KTH ROYAL INSTITUTE
OF TECHNOLOGY

Is congestion pricing fair?
Consumer and citizen perspectives on equity effects

Jonas Eliasson
Head of Stockholm City Transportation Department
Professor transport systems analysis, KTH

Two views of ”fairness”• ”Consumer” and ”citizen” perspectives – complementary––”Homo economicus” vs. ”homo politicus””Personal well-being” vs. ”subjective social welfare”• Consumer: travel costs, travel times, use of revenues…
––

Which socioeconomic groups win and lose from a reform
Traditional equity analysis• Citizen: principles, procedures, allocation mechanisms–––

Is the underlying principle, rationality, motivation of a reform ”fair” or ”just”
These views may also differ across socioeconomic groups
Is congestion pricing an ”elite” project? I.e. better aligned with an ”elite’s”
view of what is ”fair” or ”just”?

Data• Survey data from Stockholm, Gothenburg, Helsinki, Lyon
• Questions about travel patterns & attitudes••••

Stockholm introduced congestion pricing 2006
Gothenburg introduced congestion pricing 2013
Helsinki: proposed zone-distance system – never introducedLyon: hypothetical area scheme

Consumer perspectives

Toll payments per income group:
Rich pay more€/monthRelative to average payment

Toll payments as share of income:Poor pay larger share of income
Percentage of income

Relative to average percentage

Fair?
• Rich pay more – but poor pay larger share of their income• Problematic if the purpose is to generate revenues• OK if the purpose is to correct prices––

Prices are usually the same for everyone, for efficiency reasons andto avoid paternalism
Increased economic equality usually achieved by taxation andwelfare systems

”Compound self-interest” measure• Broaden the self-interest measure to include– Value of time savings– Number of car trips– Number of cars in household• Combine these variables in one self-interestmeasure• Construct relative weights from how the variables
affect attitudes to congestion pricing

Model estimation• ”How would you vote in a referendum about congestion
pricing?”– Answer 1-5: Most likely yes, Probably yes, No opinion, Probably
no, Most likely no• Estimate ordered logit model– regressing the answer 𝑖 on the self-interest variables 𝐗

𝑦 = 𝛃𝐗 + 𝜀

11
𝑃𝑖 =−1 + exp 𝜇𝑖 − 𝛽𝑋
1 + exp 𝜇𝑖−1 − 𝛽𝑋
• 𝑦 measures ”compound self-interest” (latent)

Estimation results

Tolls
Tolls,add.inc.grp1
No car
Car trips
Value of time, drivers
Stockholm
Helsinki
Lyon
Gothenburg2014

Parameter-0.0011-0.00080.3062-0.4306
0.01890.99490.0214-0.1767
0.5572T-stat
-9.6
-3.6
5.0
-15.1
12.6
14.9
0.3
-2.4
8.0

Compound self-interest by income group

Citizen perspectives

Citizen perspectives• Opinions about what is “fair” or “just” may vary acrosssocioeconomic groups• Is the concept of congestion pricing better aligned withhigh-income groups’ views about what is “fair” or“socially desirable”?
• What is the “concept of congestion pricing”?
• Includes–––

Allocating a scarce resource according to willingness to pay
Similarity to taxes: transfer resources from individuals to thegovernment
Environmental effects

Views of fairness (positive number = agree)
SthHels

LyoGbg

1.4

1.3

2.1

1.3

0.9

1.2

1.7

1.3

0.8
1.9
1.5

1.2
1.4
2.1

1.3
0.3
-1.2

0.3
0.9
0.8

0.1

-1.1

-1.6

-0.7

7 Giving out places on the ferry with a lottery is fair

-1.1

-1.3

-2.3

-2.2

8 “It is fair that airplane tickets cost more for departureduring peak hours than during off-peak”

0.9

0.8

-0.4

0.3

9 “It is fair that airplane tickets to vacation destinations
cost more when the weather in [country]is bad.”

-1.0

-1.2

n/a-1.4

10 “It would be fair if transit fares were lower in off-peak”

1.0

0.6

0.7

0.9

1 “Considerably more resources should be used toprotect the natural environment.”
2 “The government should prioritise to reduce thedifferences between the rich and the poor.”
3 ”Taxes in [country] are too high”
4 Pricing the ferry is fair
5 Queueing to the ferry is fair
6 Public agency deciding space on the ferry is fairCorrelation with income(positive = rich agree more)
Sth

Hels

-0.06

-0.10 -0.02 -0.04

-0.19

-0.27

0.06
0.00
-0.08

-0.03 -0.01 0.02
0.01 0.01 0.02
-0.03 0.03 -0.05

0.02

0.01-0.02

0.01

7 Giving out places on the ferry with a lottery is fair

-0.05

-0.02

0.01

-0.02

8 “It is fair that airplane tickets cost more for departureduring peak hours than during off-peak”

0.09

0.01

0.03

0.13

9 “It is fair that airplane tickets to vacation destinations
cost more when the weather in [country]is bad.”

0.09

0.02

n/a

0.11

10 “It would be fair if transit fares were lower in off-peak”

0.00

-0.06

0.02

-0.03

1 “Considerably more resources should be used toprotect the natural environment.”
2 “The government should prioritise to reduce thedifferences between the rich and the poor.”
3 ”Taxes in [country] are too high”
4 Pricing the ferry is fair
5 Queueing to the ferry is fair
6 Public agency deciding space on the ferry is fair

Lyo

0.00

Gbg

-0.17

”Citizen utility”• Estimate model of correlation between attitudes tocongestion pricing and attitudes to allocation
mechanisms, pricing, taxation, environment (controllingfor self-interest)• The latent variable (the ”citizen utility”) measures how
well aligned congestion pricing is with a respondent’s
socio-political (”citizen”) attitudes

Estimation results
Tolls
Tolls,add.inc.grp1
No carCar trips
Value of time, drivers
Stockholm
Helsinki
Lyon
Gothenburg2014
Environment
Taxes too highPricing is fair
Agency is fair
Equity is priority

Parameter-0.0010-0.0006
0.3298-0.33280.18251.00640.1555-0.09900.5616
0.2610-0.25240.11720.0504-0.0042T-stat
-8.6
-2.6
5.1
-11.0
9.1
14.1
2.0
-1.3
7.2
15.7
-21.3
10.2
5.1
-0.3

Consumer and citizen utilities by income group

Components of citizen utility

Conclusions• No support that congestion pricing is ”unfair” fromcitizen perspective–

Small differences across income groups; middle income groups
slightly ”better off” than the richest and poorest• The (perceived) purpose of congestion pricing affects
attitudes – tax, environmental measure, allocation
mechanism?
• Rich pay more than the poor – but pay lower share of
their income• OK if price correction, but regressive tax source