Is there a moral case for free transit for students?

Student MetroCard March: “This Is What Democracy Looks Likes” – Gothamist:

From the students:

We all came out because we can’t make it without our MetroCards. We cannot afford it, we cannot pay. Some of us are on food stamps,” and “A lot of us don’t live around here and this school helps us a lot because we don’t have good schools around us.”

From one of the instructors at one of the protesting schools:

“I don’t know why they want to cut the metrocards now, when we’re in a recession and times are so tough on everyone.”

Here’s why: “they” have a name, the New York MTA, not the “the gummint”, and “they” have an $800 million dollar budget deficit, recessions are hard on everybody, including and especially transit companies, and transit service, like all public services, cost money to provide, except in the Goodship Lollypop land of American’s brains. So we’ve refused to raise the federal gas tax since 1993, which was 17 years ago, studiously avoided increasing the tax during boom times, and states didn’t exactly race to make up the gap caused by inflation (though New York has tried; it’s a pretty high-tax state, for fuels anyway.) So the money has to come from somewhere or the service has to go away, and transit companies are looking at their patrons. You want transit, you pay. Welcome to the neoliberal hangover, kids.

We can compare this to a story reported via CNBC on German Millionaires who have volunteered to close Germany’s deficit by paying 10 percent of their income over the next 10 years. (Via the TaxProf). There are a number of appealing things about this story, like the apparent altruism of rich people who seemingly get their obligations to society. And it’s reasonable that the wealthy can and should pay more. But I am also not sure that such an approach is just. It’s probably more expedient. German millionaires are not fools, and they know that their glittering cities and spotless transit and decent schools are part of the capital that drives economic growth. This approach should bother us to. It indulges the neoliberal’s attitude about taxation which can be described as “Don’t tax you, don’t tax me, tax the guy behind the tree.”

Why should millionaires foot the entire bill? What if they paid 9/10ths and everybody else increased their expectations of themselves by 1/10th? Or 99/100s to 1/100? Redistribution via taxes does have a well-established moral theory behind it (Nancy Fraser and John Rawls), but it’s a bad idea to let the citizenry at large, even those not well off, pay nothing for services they use or deficits incurred by governments they should feel represent them. Of course, that latter statement is contestable, but if your democratic institutions do not represent you, it’s your fault in some ways, even if it is not your fault in other ways (e.g., the power of elites; however, if elites take on more of the tax bill, how does that break the disproportionate influence elites have over institutions?). Free-riding should not be encouraged even if somebody who can well afford it foots the bill for the ride because our democratic obligations should have some level of reciprocity, to each other and to our institutions.

So, going back, is there an ethical rationale for free transit for students? Free transit for students has generally been expedient politics for transit companies. Transit companies want to fill seats and be relevant, and students are a likely a patron group: they are in general are younger, have fewer children, have pretty flexible schedules, have low value of time and thus get less annoyed by the occasional transit fail, and if they are poor, are too poor or too young to have cars at all or if they do, they own crappy and unreliable cars anyway. And, in general, they are cash poor. However, most of these university programs simply tack on a student fee; students pay anyway, indirectly. I don’t know how this works for New York public schools. There is, in general, a greater tolerance for providing free service and deep discounts to students due to their financial straits than there is for providing discounts and service to people based on poverty in general: students’ poverty is considered temporary, and perhaps, even laudable as they sacrifice monetarily in order to invest in themselves. There is an intergenerational aspect to it. Students will graduate someday and then in turn pay higher amounts later in life so that other students can benefit.

Free transit passes most of the tests for reasoned public ethics. You could also make this argument in terms of fewer painful absolutes: instead of letting it be free, offer a steep discount. Instead the unsustainable transit politics gets us to where we are: it’s my way or the highway: I’m entitled to free transit; well, you can chant about your right to mobility until your head falls off, I can’t pay my unionized drivers with promises, so you’re going to pay because we’re out of money. Zero-sum. Boo-yah.

Pricing and Social Equity Seminar Video

To watch the Roundtable discussions, follow this YouTube link:

The issues: Pricing and user charges for things like carbon and gasoline offer an effective means to achieve short-term gains in climate policy, air quality, congestion relief, and agency budgetary ills. At the same time, pricing and user charges also can cut low-income families out of publicly provided services.

But the jury is out—or it should be—on whether underpricing public services really benefits low-income families. Some public infrastructure and services, like roads and water, have significant external costs (like pollution or overconsumpution) that can also hurt low-income communities in the long term. If we fail to “pay as we go” with infrastructure, spending on infrastructure can also displace public funding needed for other services to low-income families, such as public schools. Finally, charging low prices to every user, not just the poor, limits the revenues to public agencies so that service quality can suffer. Those in poverty may be far less able to supplement lower-quality public services with private purchases the way higher income families can.

