Thursday, December 3, 2009

Call them Highways!

I bet you never thought you were making an argument just by saying the word "freeway". But I think you are, in a very subtle way. A "freeway" is a high capacity, high speed roadway separated from other traffic, available free of charge at the point of use for all motorists. One of the biggest problems with freeways is that they're free to use.

In economics we have "demand", the amount of something people are willing to buy at various prices. We should think of road space like a product. When the price of the product is zero, people are willing to consume a lot of it. When the price of the product is higher than zero, people aren't willing to consume as much. Start charging people directly to use freeways and people will use them less. Some of these people will switch to surface streets, so price them too (require satellite gizmos in every car)! The prices can go up and down to maintain a steady traffic flow by charging more to use roads when lots of people try to use them.

We pay for roads indirectly through taxes and so we miss out on the traffic-reducing benefits of road pricing. So, don't say "freeway". It implies that the roads should be free (and that they are free, both of which are far from true). Call them highways!

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