I had to write a short memo summing of this week’s readings in my Transportation Planning (really Economics) class … and I thought the result was a couple of pretty good points and questions about how to look at driving in the U.S.  So I decided to recycle it here.

The readings are only casually cited (though I added footnotes), but they aren’t the main focus anyway.  I also added live links for the freely-available online content.

Memo:  Does the Car Pay Its Way?
February 19, 2010

Driving is too cheap, and the current system externalizes many of its costs.  New technology and pricing policies may help quantify these costs, making drivers more aware of their decisions’ economic impacts.  New strategies are being tested in London and other cities, but it remains to be seen whether they make feasible or effective transportation improvements.


Car ownership is ultimately a consumer choice, not a right.  This fact remains, despite growing indications that our land use choices have made the car a necessity for most American households.  Because it is a choice, we may think of it as a commodity, purchased and consumed at certain costs [1].  It is difficult, however, for either a transportation expert or the average driver to accurately calculate those costs.  Cars require an extensive infrastructure network to function:  roads, parking, gas stations, and repair shops.  Some costs, such as fuel consumption and CO2 emissions, are directly related to per-mile usage.  Others, most notably congestion, are generated by intensity of use in certain places at certain times.  Time lost sitting in traffic is a problem to which every driver on the road contributes.

These costs are generally externalized, not paid upfront for each trip.  This encourages over-usage of the commodity and leaves many social, environmental, and other costs unpaid.  Transportation policymakers therefore face the difficult task of quantifying external costs, then allocating the burden accurately and fairly on those responsible.  As Kenneth Small suggests, pricing would make drivers more aware of and accountable for their behavior, which may in turn reduce driving and perhaps channel some people toward other modes of transportation [2].  Having fewer cars on the road, it is argued, has environmental benefits (less pollution), economic benefits (less congestion and lost time), and social benefits (more leisure time, less car traffic on city streets, and more trips made by walking or public transit).  All of these factors may improve quality of life in a community, as noted in the PlaNYC Transportation section, by lessening the car’s dominance in the everyday lives of drivers and non-drivers alike [3].

Proposed Strategies

Solutions to the problem of underpriced automobile usage may be grouped into two general categories:  (1) better pricing of individual drivers’ trips, and (2) new technologies which make vehicles more fuel-efficient, more accurately tracks car usage, and creates intelligent road infrastructure to manage traffic demand and performance [4].  These strategies notably intersect in getting accurate micro-level data about each driver in order to quantify the cost of individual trips.  While neither can be pursued in isolation, we may briefly consider the demonstrated and proposed effects of each strategy, and whether it furthers the goal of improving our collective quality of life.

Strategy 1:  Better Pricing

As technology (see below) makes driving behavior easier to measure and road access easier to control, it is increasingly possible to implement sophisticated pricing policies.  These may include:  automatic tolling, peak-demand fees in city centers, insurance fees based on VMT, or fee structures based on vehicle type and efficiency [1].  London is a prominent example of congestion pricing, using cameras and an easy payment system to enforce charging a daily fee for most vehicles that enter the city’s central zone [5].  Based on the success of this program, New York City proposed a similar policy for vehicle commuters into central Manhattan, arguing that this fee would help fund public transit improvements and provide a disincentive to drive, reducing congestion for those who still choose to do so [3].  Political opposition defeated the proposal, and the program was not implemented.


  • Per-car or per-trip pricing internalizes the cost of driving for individual drivers.
  • If the price of driving increases to approach its real cost, people will re-calculate the cost of their behavior and, in theory, may choose other modes or forgo discretionary trips.
  • Reducing congestion through pricing will improve the experience for drivers who remain on the road, accruing further benefits of re-gained time and fuel efficiency.


  • The technology investment required to enforce this system offsets some of its revenue.
  • Depending on the price structure, the new fees may unfairly burden some drivers—those who must drive from home to work, and those whose income barely meets cost of living.
  • If not implemented properly, people may shift to non-priced routes and create new congestion problems elsewhere.

Strategy 2:  Better Technology

Time and again, we repeat the mantra that “technology will save the world,” with optimism evident in two articles entitled “Highway of the Future,” published in 1938 [6] and 2006 [7]. Self-driving cars, for example, would increase road capacity by allowing cars to travel closer together, and would have quicker reaction times in avoiding accidents.  The repetition of ideas in both articles, however, clearly indicates that the availability of these technologies, if and when they are ever available, is not enough to induce real change.  Widespread investment, adoption, and collaboration with transportation policy are required for these technologies to be useful.


  • Innovative uses of GPS tracking systems and “smart” highway and street grids will help policymakers better quantify drivers’ behavior and fine-tune pricing structures.
  • More efficient engines and cleaner fuel can reduce vehicles’ environmental impact.
  • Improving technology that reinforces consumer preferences may produce more immediate, politically feasible, and effective results than attempts to change behavior.


  • Relying on technological improvements to vehicles reinforces the existing separation in drivers’ consciousness between the price and actual cost of their choices.
  • New technology requires significant investment, both in innovation and adoption, by private firms and individuals.  It cannot simply be mandated by policymakers.
  • Technology alone has never been sufficient to make large-scale improvements; it is only successful in the context of cultural adoption and change.

Further Questions

1) Can we pay and/or innovate our way toward more a sustainable transportation system?

2) Automobile usage is an underpriced commodity, but many of its costs are difficult to determine per driver.  How can we ensure that drivers pay the true price of their choice to drive?


[1] Stephen J. Dubner and Steven Levitt, “Not So Free Ride,” Freakonomics blog.  New York Times, April 20, 2008.

[2] Kenneth A. Small, “The Real Costs of Transportation and Influence of Pricing Policies.”  UCTC Working Paper, No. 187.

[3] PlaNYC, “Transportation.”  City of New York Planning Department, April 2007.

[4] Susan Hanson and Genevieve Giuliano, eds., The Geography of Urban Transportation, 3rd ed.  Guildford Press, 2004.

[5] Todd Litman, “London Congestion Pricing:  Implications for Other Cities.”  Victoria Transport Policy Institute, January 2006.

[6] E.W. Murtfeldt, “Highways of the Future.”  Popular Science, May 1938.  Reprinted on Modern Mechanix Blog.

[7] Jonathan Gromer and Logan Ward, “Highway of the Future:  Interstate Intelligence.”  Popular Mechanics, July 2006.