Monday, October 12, 2009

The Traffic Congestion/Air Pollution Nexus: Reduce Infant Mortality By Introducing the EZ Pass

You don't want to live near a highway toll plaza, especially if cars get stuck there waiting to pay the toll. This paper presents a "natural experiment" under which EZ-Pass is introduced and a before/after comparison of infant mortality rates in neighborhoods nearby is calculated. Death rates fall by 10% when drivers can speed through (creating a uniform distribution of pollution) versus the concentrated plume (nice word) when they are stuck waiting to pay the toll.

So, this paper is arguing that congestion pricing could also have local environmental benefits. But, if air pollution got better near highways --- would even more people live nearby? Will rents really not change? These types of public health papers are not always explicit about the general equilibrium long run effects of local amenity improvements. Coase would have something to say here on whether we move the Mountain or Mohammad. In the short run, the urban poor who live nearby will certainly gain from the "treatment" but if I can quote Keynes, how short is the short run?

Turning to the 2009 Nobel, note that this is a UC prize. Oliver W. does great work at Berkeley and Elinor received all of her degrees from UCLA (but not in economics!).