Mark Thoma at Economist’s View takes an interesting look at this New York Times story about how tolls demonstrably rise sharply after the introduction of quick-payment technology like transponders:
After an electronic system is put in place, tolls start rising sharply. Take two tollbooths that charge the same fee and are in a similar setting — both on highways leading into a big city, for instance. A decade after one of them gets electronic tolls, it will be about 30 percent more expensive on average than a similar tollbooth without it. There are no shortage of examples: the Golden Gate Bridge, the George Washington Bridge and the Tappan Zee Bridge, among them.
The E-ZPass economy is indisputably more convenient. It saves time and frustration. But the old frustrations that came with cash also brought a hidden benefit: they forced you to notice that you were spending money. With electronic money, it’s much easier to be carefree.
Marketers understand this dynamic well, which is a big reason they promote refillable gift cards and other forms of money that don’t feel like money. Part of what’s so intriguing about Ms. Finkelstein’s work is that it suggests that government officials may be coming to understand the dynamic, too.
The writer, David Leonhardt, looks at it from the consumer-affairs angle and wonders whether governments that install these fancy electronic payment systems, rather than forcing drivers to stop and throw coins in a bin or hand bills to a worker in a tollbooth, jack up the prices as soon as drivers stop actively thinking about paying them.
But what if tolls people scarcely notice don’t achieve the desired effect of reducing traffic on a premium road? That’s Thoma’s hypothesis:
One thing to note is that after the E-ZPass system is installed, waiting times fall, frustration falls, and the inconvenience of not having correct (or any) change also falls. Thus, the economic cost is lower even if the dollar cost of the toll stays the same, and this would cause the quantity of trips demanded to increase.
It certainly fits with current thinking about the effect of roads on transportation happens: the basic assumption is that as many people will drive as can stand to — so if you widen a road because it’s clogged with cars, it’s only a matter of very little time before the damn thing is full up again. The cost of gasoline is a factor and the convenience of alternatives such as mass transit is a factor, too, but they’re not very important compared to the appeal of a big wide smooth road with nobody but you on it.
So while the dollar cost of a toll is an issue, perhaps a greater consideration for drivers is the inconvenience of paying it. Which, interestingly, is how Leonhardt gets into the story in the first place. This is his story’s second paragraph:
I spent a good part of my childhood summers at the Jersey Shore, and the tollbooths on the parkway always seemed to be a cruel final obstacle between me and the beach. Every 15 minutes or so, our car would have to stop yet again to drop a measly quarter in a bucket.
Maybe a nickel would have been enough.