The Cost of Driving in Manhattan
Felix Salmon reports on a fascinating effort to quantify the externalities associated with driving into the Manhattan Central Business District:
Being a cyclist, I’m acutely aware of the issue of externalities — it generally costs you nothing to blindly step off the sidewalk and into the bike lane, or to open your taxi door without looking behind you, but it can affect me greatly. Komanoff’s a cyclist too, but he’s concentrating in this spreadsheet mainly on vehicular traffic. After crunching the numbers, he calculates that on a weekday, the average car driving south of 60th Street in Manhattan causes a total of 3.26 hours of delays to everybody else. (At weekends, the equivalent number is just over 2 hours.) No one car is likely to suffer excess delays of more than a few seconds, of course, but if you add up all those seconds, it comes to a significant amount of time.
Many of those hours are very valuable things, especially when you consider big trucks, staffed with two or three professionals, just idling in traffic. Komanoff calculates (check out the “Value of Time” tab) that the average vehicle has 1.97 people in it, and that the value of an hour of saved vehicule time south of 60th Street in Manhattan on a weekday is $48.89. Which means, basically, that driving a car into Manhattan on a weekday causes about $160 of negative externalities to everybody else.
This suggests, of course, that the only real problem with the Bloomberg administration’s controversial congestion pricing plan from last year was that the proposed price was far too low. Of course it still doesn’t follow from this that $160 is the appropriate congestion fee, since if you had a lower congestion fee that would reduce the number of cars on the street and thus reduce the marginal impact of additional vehicles.
People seem to be unaware of this, but the evidence suggests that traffic congestion costs the country tends of billions of dollars a year in lost economic activity:
If we implemented congestion pricing in those metropolitan areas suffering from chronic congestion and then gathered up all the revenue and lit it on fire, we would swiftly find ourselves living in a more prosperous society. And if we gathered up the revenue and did something else with it, we’d be even better off.
36 Responses to “The Cost of Driving in Manhattan”
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July 4th, 2009 at 10:10 am
And what are the costs of each additional pedestrian or cyclist? Do you plan to charge them also?
July 4th, 2009 at 10:10 am
Congestion pricing may work well in London, but that doesn’t mean that it would necessarily work in New York or other American cities. One big risk is that businesses which find themselves facing congestion charges would relocate elsewhere. To this end, note that the savings from congestion charges are indirect and hard to compute, while the costs of congestion charges are right out there.
July 4th, 2009 at 10:11 am
Y’know, I was pretty opposed to the previous NYC congestion pricing scheme that Matthew was so in favor of, precisely for the reason you can see in the Felix Salmon post: the previous scheme was essentially a tax on middle-class folks in Queens and Brooklyn to make life nicer for wealthy folks who lived in Manhattan.
The “alternative plan” laid out in the post seems far more reasonable to me. Under that scheme, folks living in Washington Square brownstones would actually pay the lion’s share of the tax, which begins to solve the problems with the original Bloomberg/Yglesias plan.
July 4th, 2009 at 10:15 am
And if we gathered up the revenue and did something else with it, we’d be even better off.
It depends what you mean by “we.” Are you proposing that the winners compensate the losers? Because the Bloomberg plan consisted of such compensation in the form of totally incredible promises to improve mass transit by investing in the MTA’s capital budget.
July 4th, 2009 at 10:17 am
I vote for the fire.
July 4th, 2009 at 10:22 am
I’ll also note that the idea in the “alternative plan” of making all the buses free is sheer genius.
July 4th, 2009 at 10:27 am
One big risk is that businesses which find themselves facing congestion charges would relocate elsewhere.
OH NOES! If we don’t make life as easy as possible for rich people they will take their money and go somewhere else and not pay taxes! Oh noes!
July 4th, 2009 at 10:31 am
I’ve seen this argument before and disagree. There is a difference between being in a place and traveling to that place. Just because one place is expensive to live in doesn’t mean the government should subsidize the cost of traveling to it – in fact, they are totally unrelated!
Also, it costs Manhattan residents the same amount to visit Brooklyn as vice versa.
Why do people in Maui get to wake up in Maui when it costs me $600 to travel there? Is that unfair? Is that class discrimination? Does it matter that it costs them the same price to visit me?
It isn’t discrimination that that the people who are already at where you want to be pay less to travel there. The cost of traveling 0 miles is $0.
Your argument is the same as saying that the sales tax on cars discriminates in favor of people who already have cars or don’t want them.
Crossing a bridge, driving into a densely populated area and parking costs society more than waking up and walking somewhere. The effects of this may be harsher on the middle-class than the rich (as the effects of anything that cost money are) but that’s not the fault of the rich or biased against the middle-class.
