The AAA puts out a report on the costs of operating a car each year, and are always fun… figure a ballpark of 60 cents a mile. It’s been my experience that car owners are in consistent denial, other than chronic moaning about the price of fuel, about the high costs of automobility. (and fuel ends up being only about 1/4th of the overall cost). And these costs only represent direct costs; socialized costs (pollution, policing, mayhem, free and subsidized parking, various non-fuel taxes, etc) are not even attempted to be measured here.
“A new AAA reports shows, on average, the cost of driving 15,000 miles a year rose 1.17 cents to 60.8 cents per mile, or $9,122 per year. Overall, that’s a roughly 2% increase on the cost of operating a car last year.” usatoday
I thought that this story: Capital takes bag tax in stride, is an interesting example of a negative incentive. And it got me to thinking about incentives affect behavior. Incentives are entertainingly the central theme of the best selling book Freakonomics, which I disussed here.
So the story is that Washington D.C. enacted a law that mandates that anyone who sells food must charge 5 cents for each bag given. Customers can either bring their own bags, or not use a bag, or pay the nickel. There were the usual predictions of the world coming to an end, however the WSJ story claims no major disruptions have occurred, and even some who opposed the tax initially now have changed their minds.
The bags often become floating trash and muck-up the Chesapeake watershed — a negative externality. The tax is designed to cut disposable plastic bag consumption and, it is hoped, plastic bag waterway pollution by 50%.
Here where I live, we have no such bag tax, of course, but it is trendy for grocery retailers to offer customers a nickel credit for each bag brought in that is then reused — a positive incentive.
Looking around here, it is obvious that the (coincidentally) equal positive incentive has had very little impact on bag usage, whereas the incentive in D.C. has had a large impact. I’ve also noticed that initially the grocers offering the incentive volunteered the credit, and now they seem to “forget” or not notice to give the credit unless the customer points it out, and most/many aren’t likely to do that to earn a nickel or a dime.
I’m thinking there must be a lesson here for things like free parking; which is that positive incentives have little impact, while negative incentives have a huge influence on behaviors.
More on driver’s attitudes towards parking:
“I’m kind of flabbergasted,” … “It seems like we’re getting taxed right and left. They shouldn’t be charging for this. It’s going to be a financial burden for some people.”
And what is “this”? Why, (formerly) free parking of course. Parking must be “free” and plentiful. And I’m sure it could be a burden for some, but let’s keep things in perspective; Phoenix recently instituted a 2% grocery tax.
The plan would charge $5 a day, yearly passes would be available for $75. [arizona republic]
An integral part of unrestrained car use is having somewhere to put the darn things when we’re not driving them. Enter the “free” parking space.
They aren’t, of course, actually free — thus someone else is paying, not the driver using it, it is external to the cost of driving; call it socialism for drivers. Thus leading to ever more demand for more driving and more parking spaces.
from the Arizona Republic 12/28/2009; Ahwatukee Park-and-Ride Lot Expanding.
In the example mentioned in the story, 353 spaces are being added to the existing 562 for a cost of $3M. That’s $8,500 per space. But that is only the cost of construction (or land but that is cheap); the ongoing costs aren’t listed but they are significant. A not exhaustive list would look something like; lighting, maintenance like sweeping and cleaning, and re-sealing asphalt, full-time(one employee ~ 50hrs/week) security during operating hours, cost of operating the small building (heat and cooled approximately 24×7, even though no one is usually there; didn’t these people ever hear of a programmable thermostat?).
see Doug Shoup’s book mentioned here; The High Cost of Free parking.
In the particular example of a transit park-and-ride lot it gets even more interesting because of the cross-subsidies involved in mass transit. One wonders if the best use of presumably limited transit funds is to build parking spaces for the relatively well-off remote suburban commuters. This lot serves only one bus line; a rapid/express (no intermediate stops) route between Ahwatukee and downtown Phoenix. The line only runs one way, and only in the morning and evening. Thus the parking spots have low turnover — one spot equals one round trip rider.
A prominent “negative externality” of suburban living is the so-called free parking spot. Since the users, that is customers arriving in private automobiles, do not pay for its use economic inefficiencies inevitably result. It is normally supposed that the proprietor pays for parking facilities as a cost of business however that is often perverted by subsidies granted by government
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