Yesterday’s New York Times has a piece by Steven Dubner and Steven Leavitt (of Freakonomics fame) about the external costs of driving:

Which of these externalities is the most costly to U.S. society? According to current estimates, carbon emissions from driving impose a societal cost of about $20 billion a year. That sounds like an awful lot until you consider congestion: a Texas Transportation Institute study found that wasted fuel and lost productivity due to congestion cost us $78 billion a year. The damage to people and property from auto accidents, meanwhile, is by far the worst. In a 2006 paper, the economists Aaron Edlin and Pinar Karaca-Mandic argued that accidents impose a true unpaid cost of about $220 billion a year. (And that’s even though the accident rate has fallen significantly over the past 10 years, from 2.72 accidents per million miles driven to 1.98 per million; overall miles driven, however, keep rising.) So, with roughly three trillion miles driven each year producing more than $300 billion in externality costs, drivers should probably be taxed at least an extra 10 cents per mile if we want them to pay the full societal cost of their driving.

The piece goes on to argue for pay-as-you-drive auto insurance, which is a good idea. Had I worked on that study, I might have tried to quantify the foreign policy and defense costs of securing oil supplies, but I can imagine the methodological problems there.

At any rate, although I’ve learned to be skeptical of “cost to the economy” figures, it’s clear that there are very large implicit subsidies to driving. The difference for public transit is that the subsidies are explicit.

Via Ezra Klein.

4 Replies to “The cost of driving”

  1. “Environmentalists” and now “economists” seem able to write long articles about the negatives of autos and sprawl without mentioning public transportation.

  2. Yeah, Pay as you Go seems to be excellent for anyone who does not commute every day by car.

  3. Oregon has a form of “pay as you go” insurance for motorcyclists; not sure if it can be applied to autos BTW. You just call a number at the insurance agency and let them know when you are taking the motorcycle out and for approximately how long. Thus, you are billed for the time used. We have a friend who has used this system for years and loves it.

    We tried to do the same just this last month, but found out the State of WA decided last year to not allow pay as you go insurance to WA motorists any longer.

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