The Solution to Your Evening Commute - An Economic Approach

I've seen this image posted on several websites already:

It is obviously a post geared at showing the benefits of alternative transit (buses, bikes, light rails, etc.), but it opens up the opportunity to talk about the greater topic that is transportation, and more specifically, traffic congestion.  

We all know what traffic congestion is:  it's what makes it inconvenient, annoying, stressful, and sometimes unsafe to drive places.  It is a pervasive problem in many urban areas around the world, and with increasing amounts of the world's population center shifting to urban areas, it seems increasingly impossible to fix this problem.

But it can be done.

But First...

Of course, first we have to ask one question:  how does traffic occur?  The Federal Highway Administration explains:

"Congestion results when traffic demand approaches or exceeds the available capacity of the system."

In translation, this means that traffic congestion is caused by the fact that the miles of road in the United States is relatively constant.  Even in the face of small increases in road miles every year due to construction, this finite space is divided into smaller and smaller portions with each new driver who backs out of their drive way.  The problem then boils down to the fact that traffic congestion is a side effect of the fact that there isn't enough road for everyone who wants to drive on it.

How Do We Fix It?

Traffic congestion is something of a many-faceted problem, and the true solution to improving traffic congestion in any community requires a myriad of tools.  But here we are back to discussing tools.  Not the type you can buy at Home Depot or Lowe's, but our handy, dandy Economic policy tools.  Let's begin to discuss some of the tools we can find in our tool box.

Increasing the Supply of Road

In many ways, the most straightforward policy tool one could suggest to alleviate traffic congestion would be to widen the roads.  Traffic congestion is caused by a lack of drivable space, so the quickest way to fix the problem would be to increase the amount of drivable area.  

Now the important part of any policy tool is to realize and weigh the pros and cons of each possible solution.  Let's discuss:

Pros

• Keep it Simple, Stupid - It is the simplest, most straightforward way to fix the problem
• Certainty - It is the most certain solution to fixing the problem
• Keeps Taxpayers Happy - It is the most politically viable solution to be supported by taxpayers

Cons

•  Construction Takes Time - Usually the best the construction of new roads can do is to keep pace with the problem
• There Isn't Room - In some places with the worst traffic congestion, road widening is also the least feasible simply because there is not room to widen roads due to preexisting buildings and infrastructure
• Well, I Used to Take the Bus... - Widening the roads may cause draw out induced demand by incentivizing people who used to walk, or take the bus, to now drive.  This means that widening the roads will only maintain the status quo as roads get wider, which does not help fix the problem.
• Nobody Likes Construction - This speaks for itself.

Creating Legitimate Substitutes Goods

This solution works by creating goods and services that are legitimate alternatives, or substitutes, to driving and work to reduce the demand for driving cars.  This looks like reducing the number of vehicles on the road by finding ways to put more people in one vehicle, or by creating modes that don't use the road at all. 

Some examples:

Public Transportation

Public transportation is a network of transportation modes that provides service on fixed routes that run on fixed schedules.  According to the American Public Transportation Association, this goes beyond buses, though, to include some modes such as:

• Light rails
• Subways
• Street cars
• Ferries
• Commuter trains
• Trollies
• And yes, buses

Bicycles / Bicycle Infrastructure

 
The encouragement of biking and the provision of adequate, safe bike infrastructure allows commuters the luxury of their own 'vehicle' and choosing their own route, while also providing a mode of transportation that is cheaper, more versatile, and an alternate to driving.  

Car Pooling / Ride Sharing
This alternative matches people who have relatively common departure and arrival areas to their commute, and allows them to commute in one vehicle versus the several vehicles that would be necessary if each person were driving their own car.  Furthermore, this option also allows individuals to split money for gas, and allows the driver to be compensated for wear and tear on their car in a way that may be profitable to them.

Assessing the Policy Solution

 Of course, each of these examples of creating substitute good to driving has its own pros and cons, though this group as a whole shares some common pros and cons.

Pros:

•  Creates Alternative Options - Even though people may not want to drive, they are forced to if there is no other option.  Creating these other options is important to achieving the goal of reducing traffic congestion.
• Reduces Harmful Tailpipe Emissions - This is a fancy way of saying that public and alternative transportation modes like these work to reduce carbon emissions either by exploiting economies of scale by putting more people in one vehicle or by using modes that produce fewer emissions - such a bicycle, which produces no emissions.
• Creates Equal Access - Because many of these substitute forms are cheaper than owning a car, it works to create equal access to transportation for more people.  This is beneficial because it allows people to pursue better careers and educational opportunities than they may otherwise be able to.

Cons:

• Public Goods - In conjunction with the fact that many of these modes are public goods, or are facilitated by public infrastructure, the truth of the matter is that they are not profitable ventures most of the time. Which makes them...
• Politically Unpopular - People like public transportation once it is there.  They just don't like to pay for the investment to get it there.  This is typically a phenomenon known as latent demand, where demand is created for a good/service because it is there, rather than the supply being derived partially from preexisting demand.  This is complicated because people like the idea of moving forward with these alternatives, but they are less likely to come to fruition because there is not money to fund the projects.
• Consistency is a Must - Admittedly, the one caveat to creating legitimate substitutes to driving is that these modes must be dependable.  With public transportation, this means that routes must be expansive, timely, and usually run through longer hours of operation.  Bike routes must be contiguous and create space for both bicyclists and cars to feel safe.  All of this is fighting an uphill battle at times both politically and financially.

 Price Incentives

The final tool economists possess that can help fix traffic congestion is the Duct Tape in the tool box discussed last week:  price incentives.  Because driving in this instance creates several negative externalities - pollution and traffic congestion - then the logical solution is to 'tax' driving and make the market price of driving more expensive.  Some possibilities include:

• Increase Car Registration Fees
• Increase Gas Taxes - Increasing the price of gas would incentivize people away from driving as much, and may prompt them to make alternative transportation choices such as those alternatives above.
• Paid Parking - Paying to park in high-traffic, public places like malls, colleges, or downtowns works to make it more complicated to park once a consumer arrives at their destination.  This may make them rethink their form of transportation before they leave their house - especially if public transportation hubs are clustered in the same areas as paid parking.
•  Initiating Tolls in Very Congested Areas- This assigns a cost to something that was a public good before.  By assigning a price to some of the most congested places, some people will still be willing to pay to use that stretch of road.  But other people will be willing to take alternate routes, or will choose other transportation alternatives.

Pros

As normal, there are pros and cons to be assessed with any group of policies:  

• Choice - These mechanisms work to correct the problem while also providing free choice that people value very highly in most countries.  This goes away from telling people ho wot commute. 
• Potentially Profitable - These mechanisms have the potential to be profitable and earn money to offset many of the issues that exist with driving, such as pollution, inadequate infrastructure, or other funding needs. 
• Adjustable - Because these constructs are often intangible, they are relatively inexpensive to implement and are adjustable to changing tastes and needs in the economy.

Cons

•  Responsiveness - People may not respond to the price incentives as expected.
• Potentially Creates Socioeconomic Barriers - These price incentives may create further barriers to equal transportation for those who are lower income.

The Real Solution

The real solution to combating traffic congestion likely falls in the middle of these several policies, and a true solution uses a variety of these tools.  Unfortunately, Duct Tape may work somewhat well, but some chewing gum and maybe a hammer is necessary to truly fix the problem.  The chosen combination of these policies is very situational and depends on resources, culture, and political climate in a given community.  

Generally, though, the solution must make driving more difficult and provide a legitimate alternative to driving.  However a community chooses to implement this is variable, but the end should be the same.  That's the only way this is really going to work.