Thursday, March 20, 2014

Can Move NY Overcome Credible Commitment Problems?

Eric Jaffe writes about Move NY* at the Atlantic Cities. In the piece he highlights some work that Mike Manville and I did on credible commitment:
Some transportation experts worry that a pricing plan won't even advance to the point of debating the economic and equity questions. Over the years some notable pricing plans — Hong Kong in the 1980s, Edinburgh in 2005 — failed to get off the ground because residents lacked faith in the funding agency to manage the new revenue. Scholars Michael Manville of Cornell and David King of Columbia call this the "credible commitment" problem of congestion pricing. A few years back, Manville and King interviewed 50-some officials in Los Angeles about road pricing. About a third explicitly said they would not support a congestion plan because they didn't trust state officials to redistribute the toll revenue as promised, the same share who feared that pricing might be unfair to the poor.

"What happens is, absent that trust, that sort of revenue promise doesn't necessarily lead to the kind of political support you might think," says Manville. "In some ways, what people were saying is it would never get far enough for pricing's regressivity to be a problem, because we would just never see this money." 
Considering the emphasis Move NY's plan places on revenue redistribution, not to mention the MTA's own mixed record of public promises, those findings give reason for pause. The way around the commitment problem, says Manville, is to stress the traffic benefits that a strong pricing plan will bring, as opposed to the revenue gains. Some believe the best way forward is to run a pilot project first, as officials did in Stockholm.

The Atlantic Cities piece nicely describes many of the problems and opportunities for the Move NY plan. Revenue distribution sounds good for assembling coalitions, but these opportunities are constrained by trust. Hopefully such concerns can be overcome.

In earlier work Mike, Donald Shoup and I looked at the politics of congestion pricing, short and ungated version available here.

*Just as a point of disclosure I have informally and infrequently consulted with Move NY on their plans.

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