Welcome and introductory comments
Richard Little, Director, USC Keston Institute for Public Finance and infrastructure Policy

Water pricing and access to services
Moderator: Richard Little, USC Keston Institute

Round table participants:
Randall Crane, Urban Planning, UCLA
Charisma Acey, Urban Planning, Ohio State University
J.R. De Shazo, Public Policy, UCLA
George Chen, LADWP

Development fees and affordable housing
Moderator: Chris Redfearn, USC Lusk Center for Real Estate

Round table participants:
Jenny Schuetz, SPPD, USC
Casey Dawkins, Director, Metropolitan Institute, Virginia Tech
Mike Keston, Chairman of KFG Investment Group

Road pricing and barriers to social inclusion
Moderator: Genevieve Giuliano, USC Metrans Transportation Center

Round table participants:
Ken Small, UC Irvine
Brian Taylor, UCLA
Stephanie Wiggins, LAMTA

Carbon and energy pricing and social equity
Moderator: Chris WEare, USC Center for Sustainable cities

Round table participants:
Dan Mazmanian, Bedrosian Center, USC
Don Paul, USC Energy Institute
Adam Rose, USC, CREATE
Matt Kahn, UCLA Institute of the Environment

Summary, Recap, and Reflections
Richard G. Little.

Dowell Myers on Proposition 13

My colleague Dowell Myers has many gifts, but among those is his uncanny ability to identify issues that really matter and look at their root causes. So while many people (like me) fretted about the budget crisis, Dowell was reflecting on the various issues that drove the state of California to its knees. One of these issues is Proposition 13. Randy Crane’s Urban Planning Research Blog* presents a summary of the report here. The full report can be found at his Population Dynamics Research Group website.

One of the things so valuable about the report is that it helps quantify the structural privilege that Prop 13 has created for wealth accumulation among native-born Californians. It’s the upside-down of intergenerational equity in the public sphere: cushioning incomes of established homeowners at the expense of newcomers.

This is particularly egregious given what Prop 13 has done in concert with tax aversion in general: increasing populations and increasing demands for service volumes and qualities (like high speed rail) along with this tax aversion has lead us to an impasse [1, 2, 3]. We want sustainable infrastructure, we want green cities, we want poverty alleviation, but we want somebody else to pay for those things. It took a couple of decades, and (I suspect but can’t prove) produced gobs of economic rent for native Californians, but Prop 13 has always been the apotheosis of unsustainable among a suite of unsustainable public policies which systematically reward individual consumption over collective (read: urban) consumption. The proposition limited the ability of state and local governments to respond to changing service demands and shifted the tax burden to those who can afford to pay (and who are likely to benefit like crazy from things like high speed rail and other infrastructure investments) from those who less able to do so via tax instruments more regressive by virtually every measure than the property tax** [4].

References that informed this post
[1] Steurle E. The Tax Decade: How Taxes Came to Dominate the Public Agenda. New York: The Univeristy Press of America; 1992.

[2] Fischel, W. The Homevoter Hypothesis: How Home Values Influence Local Government Taxation,School Finance, and Land-Use Policies. Cambridge: Harvard University Press, 2001

[3] J. Yinger. Review of The Homevoter Hypothesis: How Home Values Influence Local Government Taxation, School Finance, and Land-Use Policies by William Fischel Cambridge: Harvard University Press, 2001. 45.00cloth; 344pp. Land Economics, 78(4) : 627 − −630, 2002.

[4] Institute on Taxation and Economic Policy. Who Pays? A Distributional Analysis of the tax Systems in All 50 States [Internet]. 2003 ;[cited 2009 Aug 15] Available from:

*Horray! Randy’s blog is back up with a new post! I had fretted that Randy Crane’s blog had gone dark, and that would be a shame as it is really a wonderful forum for learning about new research.

**If you ever want to just make me have a stroke, suggest we pay for high speed rail with general retail sales tax or the lottery. We might as well fund school bus programs with cigarette sales on school buses.

How much is too much to pay for mobility–Part II

One of the things that makes me wonder about people’s hysteria over congestion charging: why don’t these same people ever argue that it is wrong to charge for public transit?

Now, to be fair: transit enjoys a large out-of-pocket price advantage over owning a car, but in most places in the US, the car provides better service quality and higher mobility. And it’s no use arguing quality because much of that argument comes down to taste preferences. I prefer not driving because I once had a bad car accident and I never want that responsibility again. I’m incompetent. But that means as a transit rider and walker I’m intimately aware of the service quality problems even with good transit systems. And I’ve ridden systems around the world. No, you don’t have to drive with transit, but if it’s no fun sitting in traffic, chances are you’re still sitting, in air conditioning with some privacy if you are in your car. No such luck with congested transit, where you can be sweltering and hanging on a pole next to somebody you’d rather not share a sidewalk with less alone the same 16 cubic feet of air.

However, I digress. Service qualities aren’t the issue. The issue is why people think it’s unfair to expect people to pay for freeway service when they seldom think it’s unfair to expect people to pay for public transit.