July 4th, 2009 at 10:42 am
“I’ve seen this argument before and disagree. There is a difference between being in a place and traveling to that place. Just because one place is expensive to live in doesn’t mean the government should subsidize the cost of traveling to it – in fact, they are totally unrelated!”
Have you bothered to actually click-thru to the Felix Salmon link? There are easy-to-read pie charts there.
The original Bloomberg/Yglesias plan would have put almost no monetary burden on Manhattan residents. The “alternative plan” in that post puts the lion’s share of the monetary burden on Manhattan residents.
This isn’t as complicated as you think.
July 4th, 2009 at 10:50 am
… the previous scheme was essentially a tax on middle-class folks in Queens and Brooklyn to make life nicer for wealthy folks who lived in Manhattan.
Well, I’m a middle-class person who lives in Brooklyn and doesn’t own a car, and has many friends who don’t own cars and if anything would like to bike in Manhattan more, so I was completely in favor of congestion pricing. Of course, whether or not college-educated dotcom employees with anti-car politics can be considered truly “middle-class” in this country, as opposed to just gentrifying hipster interlopers, is another question, of course, and one that I think seems to play out during discussions of congestion pricing in the city.
July 4th, 2009 at 11:03 am
Never understood why people drive to Manhattan on a daily basis with the insane parking prices.
Plenty of rail and subway options to take advantage of.
July 4th, 2009 at 11:06 am
Perhaps they should move?
Furthermore, perhaps we should sell most of the roads and entirely eliminate these externalities.
July 4th, 2009 at 11:10 am
I live in NYC. Driving in the city is total pain compared to anywhere else in this country. Always surprised when people who live here that you thought were somewhat smart insist on owning a car and then then driving it around for stupid errands into Manhattan. Tax the hell out of people driving private cars in the city. Exempt commercial vehicles from paying. Done.
July 4th, 2009 at 11:14 am
“Of course, whether or not college-educated dotcom employees with anti-car politics can be considered truly “middle-class” in this country, as opposed to just gentrifying hipster interlopers, is another question, of course, and one that I think seems to play out during discussions of congestion pricing in the city.”
The “alternative plan” advanced in the Felix Salmon post anticipates and answers many of those concerns.
—–
One of the reasons I’m generally hostile to the kind of anti-car legislation Matthew generally advances is precisely because it plays goo-goo while advancing the interests of upscale urbanites.
If you want to play goo-goo, do it like the “alternative plan” does.
Do things that clearly are revenue-neutral, and are clearly redistributive from the top to everyone else. Not only does this help on social justice grounds, but it also is useful in a democracy to create goo-goo solutions that can have enduring electoral support.
July 4th, 2009 at 12:11 pm
But here’s the deal: When it comes to realy high rent in Manhattan, people like MY say, “This proves that people love to live downtown. Therefore, we need policies that create more downtown housing.
But when it’s discovered that roads are really crowded, rather than saying, “Hey, people must love driving, let’s accomodate more of that,” the argument becomes, sheesh. That sucks. Let’s tax it so we have less.”
July 4th, 2009 at 12:35 pm
Sam M is pointing out the principle of CAP accounting, change the rules when their favorite program is the topic. Sounds so much like a conservative I sometimes fail to tell them from the progressives.
July 4th, 2009 at 12:38 pm
The solution to Manhattan congestion is to “accomodate more” driving? Of course! There is tons of land there that is just not being used productively like sidewalks and Central Park. I think extra car lanes over the oversized sidewalks would be an especially good idea to relieve congestion along Canal Street.
July 4th, 2009 at 1:02 pm
There is no real reason why we can’t have double-decker lanes through most of downtown New York. Don’t expect government to build anything efficiently in this life time.
July 4th, 2009 at 1:19 pm
It’s a lot easier to build apartment buildings higher than it is to do so with roads, especially in a crowded city.
Also, there is something called global warming which is partly being caused by driving cars.
July 4th, 2009 at 1:19 pm
Sam M and Mattyoung-
Maybe you boys could point out the externality people paying high rent to live in downtown Manhattan are creating that makes the situation equivalent to uncharged road use?
July 4th, 2009 at 1:20 pm
One big risk is that businesses which find themselves facing congestion charges would relocate elsewhere.
Perhaps to upper Manhattan, Queens, or Brooklyn. Why do you hate middle class New Yorkers so much that you want to deny incentives for businesses to relocate to where they live??????? Especially you, Petey.
July 4th, 2009 at 1:36 pm
Seriously, what is going on in the heads of people like Sam M and Mattyoung? People using these roads aren’t paying anything like a market price, let alone a price that reflects the externalities.
