Road pricing: the marginal driving experience
Posted by Daniel Hall on September 24, 2007
Researchers at the University of Iowa are going to test out a system in which drivers would pay road taxes by the mile:
Beginning early next year, drivers in six states will begin testing a new way to pay for roads and transit: Commuters will be charged for the miles they drive rather than paying taxes on gasoline purchased. …
Over the next two years, the drivers will get sample monthly bills for the number of miles they’ve driven. They can compare what they now pay in gasoline taxes with what they would have paid in per-mile fees.
GPS systems make implementing pay-by-the-mile systems simple. They could be used for auto insurance and road fees, and charges could adjust based on driving conditions or congestion. Would drivers view this as too invasive? Would there be concerns about extending this to automatic ticketing? (Big Brother knows how fast you are driving…)
I suspect there is a behavioral economics story here as well: I predict that drivers will demonstrate more sensitivity in their price response to a GPS unit that ticks up charges continually than they will to gas taxes, which tend to get hidden in gas prices. There is also the “sunk cost” factor: driving on an already-purchased tank of gas it feels “free” since it’s paid for; auto insurance that is paid by the month is effectively non-marginal.
Would you change your behavior driving if there was a “cab meter” in your car telling you in real-time what you were racking up in insurance and road fees?