Do HIGHER tolls mean paying customers?

[cpzilliacus]

TOLLROADSnews: Study of Minneapolis dynamic priced lanes shows drivers see posted tolls as proxy for congestion, more likely to choose toll lanes when signed prices high than low

Researchers in Minnesota studying driver responses to toll rates on the dynamically priced I-394 and I-35W express lanes have found results that confound conventional models. They have found that users of the toll express lanes are attracted to them in greater numbers as prices rise -  the reverse of the straightforward economic notion of higher prices turning away users, and lower tolls attracting them.

The research by David Levinson of the Networks, Economics and Urban Systems Group at the University of Minnesota and Michael Janson a masters student there involved three field experiments in which prices were changed without any public announcements and responses studied, plus analysis of two years of traffic and toll rate data.

The other surprising finding was that drivers on the toll express lanes consistently pay $1 to $2 per minute ($60 to $120 per hour) of time saved, far more than conventionally estimated values of time saved.

The Transportationist: HOT or Not: Driver Elasticity to Price on the MnPASS HOT Lanes

The Minnesota Department of Transportation (MnDOT) has added MnPASS High Occupancy Toll (HOT) lanes on two freeway corridors. While not the first HOT lanes in the country, the MnPASS lanes are the first implementation of road pricing in Minnesota and possess a dynamic pricing schedule. Tolls charged to single occupancy vehicles (SOVs) are adjusted every three minutes according to HOT lane vehicle density. Given the infancy of systems like MnPASS, questions remain about drivers' responses to toll prices. Three field experiments were conducted on the corridors during which prices were changed. Data from the field experiments as well as two years of toll and traffic data were analyzed to measure driver responses to pricing changes. Driver elasticity to price was positive with magnitudes less than 1.0. This positive relationship between price and demand is in contrast with the previously held belief that raising the price would discourage demand. We hypothesize this is because drivers use price as a signal of time savings. In addition, drivers consistently paid between approximately $60-120 per hour of travel time savings, much higher than the average value of time. Reasoning for these results is discussed as well as the implications these results have on the pricing of HOT lanes.

[Scott5114]

$60 per hour of time saved? Man, the average Minnesotan is either really poor with money or grossly overvalues their time.

[formulanone]

Like several metro areas, we have these variable tolls on the I-95 Express Lanes in Miami-Dade county; and from my experience with them, if I see "0.25", usually traffic is light all the way around. But if "3.75" (or greater) appears, I can usually count on a slow ride or a disagreeable commute in the free lanes...for the 10-20 times a year I use that section of road, it's worth not dealing with the overall aggravation by not using the express lanes.


Edit: smartphone makes me look stupider.

[Henry]

That's the craziest thing I've ever heard!

[cpzilliacus]

That's the craziest thing I've ever heard!

If drivers are using the toll rate as a surrogate for the time that they will save (or the congestion that they will avoid), then it makes plenty of sense.

Though it seems to me that since reliable travel  time data are now available for large sections of the highway network, using a variable message sign to post estimated travel times for the "free" and tolled routes (along with the tolled price)  would be a good practice.

[wxfree]

$60 per hour of time saved? Man, the average Minnesotan is either really poor with money or grossly overvalues their time.

The study indicates that time savings average from less than one minute to nearly three minutes (over 16 miles).  Drivers seem to overestimate the amount of time they save, although the study also refers to a value of travel time reliability.  Also, I suspect the small absolute values make the money easier to spend.  Paying $2.91 to save 2.87 minutes is over $60 per hour, but, still, it's only three bucks.  That combined with drivers probably thinking they're saving more time makes it seem less outrageous.

[texaskdog]

We drove from Oklahoma to Emporia, KS, $6.75.  Yet the tollroads in Austin have horrendous fees.  We'd pay that much driving on it about 5 minutes each way.

[jeffandnicole]

$60 per hour of time saved? Man, the average Minnesotan is either really poor with money or grossly overvalues their time.

The study indicates that time savings average from less than one minute to nearly three minutes (over 16 miles).  Drivers seem to overestimate the amount of time they save, although the study also refers to a value of travel time reliability.  Also, I suspect the small absolute values make the money easier to spend.  Paying $2.91 to save 2.87 minutes is over $60 per hour, but, still, it's only three bucks.  That combined with drivers probably thinking they're saving more time makes it seem less outrageous.

I see this on my normal commute home.  As an example: I can take I-295.  From Exit 36 (Rt. 73) to Exit 28 (Rt. 168) would normally take 7 - 8 minutes.  In normal congestion, it may take 15 - 20 minutes. 

