Is 30 Minutes of your Time Worth $5.95?

January 6th, 2009 · No Comments · Books

In “Why You’ll Love Paying for Roads that Used to be Free,” Eric A. Morris delivers a compelling arguement for setting up variable toll rates for public highways that are currently free to reduce congesting.

It’s a really hard sell to politicians and citizens alike, but he argues:

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.

Ultimately, there’s no free lunch; instead of paying with money, you pay with the effort and time needed to acquire the good. Think of Soviet shoppers spending their lives in endless queues to purchase artificially low-priced but exceedingly scarce goods. Then think of Americans who can fulfill nearly any consumerist fantasy quickly but at a monetary cost. Free but congested roads have left us shivering on the streets of Moscow.

In a study done in Seattle, the highest anyone ever paid for a toll was $5.95. The time saved by using the toll was 27 minutes. Depending on where I had to go, I would make my decision on whether or not to pay the toll.

This article is similar to the book Traffic, by Tom Vanderbilt, which is next on my reading list after Gladwell’s new book, Outliers, which I am almost done with.

HT: Freakonomics