Is road congestion the best allocation mechanism?

Congestion is the darling of politics and the media, and a topic of many conversations around the barbeque. But what is it? Is it a bad thing? Do we want more of it or less of it?

I define congestion as a condition of a network (of roads or other conduits) whereby the existence of extra users slows the rate of progress of all other vehicles. Given this definition, there can be a little congestion, where progress of road users is slowed a little, or plenty of congestion, where progress is greatly slowed.

The basic assumptions required for this brief analysis are that travel on the road network consists of a number of costs including vehicle capital and maintenance, fuel, and time, and that congestion affects road users by adding to the time cost of road transport.

However, given that people still choose to drive during times of peak congestion, and assuming that congestion is known in advance, we must assume that each traveller still receives a net benefit from their trip.

We end up with a situation where congestion results in the allocation of road space to users with a higher value of use, and a road system that still provides net benefits to each road user.

So where do the figures about costs of congestion originate?

The other way to look at congestion is that each extra individual who uses the road network incurs a cost to all other users in terms of increasing their travel time. Thus, there is an incentive for people to ‘overuse’ roads, as they receive all their benefits, without incurring all of their costs.

Thus if we have 100 road users and their trip time is 20 minutes (before noticeable congestion begins), and each extra road user after this amount increases everyone’s travel time by say, 1 minute (obviously the relationship is non-linear), then we can estimate the cost of congestion as follows:

With 5 hours per day where 120 users are on the road, we can estimate the cost as 5 hours of the value of time to 120 people, minus the benefit of undertaking the trip to 20 road uses.

The main shortcoming of this traditional approach is that it is assumed the costs borne by other road users are unavoidable, and thus it fails incorporate the benefits accrued by road users even when congestion occurs.

This is where my (I think) realistic assumption of prior knowledge of congestion is important. All 120 road users will know before embarking that their trip will take 40mins instead of 20mins. Other road users are prepared to ‘pay’ the extra time cost of travel, thus we still have a net benefit to society from congested roads.

Congestion charges essentially aim to replace the increased time cost with a hip pocket cost, to keep some users off the road. However, since the time cost of different individuals is greatly different, a congestion charge will benefit the wealthier road users and hinder those who place a lower value on their time.

Alternatively, congestion could be reduced by offering more/better alternative modes of transport, to attract marginal road users to trains, buses, cycling and such transport alternatives.

In my mind, congestion is an extremely functional and efficient mechanism for allocating our finite road space.  I have no problems with introducing a congestion tax, as long as it is complemented with signficant investment in alternative modes of transport.