So, should I scoot over to the NJ Turnpike, interchanges 4 - 3?  Normally, the traffic is free-flowing there.  Assuming I can do the same speeds, I could save time, compared to sitting in rush hour traffic on 295.  BUT...I should factor in the time driving the 1/2 mile from 295 to the Turnpike...in rush hour, that may be as quick as 1 - 2 minutes, or over 5 minutes.  Plus factor in the time on the ramps...it may just be 15 seconds per ramp (295 to 73, 73 to the toll plaza, toll plaza to the Turnpike), but that's still another 30 - 45 seconds.  Then getting off the turnpike, that's more time on the ramp, plus the toll plaza is often congested.  Add 30 seconds to 30 minutes (yes, that much time on the worst of days, based on the congestion on 168.  However, normal congestion is about a minute or two) exiting at interchange 3.  Then factor in the time I'm on 168 for 3/4 mile getting back to I-295, which is another 5 or so minutes during rush hour.

So is the time I saved by free-flowing on the turnpike worth the toll, compared to the time I would've spent on 295 clogging along in rush hour traffic?  After many years, I realized, not really!

[cpzilliacus]

So is the time I saved by free-flowing on the turnpike worth the toll, compared to the time I would've spent on 295 clogging along in rush hour traffic?  After many years, I realized, not really!

I cannot quantify it for you (or even for me), but the free-flow speeds on the N.J. Turnpike also mean  less wear on your vehicle and presumably lower fuel consumption.  That may matter more for tractor-trailer combinations and other heavy vehicles than for automobiles and light trucks, but I am always impressed by how many tractor-trailer combinations, buses and other large vehicles can be seen on the Turnpike south of Exit 7A (seems that's the easiest place to go from the mainline of the Pike to I-295, though Turnpike Exit 4 (N.J. 73) is very close to I-295 Exit 36).

[PHLBOS]

I am always impressed by how many tractor-trailer combinations, buses and other large vehicles can be seen on the Turnpike south of Exit 7A (seems that's the easiest place to go from the mainline of the Pike to I-295, though Turnpike Exit 4 (N.J. 73) is very close to I-295 Exit 36).

Most of the truckers leave the NJ Turnpike at Exit 7 (US 206) which is even closer to I-295 (Exit 56) than NJ 73 further south.  Plus there are a lot more truck-oriented services (including PETRO) off of Exit 7 (along US 206 and Rising Sun Road); many of which predated the completion of the missing link of I-295 between Exits 60 (I-195) and Exit 57 (US 130) during the 1990s.

http://goo.gl/maps/pPbNj

The heavy truck traffic through this area was the main reason why the NJTA redid the Exit 7 interchange in the 1990s.  One can still see traces of the old Turnpike interchange in the above GoogleMaps image.

[jeffandnicole]

So is the time I saved by free-flowing on the turnpike worth the toll, compared to the time I would've spent on 295 clogging along in rush hour traffic?  After many years, I realized, not really!

I cannot quantify it for you (or even for me), but the free-flow speeds on the N.J. Turnpike also mean  less wear on your vehicle and presumably lower fuel consumption.  That may matter more for tractor-trailer combinations and other heavy vehicles than for automobiles and light trucks, but I am always impressed by how many tractor-trailer combinations, buses and other large vehicles can be seen on the Turnpike south of Exit 7A (seems that's the easiest place to go from the mainline of the Pike to I-295, though Turnpike Exit 4 (N.J. 73) is very close to I-295 Exit 36).

Or think of it this way - Stop and go traffic on 295 for 8 miles...about the same as any 8 mile stretch of roadway with traffic lights and stop signs.

[Henry]

That's the craziest thing I've ever heard!

If drivers are using the toll rate as a surrogate for the time that they will save (or the congestion that they will avoid), then it makes plenty of sense.

Though it seems to me that since reliable travel  time data are now available for large sections of the highway network, using a variable message sign to post estimated travel times for the "free" and tolled routes (along with the tolled price)  would be a good practice.

I take it back; they actually may have something there!

[Zmapper]

It is likely that people value their time differently depending on what they are doing. Driving to Best Buy for shopping? Not worth it. Driving to the airport for the once-daily flight to Moscow after a meeting ran late? The toll lanes are absolutely worth it.

[hotdogPi]

I think tolls are based on how many people are in the toll lane, so the price changes depending on how crowded it is. So more people mean higher tolls just because of that.

[woodpusher]

I've occasionally wondered if traffic tickets should be priced that way.

[realjd]

I admit to doing that. If I see $0.25 on the express lanes in Miami, I'll usually stick to the free lanes. Up in the $5 range? That means a slow ride in the free lanes and I'll take the express toll lanes. Price is a very good indicator of traffic. I've noticed the same correlation in other express toll highways such as the 15 in San Diego.

[NE2]

It's a feedback loop though - if they "lie" enough by upping the price when the main lanes are free-flowing, commuters will get smart and not use price as an indication of congestion.

