Friday, February 17, 2006

Traffic Jam

According to Steven Levitt, the economist behind Freakonomics, Gary Becker is "…probably the world's greatest economist alive." A Nobel prize winner, Becker's groundbreaking research employs economic ideas to explain social topics such as crime, discrimination, family interaction, and drug addiction. But research alone doesn't lead to such lofty proclamations as "world's greatest." Becker's popularity stems from his ability to communicate economic ideas to non-economists. Whether you agree or disagree with Becker's views, you'll be able to clearly follow the economics behind his arguments. Good for us, then, that he publishes blog posts on a weekly basis.

In a recent blog post, Becker used microeconomic ideas to tackle one of life's everyday problems: traffic congestion. As Becker points out, rush hour drivers fail to account for the costs they impose on other people, such as increased congestion and pollution. How to curb excessive driving and congestion? Read the blog post on traffic congestion to see what he thinks.

1. According to Becker's rough estimate, what cost did Americans incur from the extra time and fuel spent during traffic jams in 2005?

2. According to Becker, how can city governments compel drivers to take account of the congestion they cause to other drivers? How would efficient traffic congestion management change with the time of day or weather conditions?

3. How does London's traffic congestion program work? How did Londoners respond to the new program? What happened to the speed of bus trips within London after the program took effect?

4. How do you think the program affected air pollution around London? Do you think people around London drive less as a result of the program? Or do you think they drive the same amount or more by avoiding trips into London?

5. What does Becker mean by a revenue-neutral driving tax? In what ways does traffic congestion impose a tax?

Topics: Negative externalities, Pigouvian taxes, Hidden taxes


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