Stockholm Solution

Image: Stephen Wilkes/Getty Iamges

What’s more important: getting to work fast or traveling there in comfort? For many people who drive into Manhattan, luxury trumps speed.

A survey conducted this spring found 61 percent of New York City residents who drove into Manhattan’s busiest areas chose to do so even when traveling by mass transit was as fast or faster.

With traffic congestion estimated to cost the city billions of dollars per year in economic activity, Mayor Michael Bloomberg’s plan to charge vehicles to drive into a large section of Manhattan makes perfect sense. Under the scheme, which Bloomberg announced in April, car drivers would pay $8 and truck drivers $12 to enter Manhattan below 86th Street.

Bloomberg’s idea embodies principles that economists have championed for at least half a century: Force people to bear the true cost of their activities, and let those who most value a scarce resource pay for the privilege of using it.

Congestion pricing has reduced traffic in London by 18 percent and in Singapore by roughly 15 percent and has brought down pollution levels in both cities.

But consider the experience of Stockholm, where extensive data were collected during a six-month trial in 2006, as an indication of how congestion pricing could affect New York and other U.S. cities that are contemplating similar programs.

While congestion in Sweden’s capital went down by 22 percent, the number of minutes passengers stood on trains and buses rose by a whopping 21 percent, partly due to increased ridership. This consequence of congestion pricing could hit New York particularly hard because many sections of its mass transit system are already operating at full capacity. Unless New York City Transit adds more trains and buses—which Bloomberg says he intends to push the agency to do—subway crowding like that found in Japan will become increasingly familiar in New York.

The results of the Stockholm experiment also contained a surprise: The congestion tax was most popular with residents of the central parts of the city, even though they paid twice as much of the fees as those who lived outside the zone. City officials speculated that since residents in the inner city drove less, they placed a higher value on the time they gained because of the congestion tax than the average driver.

While some New York politicians have argued that congestion pricing would hurt that portion of the working poor who have to drive into Manhattan, which it doubtlessly will, data from Stockholm show that the impact on this segment of the population is likely to be limited: High-income households paid nearly three times as much as those on the bottom of the income ladder. So properly targeted subsidies and an expanded mass transit system could mitigate any ill effects on low-income commuters.

Others are concerned that Bloomberg’s plan, which will go into effect in 2009 if it’s approved, would damage the economy of Manhattan, as potential customers and enterprises, especially those with vehicles that would have to pay the $21 fee, would balk at the additional cost of shopping or doing business in the congestion-pricing zone. However, studies in Stockholm and London have found little evidence to support this worry.

So congestion pricing is a no-brainer for New York, right? Not quite.

Bloomberg claims that car speeds will increase by a little over 7 percent if congestion pricing becomes a reality. For a vehicle currently traveling 25 miles per hour on Sixth Avenue—a generous estimate—this translates into only 2 miles per hour of extra speed. Would drivers even notice?