The Cost of Driving in Manhattan


Felix Salmon reports on a fascinating effort to quantify the externalities associated with driving into the Manhattan Central Business District:

Being a cyclist, I’m acutely aware of the issue of externalities — it generally costs you nothing to blindly step off the sidewalk and into the bike lane, or to open your taxi door without looking behind you, but it can affect me greatly. Komanoff’s a cyclist too, but he’s concentrating in this spreadsheet mainly on vehicular traffic. After crunching the numbers, he calculates that on a weekday, the average car driving south of 60th Street in Manhattan causes a total of 3.26 hours of delays to everybody else. (At weekends, the equivalent number is just over 2 hours.) No one car is likely to suffer excess delays of more than a few seconds, of course, but if you add up all those seconds, it comes to a significant amount of time.

Many of those hours are very valuable things, especially when you consider big trucks, staffed with two or three professionals, just idling in traffic. Komanoff calculates (check out the “Value of Time” tab) that the average vehicle has 1.97 people in it, and that the value of an hour of saved vehicule time south of 60th Street in Manhattan on a weekday is $48.89. Which means, basically, that driving a car into Manhattan on a weekday causes about $160 of negative externalities to everybody else.

This suggests, of course, that the only real problem with the Bloomberg administration’s controversial congestion pricing plan from last year was that the proposed price was far too low. Of course it still doesn’t follow from this that $160 is the appropriate congestion fee, since if you had a lower congestion fee that would reduce the number of cars on the street and thus reduce the marginal impact of additional vehicles.

People seem to be unaware of this, but the evidence suggests that traffic congestion costs the country tends of billions of dollars a year in lost economic activity:


If we implemented congestion pricing in those metropolitan areas suffering from chronic congestion and then gathered up all the revenue and lit it on fire, we would swiftly find ourselves living in a more prosperous society. And if we gathered up the revenue and did something else with it, we’d be even better off.