Congestion Costs

An interesting post from last month on those hidden costs and benefits of higher gas prices. Turns out, according to some smarty-pants economists, that if the price of gasoline goes up (if, for example, we impose a gas tax), people carpool and ride the bus more, resulting in less congestion and therefore net time savings for the people on the highway. But ah, for the poor slobs who switched to the bus?

Note that while the time-savings compensates those who continue to drive, those who switch transit modes may have reduced welfare.

(Note that I quote here because I love the smarty-pants economists’ way of talking. Reduced welfare. I just love that turn of phrase. It disguises so much.)


  1. LL –

    Excellent question. No doubt it does. But in this case the person making the switch from car to bus (me) spends a *lot* more time getting to work than he used to by car. Whether that is “reduced welfare” for me is an open question, however, as the bus is darned entertaining.

    Like the guy the other day carrying an enormous car radiator in a black plastic trash bag. That was entertaining.

  2. The stops the bus continues to make are what makes bus travel slower than cars. Mashey’s point about reading/e-mail are the key. Interesting is many light-rails have Wi-Fi, but buses don’t, a reflection of the dominant demographic.



  3. My problem is motion sickness, which makes reading not an option on the bus, even if they did have wi-fi. But I can listen to news on the iPod, which is an equivalent valuable use of the time. And I love watching the people, which you can’t do in a car.

  4. I can’t read in a vehicle either, making productivity gains negligible, unless you consider people-watching productive, in which case I’m very productive ;o). But for a wider population, there is the productivity gains of transit.



  5. I’d also recommend Don Shoup’s “The High Cost of Free Parking”.

    See reviews at:

    Think about the logical effects of local statutes that a certain amount of parking spaces be provided per resident, worker, or customer. In effect, parking spaces are required, thus spreading buildings further apart, and *incenting* people to use cars more, because now, the spots are there.

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