If you don't use willingness to pay, how else are you going to measure how much people "need" to drive on a road? Willingness to pay is a great heuristic for need, and the information from people's willingness to pay is automatically integrated into the entire economy through the price system.
I wouldn't say it's a "great" heuristic for need, especially since its implementation across a range of systems has such a large exclusionary effect on the poor. With that being said, I'm not sure a better one exists. This more leads to the conclusion that we shouldn't regulate public utilities, meant in principle to be accessible to all, in this way. traffic might just be a consequence of having "free" roads.
Traffic certainly is a consequence of free roads. It's a classic tragedy of the commons. People don't have to pay for the costs they impose on other by driving on the roads so far more people than optimal drive on the roads.
The poor are excluded from some things not because of the price system but because of their lack of resources. There are three possible solutions to this. 1. Produce more resources, 2. Redistribute existing resources, 3. Try to change the price system or avoid it entirely. The price system simply allows everyone to prioritize and allocate in whichever way they want, given the resources that they have. You might want to change people's resource endowments through redistribution, but that is no reason to mess with individual's allocation of their given resources. In the case of roads it is clearly preferable to implement a price system to force people to face the very real tradeoff between scarce road space and their desire to commute. If you're worried about exclusion then a means tested voucher or subsidy would do the trick and still preserve the allocative efficiency of the price system. This improves the welfare of everyone, including the poor and especially poor commuters who can now get to work much more easily.
I'll give you a situation where having 'free' roads actually excludes the poor as well. Lets say there is a lucrative job opening Downtown for a poor worker but with traffic the commute is an hour long. Even though this new job would give them a huge wage premium, they can't use that premium to make the commute faster so they can't take the job. With road pricing, this worker can allocate some of their gains to buying the EZ-pass and get the job. Traffic increases travel times which excludes people from labor markets that are too far away.
@both of you - One thing I don't fully get is why one type of cost is fine and the other isn't. When we build more roads, we get more cars so traffic speed stays the same; when we reduce roads, we get less cars so speed stays the same. If we don't do anything, everyone complains about traffic but everyone continues to sit in it, presumably because it's worth it. This to me suggests that there's an equilibrium (opportunity) cost that we settle on anyways. But everyone looks at traffic times and sees a cost that needs to be eliminated. So why exactly is a financial pricetag good and a temporal one bad?
Max, is your last reply to Grady the only answer, or are there other considerations as well?
A financial price tag is better because it considers the marginal cost of building and maintaining the road and the cost to other drivers of more cars on the road. The temporal cost considers none of these things, only how long it takes the individual drivers to get to work. The temporal cost lets drivers impose negative externalities on others and it doesn't send any resources to building and maintaining roads.
You seem to believe the price system does not already exist. As I wrote in the article, "price" includes non-dollar amount costs, such as the costs of sitting in traffic. Your example may forget this. In previous conversations, you've stated that when a low-income person doesn't take a higher-paying job with a far commute they're saying that not having the commute is worth more than the pay increase. Of course, I've criticized this line of reasoning for ignoring the excess time commitments of poverty.
I'm not going to criticize too heavily the notion of providing vouchers/wealth redistribution so that the implementation of a price system isn't inequitable. If you "solve" poverty through redistribution wealth-based equity concerns can't really exist. I seriously doubt that making I-19 tolled (for example) would come with a voucher system in our current political climate but I'm not the type to be anti-redistributionist.
You're missing the point. In a world without road pricing, the poor person is forced to internalize the costs of traffic and they decide that the commute is to long and unpleasant to justify. Road pricing solves this problem by making people pay for the costs they impose on others by driving on the roads. Additionally, it allows people to decide how much of their income they want to devote to driving on roads depending on how useful it is to them. The poor person can get a great job by allocating more of their income to driving, and a telecommuter doesn't have to pay at all.
I'm acutely aware of your point. The poor person pays higher costs to commute, whether that's time or in cost in a pay-to-drive system, due to a myriad of issues with our housing market. (You wouldn't call them issues. One, for example, is that housing close to job centers like inner cities is expensive.) Traffic is a cost on drivers, and as such, some low-income Americans are unable to get jobs far away. (The impact of this is far less than you think. Any job with a life-changingly higher salary would permit someone to rent a place closer to their new job. Moreover, your future wages are determined by your first wage more than anything else. Low-income people just don't have access to great jobs for many structural reasons. Eg. Education access) However, poor people will be priced out of a pay-to-drive system as well. If you're giving people vouchers/subsidies I'm not going to argue against that, but vouchers aren't going to come along with making I-29 tolled in our current climate. I've already said all of this.
Without road pricing the commute time is constant, or at least exogenous to what the driver does. Even if a job far away offers a higher wage, there is no way for the driver to spend some of that wage on a shorter commute. Commuting more than an hour each way every day is infeasible even for a big wage bump, so without road pricing workers are exluded from these jobs. With road pricing workers can allocate resources to getting a faster commute and expanding their labor market.
