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Congestion Pricing Gridlock

Governor Hochul’s Very Big, Very Myopic Mistake
by clifford winston

cliff winston is a senior fellow at the Brookings Institution and coauthor of Revitalizing a Nation: Competition and Innovation in the U.S. Transportation System

Published June 13, 2024


After decades of negotiation and public debate, New York City’s experiment to charge hefty fees for cars and trucks to enter the busiest parts of Manhattan has been suspended by New York Governor Kathy Hochul at the eleventh hour.

Just why she changed her mind is unclear. The governor justified the decision on the grounds that it might cause unintended (and unwanted) consequences, perhaps reducing business activity in a city that has yet to fully recover from the pandemic. Others surmised that she feared the unpopularity of the new tolls would prevent Democrats from picking up fiercely contested House seats in the suburbs in November. Either way (or both), her decision represents a forsaken opportunity, dimming the long-term economic prospects of New York, as well as a missed opportunity to demonstrate the benefits of efficient urban transportation planning for other traffic-choked cities.

The experiment — the first of its kind in the U.S. — could have provided real-world evidence of both congestion pricing’s short-run effects as drivers respond by changing transportation modes and the times and places they travel, and the more complex, long-run effects as households change their vehicle sizes, shopping patterns, and even where they choose to live. Unfortunately, we will have to wait longer — at a potentially significant cost to the nation — for a courageous politician in some other city to bull through the opposition just to get to where New York was before Governor Hochul lowered the boom.

In the near term, the qualitative impact of the pricing plan would have been reduced road use — nobody is eager to pay as much as $15 for cars and $36 for trucks to enter Manhattan south of 60th street at the most congested times of day. Some motorists would presumably car pool or switch to mass transit. Others would enter the city at night, when the tolls were lower. And then, of course, some would take fewer trips to Manhattan.

Collectively, those responses would significantly reduce traffic in Manhattan and lead to at least three important long-run responses. First, as my research with Jia Yan of Washington State University explores, congestion has caused an “arms race” on American roads, which has helped persuade motorists to purchase larger and more powerful vehicles that reduce overall road safety and increase fuel consumption. Thus, by encouraging folks to drive smaller vehicles, congestion pricing could generate large benefits by reducing vehicle fatalities and improving average vehicle mileage.

Second, by reducing travel time in the city, congestion pricing could significantly change travel patterns. For example, some people who value their time highly may be willing to use their cars to make trips into the city that they previously avoided because of congestion. Similarly, because congestion pricing would also improve travel time by bus, which currently averages a dismal seven miles per hour in Manhattan, some previously skeptical people might be willing to take trips into the city on mass transit.

Note that faster travel times could partially offset losses in patronage to businesses caused by travel behavior that resulted in fewer trips into the city. Consequently, Governor Hochul’s claim that congestion pricing would create another obstacle to the city’s recovery was at best premature — and perhaps flat out wrong.

Finally, it is well known that households’ residential decisions in big cities trade off housing expenditures and commuting time. Generally, people who live close to work and have short commutes live in more expensive houses on smaller lots than people who live further out. In my research with Ashley Langer of the University of Arizona, we found that by reducing commuting time, congestion pricing enabled some households to benefit by changing their residential locations such that they could modestly increase the length of their commutes and live in less expensive houses on larger lot sizes.

Of course, motorists who highly value the travel time savings don’t get a free lunch; they would pay for at least part of that benefit through the congestion tolls. And there would be motorists who don’t highly value the travel time savings but still must pay the tolls. At the same time, the revenues generated by the tolls would provide a clear benefit by helping to fund New York’s financially strapped transit system. Indeed, the loss of that potential revenue has got the governor scrambling to raise revenue for transit from another source.

As a transportation economist who has long championed congestion pricing, I am disappointed that Governor Hochul backed down from the challenge of conducting a risky but vital road pricing experiment that would have been of great interest to the nation. As someone originally from New York, I am also disappointed by the governor’s inclination to sacrifice the city’s prospects for greater mobility that would have contributed to a more vibrant economic future.

main topic: Transportation
related topics: Climate Change