[Brandon]

It's a feedback loop though - if they "lie" enough by upping the price when the main lanes are free-flowing, commuters will get smart and not use price as an indication of congestion.

Drivers aren't all that stupid.  If the lanes are more congested at the higher toll (or equally as congested), they'll start avoiding them and using the free lanes.

[NE2]

It's a feedback loop though - if they "lie" enough by upping the price when the main lanes are free-flowing, commuters will get smart and not use price as an indication of congestion.

Drivers aren't all that stupid.  If the lanes are more congested at the higher toll (or equally as congested), they'll start avoiding them and using the free lanes.

Reread what I said. Price is currently an indication of main lane congestion. If they set a high price when the main lanes are fine, they might get short-term gains, but will lose in the long term.

[1995hoo]

It's a feedback loop though - if they "lie" enough by upping the price when the main lanes are free-flowing, commuters will get smart and not use price as an indication of congestion.

Drivers aren't all that stupid.  If the lanes are more congested at the higher toll (or equally as congested), they'll start avoiding them and using the free lanes.

Reread what I said. Price is currently an indication of main lane congestion. If they set a high price when the main lanes are fine, they might get short-term gains, but will lose in the long term.

Theoretically, at least on the HO/T lanes here in Virginia, it's a slightly less direct connection than that. The theory is that the toll is supposed to reflect the traffic level in the HO/T lanes, not in the general-purpose lanes, and thus in theory you could have heavy traffic in the general-purpose lanes without a knock-on effect of more traffic in the HO/T lanes; most likely this would happen if there were an incident in an area with no HO/T exit, I assume (meaning a lot of people would stay in the local lanes if they wanted to use that exit).

That's the theory, anyway. In practice I think people are more likely to view the toll as a proxy as you and others suggest because there has to be a tension between allowing a desirable level of traffic (i.e., paying customers) and discouraging too much traffic (i.e., slowing the express lanes down). I know the day the toll hit $7.40 it was because a wreck blocked three of four general-purpose lanes AND the right-hand HO/T lane (leaving one of each type of lane for traffic to squeeze past).

What would be nicer would be a dual-column sign listing travel times via both sets of lanes. Around here that might be a little tricky because the exits don't all match up, though.

When I'm driving for business I always use the toll lanes because I can write off the toll on my taxes.

[wxfree]

This reminds me of a story I read some time back about vodka.  According to the story, some vodka makers increased their sales by raising prices.  People saw the higher price and assumed it was a better product.  That's just the way some people are.

The point of the higher toll is to reduce demand and manage traffic levels.  If market reversals happen (higher price leads to more demand), that makes for difficulties.  Showing the comparative travel times on signs may reduce revenues since people will realize how little time they can expect to save.  I wonder if it would help manage traffic, though.  If people are willing to pay a high price to save a few minutes, they'll be willing to pay a high price to save more time during real congestion.  If the signs verify that there's a significant time savings, then it just makes drivers sure that they're willing to pay.  The way to manage traffic would be with very high prices.

The difference I see between having the signs and not having them is the level of use in lighter traffic, reducing revenue.  I don't see how that would benefit the ability of the price to manage traffic levels.  If anything, it would just make people more willing to pay when the main lanes have severe slow-downs.  The difference I see is fewer customers when there isn't a severe slow-down, which reduces revenue and doesn't help manage traffic levels, since that isn't when it really needs to be managed.

[NE2]

The difference I see between having the signs and not having them is the level of use in lighter traffic, reducing revenue.  I don't see how that would benefit the ability of the price to manage traffic levels.  If anything, it would just make people more willing to pay when the main lanes have severe slow-downs.  The difference I see is fewer customers when there isn't a severe slow-down, which reduces revenue and doesn't help manage traffic levels, since that isn't when it really needs to be managed.

And this is why privatization is bad. Something which would obviously benefit the public (travel time signs) may be opposed because it cuts into profits.

[theline]

And this is why privatization is bad. Something which would obviously benefit the public (travel time signs) may be opposed because it cuts into profits.

Exactly. I'm put off when politicians say they want to run government or a government agency like a business. Government and business have different goals, and that is a good thing. Businesses are run for a profit, but government works (or should work) for the public good. We all want government to spend efficiently, avoiding waste, but insisting that it make an economic profit may be contrary to the public interest.

Roads are for the public good, and should be run by government, not a for-profit business.

[Scott5114]

Your average government has much greater borrowing power than your average business, as well, and failing to leverage that advantage is not good policy.

[NE2]

Your average government has much greater borrowing power than your average business, as well, and failing to leverage that advantage is not good policy.

Too often they do use that advantage. The corporations get the profits but the government is stuck with the risk.