Tuesday, August 24, 2010

Why road pricing is so difficult to impose

As an economist, don't you hate it when a policy that should so obviously be enacted is either perverted by special interests in the legislative process or immediately dismissed as politically unfeasible? The problem is often that politicians are economic laymen yet believe that they know best. Or they do not think about the common good. Anyway, congestion pricing is one policy that makes perfect sense to an economist, but that is often rejected by policy makers because it would be unpopular. And this despite the success of the congestion charge in London. Why this negative attitude?

Bruno De Borger and Stef Proost look at the political economy of congestion pricing. They observe that in the successful cases, revenue was used for public transportation. Also, there was a majority opposed ex-ante, but no majority to revert ex-post. De Borger and Proost claim this is consistent with people being uncertain about outcomes, which means they would also be against experiments. Thus, I conclude that politician need to show leadership and impose congestion pricing.

1 comment:

przemek said...

Politicians should bribe voters more. In situations where it's clear that popular opposition to an efficient policy will disappear as soon as the policy starts working, politicians do not face long-term risks from advocating it and therefore could offer voters side-payments of some sort in exchange for voting in favor of such policy. It wouldn't cost them much, either; since the policy is efficient, it will generate new revenue, so the bribes can be financed through borrowing against that revenue.

Of course the devil is in the details though. I have no idea how to work these out.