Errata Carmona
Cars create plenty of problems, from road congestion to climate-damaging carbon emissions to unhealthy tailpipe pollutants. But cars are convenient, part of the reason public transit accounts for only 3.4 percent of the 850 million trips taken in US cities every day.
But despite efforts such as New York’s congestion pricing initiative, shifting the balance away from cars in an economically fair and efficient way is not a straightforward task for cities. That said, an analysis of Chicago’s transit system by Chicago Booth’s Milena Almagro, University of Pennsylvania’s Felipe Barbieri and Juan Camilo Castillo, and MIT’s Nathaniel Hickok and Tobias Salz finds that blending charges for drivers with adjustments to transit fares and schedules offers a promising path.
“If we think about urban transportation, it’s important to think about a combination of policies at once,” Almagro says. “One policy can serve as a complement to others. In this case, road pricing collects money that is reinvested in public transit.”
The researchers considered three transportation policies: adjusting bus and train fares, changing bus and train frequencies, and introducing a fee on cars driving into the city.
They compiled data for January 2020 from a range of sources. These data included the station of origin, time of day, and inferred drop-off location for every trip taken on buses and trains. The researchers also analyzed every taxi and ride-share trip, looking specifically at pick-up and drop-off points, price, number of riders, and trip length and duration. And they used anonymized cellphone data to track commuters from home to work and back. Finally, they matched the information with demographic data from census tracts, inferring the income levels of commuters.
The researchers modeled several scenarios, starting with a world in which the Chicago Transit Authority has an unlimited budget. In this case, rides would be free and trains would run more frequently. (Buses would actually run less often to optimize bus ridership, as most buses operate well below capacity.) On the basis of the current CTA budget, this scenario would create a deficit of $11 million a week.
More realistic scenarios would be making changes to public transit or adjusting road pricing, but these options taken alone would create distinct problems, the researchers find. Because the CTA has tightly constrained resources, it could by itself make only modest changes to fares and train frequencies. It also has considerations to manage beyond cost, such as offering services equitably. These factors contribute to a large gap between how well the CTA could be serving its customers and how well it actually serves them.
Using road pricing on its own creates a distinct dilemma. While these tolls could effectively reduce the number of cars on the road and generate environmental benefits, the researchers find that under their optimal price—an average of $13.40 daily per driver—commuters would pay nearly $30 million a week. People in the middle class, who make up the largest share of car commuters, would bear most of the expense. Lower-income groups tend to take public transit, especially buses; wealthier people tend to walk, travel from areas with good access to trains, or use a ride-hailing service.
If authorities pursue both policies simultaneously, the researchers find, the revenue collected from charging commuters 30 cents a kilometer could subsidize cheaper, more convenient public transit. The CTA could slash fares to next to nothing: 16 cents for a bus fare compared with $2.25 today and 26 cents for the train, down from $2.50. Excess revenue from road fees (any collected beyond the amount required to finance the CTA at this level) could go back to residents in the form of rebates, lessening the budgetary strain on middle-income commuters.
Almagro notes that the specifics of transit infrastructure and its use vary widely from city to city. The system of trains and buses in Chicago differs from that of New York or Los Angeles. The number of commuters and their transportation patterns also differ. But the central finding is universal, she says.
“Road pricing seems to be the most effective instrument when thinking about efficiently reducing congestion and environmental externalities, but it’s also the one that hurts consumers the most,” Almagro says. “The question then becomes how road pricing can best be combined with investment in public transit to make everybody better off.”
Milena Almagro, Felipe Barbieri, Juan Camilo Castillo, Nathaniel Hickok, and Tobias Salz, “Optimal Urban Transportation Policy: Evidence from Chicago,” Working paper, May 2024.
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