The bottomline is that queue rationing is a bad idea as applied to roads in general, and a particularly bad idea as applied to roads in densely-built environments. That leaves plenty of room to argue over the best alternative, but we know queue rationing sucks.
July 4th, 2009 at 2:24 pm
I don’t have any policy objections to congestion pricing. But aren’t its political problems obvious?
To most people, congestion pricing is a new and exceedingly strange idea. People vote against things that are new and strange.
ISTM that if you have a more familiar alternative that accomplishes some of the same purposes as your new and strange idea, then that should be tried first. And we do: it’s called charging a market rate for street parking, rather than keeping meter rates as artifically low as we do – or even not having meters at all in many busy neighborhoods of many cities.
People who drive into midtown Manhattan are planning to stop somewhere. So charge a rate for parking that’s sufficiently high so that they can probably find a space within a block or two of where they’re going, but not so high that empty parking spaces are abundant.
And maybe charge a sales tax on parking in parking garages that reflects the same increase.
Try those things, and see what the effect is. Then do congestion pricing if there’s still a strong case for it.
July 4th, 2009 at 2:43 pm
I live in Brooklyn and I have a car. We never drive into Manhattan if we can help it. As for congestion parking, I am neutral about it, but I do think that mass transit within the boroughs is just terrible, particularly on weekends and late at night, but also during the day. As far as weekends, our children live in Queens. They don’t have a car and it takes them hours to visit us, because the train has to cross the river twice, going in and out of Manhattan, yet as the crow flies it is only 10 or 15 miles. This is just wrong.
A friend of ours lived in Brooklyn and worked in the Bronx and felt it was necessary to to commute by car because of all the changes and detours subway travel would have entailed. Commuting either was was a nightmare that took hours and hours.
I am particularly upset about the recent rise in prices on the MTA, considering the beefs I have with it
July 4th, 2009 at 3:24 pm
The highest cost seems to be labor, labor sitting in cars, on bikes, on foot, and in trucks. Labor as compared to idling gas, for example. But mainly freight handlers sitting in trucks. So, business should be glad to pay congestion fees if it drops lost labor time by, say 1/2; it can save $60 per load (assuming three loads per truck and idle labor costs are $120).
That is a nice price cut for shoppers who take the free bus. I would think that a congestion fee would actually increase business efficiency in Manhattan and increase customer traffic.
July 4th, 2009 at 5:59 pm
How refreshing that a real live blogger has understood the basics of urban economics that economists have known for 50 years. Maybe in another 50 years the commenters on the blog will too. Then in ANOTHER 50 years the politician may catch on.
July 4th, 2009 at 8:28 pm
I didn’t click on any linked articles (sorry), but it’s a bit difficult to believe that congestion would entail billions of dollars of cost. I would think people who arrive late for work would still manage to get their daily work done by either working faster or working a longer day. Besides paying overtime for transportation workers, I wouldn’t expect congestion to cause a large expense.
July 4th, 2009 at 9:38 pm
I didn’t click on any linked articles (sorry), but it’s a bit difficult to believe that congestion would entail billions of dollars of cost.
Really? I would imagine the fuel waste alone would constitute a hefty sum, as would the negative effects from all that excess pollution. Then you throw in overtime for all the workers who have to be compensated because their relief hasn’t arrived on time. And the docked paychecks of tardy hourly workers. And the last sleep (and the costly, resulting reduced productivity) flowing from workers who get up earlier than they would like in order to accommodate the slow commutes caused by traffic jams. And the lost sales to coffee shops from workers who stop in on the way to the office when they’re on time (but don’t when they’re running late). And canceled appointments. And I’m sure a huge cost is the economic activity that simply doesn’t get undertaken because people know it’s not time-feasible given the slowness of moving around. Etc. Etc. Multiply this across a metropolis of 20 million, and you’re talking big bucks. And I’m just a blog commenter riffing off the top of my head and I came up with these. Imagine what a team of transportation economists could dream up.
July 4th, 2009 at 9:55 pm
“Maybe you boys could point out the externality people paying high rent to live in downtown Manhattan are creating that makes the situation equivalent to uncharged road use?”
Really? You can’t see an externality?
OK. SO let’s assume you do not live in Manhattan. OK. Now, get this: Let’s say I build 46 stories of high density housing on top of you current dwelling.
Do you assume that would have NO IMPACT on your neighborhood? Assuming that you admit it would have an impact of some sort… you assume that none of those impacts would be negative impacts?
That’s ludicrous.
