to pay a little more for something that is a little
better. The same is true for the added convenience or virtual guarantee of being on time or not
sitting in traffic.
Following that line of thinking, one of the most often overlooked benefits of tolling is
that it encourages economic thinking. Variable pricing enables us to put a price on time—
allowing those that are willing to pay to avoid congestion. If we can appropriately price the cost
an urban driver puts on the system during rush hour, the incentives for that driver change
significantly. Faced with options, that driver will either pay the cost, find someone to share the
cost by carpooling, commute during non-peak hours, find other means to get to work by bus or
train, or arrange to telecommute.
Congestion will decrease almost immediately. Economic factors and decision making
will lead to greater use of each option above—at a minimum, some drivers will no longer
commute alone in their car during rush hour.
A recent national road pricing study in the United Kingdom produced a stunning
conclusion—using road pricing to achieve just a 4 percent reduction in traffic reduces congestion
by 50 percent. So not many people need to use toll roads in order to significantly reduce
congestion on today’s main thoroughfares.
One of the biggest arguments against tolling or road pricing is that it isn’t “fair,” since
the lanes would only be open to those that can afford to use them. This argument is flawed
since users of the “pay” road free up space on the “free” road thus reducing congestion and
improving the average speed there as well. Indeed, two variable pricing projects in California
shows that pricing really keeps traffic flowing. For example, the priced lanes on SR-91 carry
twice as many vehicles per lane as the unpriced lanes at speeds 3 to 4 times faster. In addition,
the free lanes are experiencing shorter commute times and less congestion than before. A
classic win-win. We don’t object to different levels of service for other commodities including
our airlines and rail service and there is no reason to believe would with toll roads.
Pricing, however, is itself more equitable. Those who use the network during peak
periods should pay more than those who do not. This is the same type of pricing we use for
telecommunications, electricity, movies, time-share vacation homes, airline tickets, and virtually
any other business that experiences higher demand periods.
There is no justifiable reason why highways are any different. Why should a driver on
Sunday pay the same charge to use the toll road as a commuter driving to work at 8:00 a.m. on
Monday morning?
The third most overlooked benefit of road pricing is that it creates customers and
encourages innovation. Toll authorities in America tend to be more customer-focused because
their revenues are directly tied to the number of drivers using their facility. While VDOT has
made dramatic strides and improvements in their operations, they fall well short of being labeled
customer centric.
We must not lose sight of the purpose of our transportation network. It is to move people
in the most efficient and effective manner possible. Pricing as a model must be part of the future
solution to our transportation needs. Americans are always willing to pay more for quality or
convenience.
We’re willing to pay upwards of $5.00 for Starbucks even though our offices provide fee
coffee. The US Postal Service will deliver a letter for 37 cents, but we are willing to pay $15 for
guaranteed service by FedEx and UPS.
Our highways should be no different. Drivers will pay to get where they’re going in a
shorter period of time when it is convenient to do so.
Geoffrey F. Segal is Director of Government Reform at Reason Foundation and a Senior Fellow
on Government Reform at the Thomas Jefferson Institute for Public Policy. Opinions expressed
are his own, and do not necessarily represent the views of either the Thomas Jefferson Institute
or its Board of Directors. Geoff can be contacted at Geoffrey.segal@reason.org