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HOT & Bothered

High-Occupancy Toll lanes: another nightmare from the suburbs-hating traffic planners

Apr 14, 2014, Vol. 19, No. 29 • By JONATHAN V. LAST
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As people migrated to the suburbs, some highways became congested. Under optimal conditions, a lane of freeway can move roughly 1,800 cars per hour. In places like metropolitan Los Angeles—which combines sprawl with the hard geographic limits of a bounding ocean and a bisecting mountain range—this rate of throughput, as the traffic engineers call it, on the existing freeway lanes proved inadequate. The obvious solution was to add lanes, increasing carrying capacity. But over time, economists and engineers came to believe that adding capacity to the system only made the traffic worse. They contended that adding lanes “induced demand.” Which is to say that building extra lanes only encouraged more people to drive, with the end-state of gridlock being a permanent condition, no matter how many lanes you had.

There was never a solid scientific basis for induced-demand theory—in fact, a great deal of research has subsequently rendered it dubious, at best. But that’s beside the point. The specter of “induced demand” was a good excuse to not build more highways, which has been the prime directive of environmentalists, urban planners, and other bien pensants of the administrative state for the last 35 years.

At the same time induced-demand theory was making the rounds, conservative economists proposed that the real answer to traffic was pricing. Roadways, they argued, are a classic tragedy of the commons. Because highway travel is free, so many people take advantage of it that it gets ruined for everyone. The economists contended that if use of the highways were priced, people would be forced to put a value on driving and the invisible hand of the market would regulate traffic.

At first the economists fixated on “peak pricing,” that is, charging a toll during rush hour. But flat tolls were a crude mechanism. What they longed for was a dynamic system that would always reflect the “true” cost of usage. In 1993, two economists at the Reason Foundation, Gordon Fielding and Daniel Klein, proposed a regime of variable pricing: When traffic was light, the toll might be 50 cents; when traffic was heavy, it might jump to $8. Dynamic pricing would force drivers to pay a true price to avoid traffic. The market would then cause driver economicus to regulate his behavior in the most efficient manner.

The creation of cheap, passive Radio Frequency Identification transponders in the early 1990s made dynamic pricing possible. Drivers registered for transponders (such as the E-ZPass system in the northeast, or SunPass in Florida) that were tied to a credit card. Tolls could be collected electronically while the car was moving. With the problem of collection solved, adjusting prices on the fly was easy. All that was needed was a system of sensors at on-ramps and exits to track the movement of vehicles within the network and a computer algorithm that could raise or lower prices so that traffic volume in the HOT lanes was kept moving at some predetermined minimum speed, say, 50 mph. The first HOT lanes in America, on SR-91 in Orange County, California, opened in 1995.

Six years after Fielding and Klein launched the HOT lane concept, Robert W. Poole Jr. and C. Kenneth Orski became its most formidable intellectual advocates with a piece in the journal Regulation that still serves as the definitive argument for HOT lanes. Poole and Orski began by attacking the HOV concept: HOV lanes, they said, were problematic. Drivers didn’t like them; the environmentalists who’d agitated for them in the first place during the 1970s were having buyer’s remorse; and academic studies suggested they didn’t relieve congestion.

Poole and Orski suggested that the big problem with HOV lanes was that they were underused: A freeway lane that could be moving 1,800 vehicles per hour, when marked for HOV, might be moving 400. If those cars held an average of 3 people, HOV lanes were less efficient than general purpose lanes. Further, even if HOV lanes were moving 1,200 cars an hour, they still had latent capacity that was going unused. So Poole and Orski proposed converting HOV lanes to HOT.

The appeal of their proposal was simple: In addition to carpooling riders, the express lanes would attract single drivers willing to pay a toll. This would soak up excess capacity in the express lanes, relieve congestion on the main lanes, move all riders faster—and generate revenue to boot. To cover the costs of conversion (or new construction), states could form partnerships with private-sector companies, which meant that the improvements could be made with a minimal tax burden. It was win-win-win. 

The market would solve everything.

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