If you cannot even IMAGINE any of these negative impacts, I invite you to visit Kersey, PA. It’s about six hours from NYC. It’s where NYC ships a lot of its garbage.
In the meantime, what “uncharged road use” are you speaking of? People pay taxes for roads. People pay gas taxes. Perhaps you think that tax ought to be more. OK. Fine. But it’s not like transit use is “free” in some sense.
My point was, MY argues, in the case of housing, that high costs mean people love that style of living. And since they love it, we ought to have more of it. Because, again, people love it.
Well, by that standard, people love driving and we ought to have more.
You turn to stuff like global warming. But MY’s position is not a new one. It predates any idea of global warming. There is a larger aesthetic at work that GW supports. Which does not invalidate the GW claim. But it sure does seem convenient.
Again, as for externalities, remember that NYC was not always the NYC of today. Cramped urban dwelling has a long history of unsavoriness. Charles Bronson did not invent the idea of the crime-ridden ghetto. His movies were a reaction to a very specific reality.
July 4th, 2009 at 10:39 pm
I would think people who arrive late for work would still manage to get their daily work done by either working faster or working a longer day.
For the most part, yes. And how is that not a cost?
July 4th, 2009 at 11:29 pm
OK. SO let’s assume you do not live in Manhattan. OK. Now, get this: Let’s say I build 46 stories of high density housing on top of you current dwelling.
That doesn’t make a lot of sense. In most cases, the developers would be paying me (or my landlord) for the use of the land. That’s not an externality.
As for garbage, etc., well, obviously urban residents should be paying the full price for the disposal of their waste, and any other environmental costs.
Of course, so should suburban residents – but their environmental costs are a lot higher on a per capita basis. The net effect of fully pricing all the externalities just makes dense urban living arrangements look a lot more attractive. That’s kind of the whole point.
Now, there ARE some externalities in terms of viewscape and so forth, and perhaps those should be accounted for somehow. There’s obviously some thought that needs to be put into optimal heights, the optimal amount of green space, and so on. Taxes or auctions of some kind for building height might even be one way to approach it. (Your charge of hypocrisy still doesn’t stick, because that’s exactly what new urbanists like Matt would propose.)
In a way, there might even be positive aesthetic externalities to cities. For one thing, it’s not as if suburban sprawl is cost-free in this respect. And by concentrating structures in cities, you preserve greenspace in the countryside, and create a distinct aesthetic environment where the viewscape contribution of an attractive building might even be positive. Certainly, in an environment as built up as Manhattan, the marginal viewscape externalities of a single apartment are pretty negligible compared to the rent. Possibly even positive if it’s a well designed building.
Either way, in the end you definitely do want lots of large buildings in cities, or at least a high average density, because you want to take advantage of those reduced environmental loads, as well as the positive cultural and commercial network externalities that come from density.
If you really feel that fewer people would want to live in cities if all those externalities are fully priced, or that more people would want to drive, feel free to make the argument.
July 4th, 2009 at 11:39 pm
In the meantime, what “uncharged road use” are you speaking of? People pay taxes for roads. People pay gas taxes. Perhaps you think that tax ought to be more. OK. Fine. But it’s not like transit use is “free” in some sense.
In the context of the post, the “uncharged” part we’re talking about is the congestion externalities you impose on everyone else when you get on the road. That is most definitely NOT covered by gas taxes, or any other kind of user fee or tax.
(Hell, even the construction and maintenance of the roads themselves isn’t covered by user fees. It’s ultimately paid for somehow, of course, but property and income taxes don’t provide any price signals for drivers. Even gas taxes arguably don’t provide a very good one.)
Meanwhile, transit use is actually BETTER than free in this respect. The congestion externalities are positive.
July 4th, 2009 at 11:45 pm
It is perfectly fine that people like highly urban environments, but why does that remove the need for congestion fees? People who live in high rises would get some substantial gain if their streets, of which they are primary users, were adequately covering the cost of transport delays. I see mostly upside for high rise apartments with congestion fees, more people would like to live in them, not less. In fact, most high rises would get greater demand if they charged extra for parking spaces as they would then offer cheaper prices to walkers and transit users.
July 5th, 2009 at 12:58 am
It is perfectly fine that people like highly urban environments, but why does that remove the need for congestion fees?
It doesn’t, obviously, and I agree with the rest as well. But I can’t see where anyone has implied that urban environments obviate the need for congestion prices. Who are you addressing?
July 5th, 2009 at 1:05 am
Even better solution.
July 5th, 2009 at 1:28 am
Even better solution.
Yay, PRT! The low capacity of automobiles combined with the expensive infrastructure of mass transit. How can it fail?