Monday, January 23, 2012

Tangled up in equity arguments

Monday, January 23, 2012

The rise of performance pricing for parking is provoking equity-based objections.

As an example, let's take a look at the equity arguments quoted by the Boston Globe article on performance pricing which I mentioned last week. I liked it for mentioning that market pricing can shake up how we think about parking. But I wasn't so impressed by its take on the equity implications:
If Back Bay spots floated up to a market price, lower-income drivers would effectively lose access to parking spaces that they have as much legal right to as anyone else. The result, ultimately, would be a city where the rich have access to whatever spots they want, while everybody else has to settle for what’s affordable.

I care about equity and I agree that parking policy has important equity implications but this paragraph seems deeply muddled to me.

How does having the 'legal right' to park have anything to do with how parking should be priced? I have a 'legal right' to rent an apartment in the most prestigious street in my city. The fact that I, like most people, can't afford to do so has nothing to do with whether apartments should be market-priced. Of course, if significant numbers of people can't afford any decent shelter we must look for solutions. In market economies, those solutions are (usually) targeted and don't abolish market pricing for real estate generally. In any case, surely parking in busy urban streets is much less of a basic need than housing.

This brings me to 'compulsory car' thinking, which is a culprit in many of these equity objections. Many people seem to assume that driving is the only (tolerable) way to move around or that most drivers have little or no choice. They assume that if you can't afford to park in an area, then you can't afford to go there. Many people seem to be thinking of parking and driving as a basic necessity, like water. We do price water of course, but the politics of pricing for basic needs is always tricky. Highly automobile dependent societies, like the USA, are naturally especially prone to compulsory car thinking. However, the places where parking is scarce enough for performance prices to be high also tend to be the kind of dense urban places that are richest in mobility alternatives. Cars are one option among many and are clearly not a basic need in order to reach such places, even when such a place is located within a generally auto-dependent metropolitan area.

It is a pity the Boston Globe journalist didn't dig further into the connection between equity worries and how we frame parking as a good (which was a strong point in the story).

For example, on-street parking is owned by the community as a whole. But is it like space on an uncrowded beach or is it more like city-owned tennis courts in a popular urban park in a dense city? Both are publicly-owned but their pricing stories are different. Pricing the space on an empty beach is unlikely (and in any case, the 'performance price' there would be zero!). But pricing municipal tennis courts seems reasonable (at least in dense places) since tennis involves relatively few people using up a lot of space. Having 'peak pricing' for tennis courts (higher prices for high-demand times like weekends) also seems acceptable (here are some examples from London). And underpricing of tennis courts would cause nothing worse than a waiting list, whereas under-priced on-street parking causes traffic chaos and disruption. So why are some people so suspicious of performance pricing for on-street parking?

Two eminent left-of-center American economists are also quoted in the article:
“My first reaction was that this is going to create a huge issue of equity,” said University of Oregon economist Mark Thoma, who publicly voiced this concern in a 2010 blog post responding to a New York Times op-ed arguing for demand-based pricing.

Robert Reich, former labor secretary and professor of public policy at the University of California at Berkeley, who recently lamented the creep of privatization into public life, points out that the current system has a kind of equity built in: People who make less money, and can’t afford to park in a garage, can instead invest their time in the search for a cheap metered space. “Which is best? It depends in part on how much time you have relative to how much money,” Reich wrote in an e-mail. “Upper-income people have more of the latter, of course, which makes the allocation-by-price system better for them. But it’s far from clear it’s the best system for everyone.”
Now I respect these two economists enormously but I don't think they have thought this parking issue through. 

For example, there is a hidden assumption here that the status quo is fair. Why assume that? It seems likely that there are often more low-income people among the victims of cruising for parking (such as bus users) than among the beneficiaries of the under-priced parking.

Here is another way to think about the lack of fairness of the status quo. Imagine a city with a long-standing system of performance pricing for its on-street parking. Would a cap on parking prices really be high on your list of ways to improve equity of access to prime locations in this city? Would such a cap accurately target the people who really need most help? Would the poor really receive a big share of the benefit?

There is much more to be said on equity and performance-pricing but that is enough for one blog post.

What do you think?


  1. Technology offers a far greater degree of flexibility in parking pricing policies. Many cities in Italy have 'progressively increasing' parking fees which are paid in advance: 1 euro for the first hour, 2 euros for the second (ie 3 euros for two hours), 3 euros for the third (6 euros for three hours, etc.).

    Also, every car has a little clock on the windshield which is used in places which have limited 'free parking' for up to one hour. If you are caught cheating on the time, it is a very stiff fine (as are all parking tickets in Italy).

  2. This post was highlighted at Streetsblog Network (see Thanks Streetsblog!

    There is a lively comment thread and I have made some replies and clarifications. Take a look.

  3. I keep arguing the same thing as you, but I'd like to add two things:

    First is to underline your sentence "parking in busy urban streets is much less of a basic need than housing". The first thing I do when I hear the equity argument is point out that it treats parking as more important than food, housing, health, etc. because all of those have a market-based price.
    Second, contrary to food, housing, etc. paid on-street parking has actually redistribution effects! If a rich man parks, and a poor does not, then the first is giving money to the latter through increased public revenue to the city. But if a rich man buys a fancy dinner, there is no redistribution going (or a lot less).

    1. Excellent points Miguel. Many thanks for those.