If you don't use willingness to pay, how else are you going to measure how much people "need" to drive on a road? Willingness to pay is a great heuristic for need, and the information from people's willingness to pay is automatically integrated into the entire economy through the price system.
I wouldn't say it's a "great" heuristic for need, especially since its implementation across a range of systems has such a large exclusionary effect on the poor. With that being said, I'm not sure a better one exists. This more leads to the conclusion that we shouldn't regulate public utilities, meant in principle to be accessible to all, in this way. traffic might just be a consequence of having "free" roads.
Traffic certainly is a consequence of free roads. It's a classic tragedy of the commons. People don't have to pay for the costs they impose on other by driving on the roads so far more people than optimal drive on the roads.
The poor are excluded from some things not because of the price system but because of their lack of resources. There are three possible solutions to this. 1. Produce more resources, 2. Redistribute existing resources, 3. Try to change the price system or avoid it entirely. The price system simply allows everyone to prioritize and allocate in whichever way they want, given the resources that they have. You might want to change people's resource endowments through redistribution, but that is no reason to mess with individual's allocation of their given resources. In the case of roads it is clearly preferable to implement a price system to force people to face the very real tradeoff between scarce road space and their desire to commute. If you're worried about exclusion then a means tested voucher or subsidy would do the trick and still preserve the allocative efficiency of the price system. This improves the welfare of everyone, including the poor and especially poor commuters who can now get to work much more easily.
I'll give you a situation where having 'free' roads actually excludes the poor as well. Lets say there is a lucrative job opening Downtown for a poor worker but with traffic the commute is an hour long. Even though this new job would give them a huge wage premium, they can't use that premium to make the commute faster so they can't take the job. With road pricing, this worker can allocate some of their gains to buying the EZ-pass and get the job. Traffic increases travel times which excludes people from labor markets that are too far away.
@both of you - One thing I don't fully get is why one type of cost is fine and the other isn't. When we build more roads, we get more cars so traffic speed stays the same; when we reduce roads, we get less cars so speed stays the same. If we don't do anything, everyone complains about traffic but everyone continues to sit in it, presumably because it's worth it. This to me suggests that there's an equilibrium (opportunity) cost that we settle on anyways. But everyone looks at traffic times and sees a cost that needs to be eliminated. So why exactly is a financial pricetag good and a temporal one bad?
Max, is your last reply to Grady the only answer, or are there other considerations as well?
A financial price tag is better because it considers the marginal cost of building and maintaining the road and the cost to other drivers of more cars on the road. The temporal cost considers none of these things, only how long it takes the individual drivers to get to work. The temporal cost lets drivers impose negative externalities on others and it doesn't send any resources to building and maintaining roads.
You seem to believe the price system does not already exist. As I wrote in the article, "price" includes non-dollar amount costs, such as the costs of sitting in traffic. Your example may forget this. In previous conversations, you've stated that when a low-income person doesn't take a higher-paying job with a far commute they're saying that not having the commute is worth more than the pay increase. Of course, I've criticized this line of reasoning for ignoring the excess time commitments of poverty.
I'm not going to criticize too heavily the notion of providing vouchers/wealth redistribution so that the implementation of a price system isn't inequitable. If you "solve" poverty through redistribution wealth-based equity concerns can't really exist. I seriously doubt that making I-19 tolled (for example) would come with a voucher system in our current political climate but I'm not the type to be anti-redistributionist.
You're missing the point. In a world without road pricing, the poor person is forced to internalize the costs of traffic and they decide that the commute is to long and unpleasant to justify. Road pricing solves this problem by making people pay for the costs they impose on others by driving on the roads. Additionally, it allows people to decide how much of their income they want to devote to driving on roads depending on how useful it is to them. The poor person can get a great job by allocating more of their income to driving, and a telecommuter doesn't have to pay at all.
I'm acutely aware of your point. The poor person pays higher costs to commute, whether that's time or in cost in a pay-to-drive system, due to a myriad of issues with our housing market. (You wouldn't call them issues. One, for example, is that housing close to job centers like inner cities is expensive.) Traffic is a cost on drivers, and as such, some low-income Americans are unable to get jobs far away. (The impact of this is far less than you think. Any job with a life-changingly higher salary would permit someone to rent a place closer to their new job. Moreover, your future wages are determined by your first wage more than anything else. Low-income people just don't have access to great jobs for many structural reasons. Eg. Education access) However, poor people will be priced out of a pay-to-drive system as well. If you're giving people vouchers/subsidies I'm not going to argue against that, but vouchers aren't going to come along with making I-29 tolled in our current climate. I've already said all of this.
Without road pricing the commute time is constant, or at least exogenous to what the driver does. Even if a job far away offers a higher wage, there is no way for the driver to spend some of that wage on a shorter commute. Commuting more than an hour each way every day is infeasible even for a big wage bump, so without road pricing workers are exluded from these jobs. With road pricing workers can allocate resources to getting a faster commute and expanding their labor market.