I'm a guy with a long commute and a dislike of traffic jams. I've shifted my work hours to get me to work by 6:30 am at the latest. I'll take the toll route (Boston's Tobin Bridge, $1.50) or the free route (I-93) without considerating cost because I've taught myself that time is worth more than money.
But if the Tobin toll abruptly went up to $20, my loss-aversion anxiety would spike (cf. this year's Nobel Memorial winner Richard Sunstein, for behavioral economics) and my behavior would change in ways that weren't exactly rational.
This already happened on the Tobin Bridge when the tolls were first introduced. People from the neighborhoods near the Tobin used alternate routes and clogged them. The government response was wise: issue special toll tags to neighbors giving them a discount on the Tobin. The wisdom was that it countered loss-aversion with a special privilege. It worked. (Of course, this being Massachusetts, there's a small but thriving black market in those special toll tags for wiseguys wanting to save a couple of bucks a day. But so what?)
In a place like the DC area, people react to loss anxiety by attacking public projects as well as by changing their behavior, so this experiment may not last too long. I hope they can get some skilfull behavioral economics people to work with them before the whole thing gets shut down hard by fake-angry politicians.
If the goal is really to increase vehicle occupancy, the highway needs stations named for Tom and Ray Magliozzi's Russian chauffeur (Pickup Andropoff) near the exits. Getting more people into cars has proven very difficult.
Understanding this kind of peak-load pricing, and how to apply it effectively, will help all sorts of future projects in our overcrowded metroplexes.
But if the Tobin toll abruptly went up to $20, my loss-aversion anxiety would spike (cf. this year's Nobel Memorial winner Richard Sunstein, for behavioral economics) and my behavior would change in ways that weren't exactly rational.
This already happened on the Tobin Bridge when the tolls were first introduced. People from the neighborhoods near the Tobin used alternate routes and clogged them. The government response was wise: issue special toll tags to neighbors giving them a discount on the Tobin. The wisdom was that it countered loss-aversion with a special privilege. It worked. (Of course, this being Massachusetts, there's a small but thriving black market in those special toll tags for wiseguys wanting to save a couple of bucks a day. But so what?)
In a place like the DC area, people react to loss anxiety by attacking public projects as well as by changing their behavior, so this experiment may not last too long. I hope they can get some skilfull behavioral economics people to work with them before the whole thing gets shut down hard by fake-angry politicians.
If the goal is really to increase vehicle occupancy, the highway needs stations named for Tom and Ray Magliozzi's Russian chauffeur (Pickup Andropoff) near the exits. Getting more people into cars has proven very difficult.
Understanding this kind of peak-load pricing, and how to apply it effectively, will help all sorts of future projects in our overcrowded metroplexes.