UTTRI faculty associate Professor Jonathan D. Hall has been honoured with an essay award from the 2020 Sakip Sabanci International Research Awards for his paper “Can tolling help everyone? Estimating the aggregate and distributional consequences of congestion pricing.”
Three essay awards and one jury prize were announced April 10, 2020. This year’s topic “The Future of Economy and Turkey” is the first in the area of social science for the Sakip Sabanci International Research Awards based in Istanbul, Turkey.
The importance of reducing traffic congestion
About his paper and his research, Professor Hall says:
My essay starts with the observation that traffic congestion is a major problem is cities around the world. It wastes time, it creates pollution, and it makes it harder for us to interact with each other.
Making this especially frustrating, is that we know there is too much traffic congestion.
How do we know there is too much? Well, when we need to make a trip, and are trying to decide whether to drive a car, or take a train or bus, we think about lots of things: how long the trip will take, how much it will cost, how comfortable it will be, and so on.
But what none of us think about, is that if we drive, we will slow down all the other cars by a small amount. For example, if you slow down 900 other cars by just one second each, that is an additional 15 minutes of travel time. This matters because when someone decides to drive, rather than take a bus, because it saves them 10 minutes, they are actually making the wrong choice.
Economists have been talking about the solution to traffic congestion for 100 years, we need to add tolls to our roads so that drivers pay for the costs they impose on others. Unfortunately, we rarely do so because adding these tolls hurts many drivers, especially the poor.
My essay shows how a carefully designed toll applied to a portion of the lanes of a congested highway can make all drivers better off.
There are two key ideas: the first is that, because roads get jammed when there are too many cars on the road, adding a toll can increase highway capacity; and the second is that by leaving some lanes without a toll, you avoid hurting the poor.
I am hopeful that this research can lead to better traffic in cities around the world.
Hall expresses deep appreciation for the award:
My research is motivated by a desire to help make cities better places to live and work; and so receiving an award expressly recognizing that my work does so is a greater honour than I can express.
The award winning essay
Economists have long advocated road pricing as an efficiency-enhancing solution to traffic congestion, yet it has rarely been implemented because it is thought to create losers as well as winners. In theory, a judiciously designed toll applied to a portion of the lanes of a highway can generate a Pareto improvement, even before using the toll revenue. This paper explores the practical relevance of this theoretical possibility by using survey and travel time data, combined with a structural model of traffic congestion, to estimate the joint distribution of agent preferences over three dimensions—value of time, schedule inflexibility, and desired arrival time—and evaluate the effects of adding optimal time-varying tolls. I find that adding tolls on half of the lanes of a highway yields a Pareto improvement. Further, the social welfare gains from doing so are substantial—up to $1,740 per road user per year.
Read Professor Jonathan D. Hall’s award-winning essay “Can tolling help everyone? Estimating the aggregate and distributional consequences of congestion pricing” here.