April 22, 2008
Long Commutes Pushing Down Suburban Home Prices
While home buyers have been factoring the high costs of commuting into purchasing decisions, Stephen J. Dubner and Steven D. Levitt (of Freakonomics fame) have been calculating the costs commuters aren't paying. The largest externality associated with driving is not carbon emissions ($20 billion a year) or congestion ($78 billion a year) - it is auto accidents, which cost $220 billion a year. Congestion pricing or a higher gas tax could internalize the externalities, but both are politically unlikely, especially in car-hugging Texas. Instead, the freakonomists suggest modifying auto insurance rates, so that drivers would be charged based on the number of miles they drive and other risk factors more indicative of their likelihood of crashing. If they are right that driving less means crashing less, this could be a win/win for insurance companies adopting this plan and non-commuting car owners. The insurance companies would attract low-risk policyholders and non-commuting car owners would save on their insurance bill.
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It would be a big step in the right direction. Notwithstanding the idiot commuting calculators which treat depreciation as a function purely of mileage (when it's really 90% age and 10% use), driving today is fundamentally a high fixed cost and a very low variable cost - which tends to mean that once you own a car, your most rational decision is to keep driving (people who say they save a bunch of money by leaving their car parked at home and riding the bus are displaying extremely poor math skills and/or an illegally low hourly wage).
Wow. I ride my bike to work, and to/from my Calc 3 class at ACC, and i work full-time with benefits.
Oh, and i have a car. I drive it out to my parent's house, HEB, road trips, visit friends...
(Don't worry, one of these days i'll fit into a generalization, i'm sure of it!)
Mike,
How do you figure that people don't save a bunch of money by not driving?
I'm not disputing it, because my gut is that you are correct, but I am wondering if you have a sound argument.
Raising insurance rates enough will also be politically impossible. Accident costs are not fully internalized today because states don't require drivers to carry enough insurance for political reasons. Pricing insurance by the mile won't fix the political problem.
cram,
I went through the depreciation argument somewhere... let me see:
http://mdahmus.monkeysystems.com/blog/archives/000440.html