Putting some numbers on the example further illustrates the point. A patron of Orange County’s SR91 HOT lanes pays on average $1600 a year in user fees if they use the facility 8 times a weekduring the very highest morning and afternoon peak charges; if they only use the lane for 6 trips a week and move to an hour off peak in either direction, they can reduce that amount to only about $800 a year . Peak-period, peak-direction freeway commuters are more likely than commuters in general to come from middle- and upper-income households; as such, the lowest income users who regularly commute in the SR91 Express Lanes come from households with average annual incomes of about$40,000.

By contrast, someone who buys a regular monthly pass for Los Angeles County-wide transit service pays $744 a year; a region-widepass costs $881 a year—about the same as the HOT lane charges. And that’s for one adult: two adults put the figure at $1488 because in transit there are no economies for multiple adults (whereas you can stick two adults in a car and drive on the SR91). A monthly pass for the New York MTA costs over $1,000 a year. Local bus and subway services for Boston MTBA patrons are about $720 a year, and commuter rail passes range in price from $720 to $3000 a year. These costs can get higher if a patron is unable to pay out in lump sums for monthly passes; what costs monthly pass riders $744 a year in Los Angeles costs weekly pass purchasers $884. These are not small charges when the poverty line sits at $18,000 for a family of three in the US; the cost of a NY MTA pass runs at 0.06 percent of total income there—much higher than some gas tax and toll schemes

My point here is not that it is cheaper to go by car: you’ve still got payments, maintenance, and insurance, etc. My point is that we worry about low-income motorists having to face charges but nobody seems to think anything of what we charge for transit. Yes, when transit fares go up, there is usually some discussion of what that means for impoverished riders, but charging for transit is routine while charging for freeways is seen as deviant. I find this weird. Of the major metropolitan areas, San Francisco is the only one I know of that has lifeline pricing for passes.

Here’s one of the very few recent studies on the cost incidence of transit fares.

Nuworsoo C, Golub A, Deakin E. Analyzing equity impacts of transit fare changes: Case study ofAlameda-Contra Costa Transit, California [Internet]. Evaluation and Program Planning. In Press, Corrected Proof, Available: here

And another colleague weighs in on congestion pricing in LA

Peter Gordon also weighs in on the question of congestion pricing on the 710 in Los Angeles.

Actually, we should be precise, as this is a research blog. This is a value-pricing, not a congestion pricing scheme. Congestion pricing generally reflects an scheme that prices the whole facility. Travelers must chose between using the facility and paying, or not using the facility at all.

Value pricing concerns a subset of lanes that travelers may opt into. They can stay in the free lane and deal with congestion (or no), or they can pay into lanes that have been priced.

Marlon Boarnet on equity and toll roads

Marlon Boarnet has been one of my intellectual role models since before I went to graduate school. In today’s LA Times, he does a nice job of pointing out how superficial assertions about the equity of toll roads do not hold up. Bottom line: on public goods that are subject to congestion, there are only two things that discipline or ration use: out-of-pocket money costs and/or time costs. We can’t assume that favoring one or the other necessarily leads us to one conclusion about social equity. We can be pretty sure that impoverished families do pay proportionally higher out-of-pocket costs. We also can be sure that time burdens are also disproportionate, and we should never assume that less affluent individuals’ time is “free.”

In addition to Marlon, one of my colleagues from Industrial Engineering, Jim Moore, also weighs in intelligently, as does Kathryn Phillips–who is UCLA grad, like me–with Environmental Defense Fund also writes well here.

Matt Kahn on bad water pricing

Matt Kahn at UCLA is one of those economists whose work I cite quite a bit. His blog is smart and funny and edgy, and he has up a very good post comparing how the LA Department of Water and Power’s pricing regime makes no sense from a sustainability perspective. To wit–he compares the pricing schedule he faces with that of Candy Spelling, TV producer** Aaron Spelling’s very wealthy widow.

The water pricing story in southern California is larger than life with movies like Chinatown out there (great movie), but the DWP’s past attempts at implementing marginal cost pricing should be a case study in implementation for young environmental economists everywhere. To make a long story short, marginal cost pricing was on the table until Valley constituencies–all predominately single-family houses with yards–got out their calculators. The resulting outcry prompted deal-making that, while perhaps reassuring to us lovers of citizen participation, landed us with the pricing mechanism we have now. The basis for the changes revolved around an equity concern–as it so often does–not about people who are actually impoverished, but over the costs to people who are solidly middle class but not affluent per se. In order to protect these folks from what seemed prohibitively high water prices, we struck the deal that Matt discusses, considering usage as a function of lot size and occupancy. The end result bears little resemblance to marginal cost pricing or pricing based on social equity goals.

For people like me who study social equity and justice, the political discourse surrounding most pricing schemes tends to be entirely about equity and yet entirely miss the point about equity. We tend to protect the wrong groups–as in those with some discretionary income if not a lot– from the consequences of their consumption choices because we worry about affordability rather than the proper pricing signals and affordability.

**Aaron was the purveyor of such time-wasting, high-camp glory as “Dynasty” and the original “90210.” O the cat fights! O the shoulder pads! O the gigantically big hair!